Agenda Document Pack - Audit and Risk Committee - 25/03/2024
Perth and Kinross Council · 25 March 2024
Back to Audit and Risk Committee — 25 March 2024 and its agenda
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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 19/03/2024 A hybrid meeting of the Audit and Risk Committee will be held in the Council Chamber on Monday, 25 March 2024 at 13:00. 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 64
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Audit and Risk Committee Monday, 25 March 2024 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 2 DECLARATIONS OF INTEREST 3 MINUTE OF MEETING OF THE AUDIT AND RISK COMMITTEE OF 11 DECEMBER 2023 FOR APPROVAL (copy herewith) 5 - 8 4 OUTSTANDING BUSINESS STATEMENT (copy herewith 24/94) 9 - 10 5 PERTH & KINROSS COUNCIL ANNUAL AUDIT PLAN 2023/24 Report by External Auditor (copy herewith 24/95) 11 - 28 6 INTERNAL AUDIT FOLLOW UP Report by Chief Internal Auditor (copy herewith 24/96) 29 - 30 7 INTERNAL AUDIT UPDATE Report by Chief Internal Auditor (copy herewith 24/97) 31 - 34 7(i) ALL SERVICES 7(i)(a) 22-02 CLIMATE CHANGE (copy herewith 24/97) 35 - 48 7(i)(b) 23-06 FUEL (copy herewith 24/99) 49 - 64 IT IS RECOMMENDED THAT THE PUBLIC AND PRESS SHOULD BE EXCLUDED DURING CONSIDERATION OF THE FOLLOWING ITEM(S) IN ORDER TO AVOID THE DISCLOSURE OF INFORMATION WHICH IS EXEMPT IN TERMS OF SCHEDULE 7A TO THE LOCAL GOVERNMENT (SCOTLAND) ACT 1973 P1 APPENDIX 1 TO MINUTE OF MEETING OF THE AUDIT AND RISK COMMITTEE OF 11 DECEMBER 2023 FOR APPROVAL Page 3 of 64
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• Exempt Reason 14 - Any action taken or to be taken in connection with the prevention, investigation or prosecution of crime. P2 INTERNAL AUDIT UPDATE - A22-04 PARTNERSHIP WORKING (copy to follow) Page 4 of 64
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AUDIT AND RISK COMMITTEE Minute of Special Meeting of the Audit and Risk Committee held hybrid on Monday 11 December 2023 at 11.30am. Present: Councillors D Illingworth, L Barrett, A Chan, K Harvey, I MacPherson, G Stewart, and C Stewart. In Attendance: C Mailer, Director (Strategy, People and Resources); L Simpson, J Clark, S MacKenzie, S Walker, K Jamangile, K Molley, A Brown, and R Ramsay (Strategy, People and Resources); F Crofts and L Potter (Communities); and C Palmer (Education and Children’s Services) Also in Attendance: M Bruce and B Howarth, Audit Scotland Councillor D Illingworth, Convener, Presiding. 1. WELCOME AND APOLOGIES/SUBSTITUTIONS The Convener welcomed everyone to the meeting. 2. DECLARATIONS OF INTEREST There were no declarations of interest made in terms of the Councillors’ Code of Conduct. 3. MINUTE OF SPECIAL MEETING OF THE AUDIT AND RISK COMMITTEE OF 30 OCTOBER 2023 FOR APPROVAL The minute of special meeting of the Audit and Risk Committee of 30 October 2023 was submitted and approved as a correct record. 4. OUTSTANDING BUSINESS STATEMENT Resolved: The contents of the Outstanding Business Statement, be noted. 5. DRAFT AUDITED 2022/23 ACCOUNTS AND DRAFT ANNUAL AUDIT REPORT TO THE MEMBERS OF PERTH AND KINROSS COUNCIL AND THE CONTROLLER OF AUDIT FOR THE YEAR ENDED 31 MARCH 2023 There was submitted a report by Head of Finance (23/363) presenting the Council’s draft Audited 2022/23 Annual Accounts in accordance with the Local Authority Accounts (Scotland) Regulations 2014 and draft 2022/23 Annual Audit Report. In response to a question from Councillor C Stewart, B Howarth, Audit Scotland, advised that the Local Government Financial Overview detailing the relative borrowing levels across Local Authorities would be shared with members when made available. B Howarth added that house building across Scottish Councils 3 Page 5 of 64
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had increased over the last 5 years which would suggest an increase in associated debt. In response to a question from Councillor K Harvey regarding resourcing issues, B Howarth confirmed that concerns over staffing resources had been an increasing issue in Scotland across all public bodies. B Howarth advised that it had been difficult over recent years to recruit agency and temporary staff to supplement peak periods over the Summer and the graduate programme had reduced to a quarter of the number of applicants. However, B Howarth added that Audit Scotland recruit up to 15 trainees a year to help increase the number of qualified staff into the organisation and ongoing work continues to look at ways to increase recruitment into the Audit sector. In response to a question from Councillor I MacPherson regarding unusable reserves, S MacKenzie confirmed that those reserves such as the Pension Fund and the Capital Adjustment Account are accounting and technical adjustments. Councillor D Illingworth queried if the recommendations detailed in the audit would have a material impact on the daily running of the Council. S Mackenzie advised that work would be undertaken with the Auditors regarding valuations going forward as part of the presentation of the accounts rather than have effect on the day-to-day decision making in terms of the allocation of resources. S Mackenzie confirmed that from the accounts there did not seem to be a significant impact on the cash position as the uncommitted reserves had not changed. Members thanked S MacKenzie, S Walker and the Finance Team for their work in producing the accounts and J Clark and her team for completing the audit. Members thanked M Bruce and B Howarth, Audit Scotland, for their informative report. Resolved: (i) The Audited 2022/23 Annual Accounts detailed in Appendix 1 of Report 23/363, be approved. (ii) The Leader of the Council, the Chief Executive and the Head of Finance be authorised to sign the Audited 2022/23 Annual Accounts and the Head of Finance be authorised to sign the Letter of Representation. (iii) The contents of Audit Scotland’s Draft 2022/23 Annual Audit Report detailed in section 6.3 of Report 23/363, be noted. THE VICE-CONVENER LED ON THE FOLLOWING ITEMS. 6. INTERNAL AUDIT FOLLOW UP There was submitted a report by Chief Internal Auditor (23/364) presenting a current summary of Internal Audit’s ‘follow up’ work relating to actions due for completion up to October 2023. Resolved: The current position in respect of the agreed actions arising from Internal Audit’s work, be noted. Page 6 of 64
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7. INTERNAL AUDIT UPDATE There was submitted a report by Chief Internal Auditor (23/365) presenting a summary of Internal Audit’s work undertaken as part of the Internal Audit Plans for 2022/23 and 2023/24. In response to a question from Councillor C Stewart regarding the further areas of unplanned investigatory work which had arisen during the audit year, J Clark confirmed that the work would vary on a case-by-case basis but would usually arise form contact with Services which may be of a whistleblowing nature or areas for improvement which require further investigations. Resolved: The progress with Internal Audit activity, be noted. THE CONVENER LED ON THE FOLLOWING ITEMS. 8. BEST VALUE THEMATIC REVIEW There was a report submitted (23/366) setting out the findings and two recommendations for improvement contained in the Perth and Kinross Council’s Best Value Thematic Review Report 2022/23. In response to a question from Councillor L Barrett regarding the level of concern over budget setting for 2024/25 and the indicative budgets for future years, B Howarth confirmed that Perth and Kinross Council should be fairly concerned. Perth and Kinross Council face similar concerns to other Local Authorities in trying to find a solution to a funding gap. B Howarth added that many Councils increased their reserves during the pandemic because of Government funding and as that started to reduce there had been a reduction in general funds. B Howarth added there are a substantial planned use of reserves going forward compared to what sits in usable reserves. B Howarth confirmed that Audit Scotland would monitor the outturn in the current year, the budget planning process, and the outcome of the budget for next year. In response to a question from Councillor L Barrett regarding the alignment of the LOIP objectives with the Corporate Plan Objectives, C Mailer advised the LOIP had been created to tackle inequalities and the Corporate Plan to focus on the wider Council priorities. C Mailer added that work had been ongoing with the Community Planning Partnership to review progress against the LOIP, and C Mailer confirmed that the area would continue to be monitored. In response to a further question from Councillor L Barrett regarding if there had been a focus on enhancing the explicitness of Improvemnet Plans, C Mailer confirmed that work had been underway following a previous action from the Scrutiny and Performance Committee for better reporting in terms of where the Council hadn’t performed as well and a clearer link to what the improvement actions are. In response to a question from the Convener regarding the Local Government Benchmarking Framework and the weighting of the 62 values, B Howarth advised that there are two aspects to the overall assessment. He added that when using the wider tool (LGBF) and ranking the Council against those measures then it does treat Page 7 of 64
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the non-cost measures equally. B Howarth confirmed that the Auditors also assess what the Council priorities are and assess how the Council are doing against its own priorities. B Howarth confirmed it would be expected for the local priority setting and performance monitoring in the Council to reflect the difference of what LGBF says generally and would be deemed important to the Council. In response to a question from Councillor C Stewart regarding the Council reviewing and updating their approach to community engagement and empowerment as part of our Transformation and Change Programme and the ongoing audit of Community Engagement, J Clark advised that the audit being undertaken on Community Engagement would reflect a lot of the changing landscape and would be reported back to the Audit and Risk Committee. In resposne to a question from Councillor C Stewart regarding the figures of participatory budgeting, B Howarth confirmed that the figures and calculations would be checked and reported back to members. Resolved: (i) The contents of Audit Scotland’s Best Value Thematic Review Report, be noted. (ii) Updates on progress against improvements will be reported through the Council’s Annual Performance Report, be noted. 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 AND S30 OF THE FREEDOM OF INFORMATION (SCOTLAND) ACT 2002. P1. INTERNAL AUDIT REPORT – INFORMATION SECURITY The was a report submitted (23/367) detailing an audit undertaken to evaluate the adequacy and effectiveness of controls over information assets and PKC compliance with Information Security Standards. Resolved: The contents of report 23/397, be noted. Page 8 of 64
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(Report No. 24/94) AUDIT AND RISKCOMMITTEE OUTSTANDING BUSINESS STATEMENT (OBS) 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 3. 26 June 2023. Item 9. Annual Report – Strategic Risk Management A demonstration on PK Performs be provided to members. A session was arranged for members on 21 February 2024. COMPLETED Greg Boland March 2024 March 2024 4 Page 9 of 64
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AUDIT & RISK COMMITTEE 25 MARCH 2024 INTERNAL AUDIT FOLLOW UP Report by Chief Internal Auditor (Report No. 24/96) 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 January 2024. 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 2 actions due to be completed up to January 2024, both of which have been completed. Author Name Designation Contact Details Jackie Clark Chief Internal Auditor InternalAudit@pkc.gov.uk 6 Page 29 of 64
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AUDIT & RISK COMMITTEE 25 MARCH 2024 INTERNAL AUDIT UPDATE Report by Chief Internal Auditor (Report No. 24/97) 1. PURPOSE 1.1 This report presents a summary of Internal Audit’s work undertaken as part of the Internal Audit Plans for 2022/23 and 2023/24. 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 Perth & Kinross’ Integration Joint Board. 4.3 Work has continued to support the 2022/23 National Fraud Initiative exercise, with supporting Services to conclude their investigations. Services have made good progress reviewing and investigating their matches, with the main areas outstanding being as a result of new matches in November 2023 for a number of datasets. Outcomes from this will be reported once all matched have been reviewed and investigations into all datasets have been completed. 5. PROGRESS UPDATE 5.1 Appendix 1 shows the status of audits arising from the Internal Audit Plans. 5.2 Internal Audit is currently involved with further areas of unplanned investigatory work. If any control issues arise as a result of these, reports will be presented to the Audit & Risk Committee. 7 Page 31 of 64
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5.3 Internal Audit assignment 22-05, Community Engagement, had an indicative scope of “to review the effectiveness of arrangements in place for engaging with communities”. Community Empowerment and Engagement is the subject of a transformation and change workstream, which will provide recommendations to Council later in 2024 and is focused on future alignment of Council functions related to community engagement, and the future shape of local democratic forums. Internal Audit is content that the areas which would have been covered by an Internal Audit review have been included within the scope of the transformation review, with the changes recommended being implementation over the coming years. Any additional audit activity would therefore not add value at this time. As such, Internal Audit will consider the outcome of this transformation review, along with the outcomes from all transformation reviews, as part of its planning process for consideration for future Internal Audit plans. Authors Name Designation Contact Details Jackie Clark Chief Internal Auditor InternalAudit@pkc.gov.uk APPENDICES • Appendix 1 Internal Audit Activity Page 32 of 64
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Appendix 1 INTERNAL AUDIT UPDATE Internal Audit Activity Audit No. Title Lead Service(s) Status as at November 2023 Audit Committee 2022/23 A22-02 Climate Change Communities Completed March 2024 A22-03 Partnership Working All Completed March 2024 A22-05 Community Engagement Communities Completed March 2024 A22-06 IT Assets Corporate & Democratic Services Completed December 2023 2023/24 A23-01 Food Health & Safety Communities Completed September 2023 A23-02 Mosaic Corporate / HSCP / ECS Ongoing June 2024 A23-03 Local Employability Partnership Communities Ongoing June 2024 A23-04 Child Poverty Communities June 2024 A23-05 Business Continuity All Services June 2024 A23-06 Fuel Communities Completed March 2024 7 Page 33 of 64
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(Report No. 24/98) Internal Audit Report All Services 22-02 Climate Change February 2024 Final Report Legal and Governance Corporate and Democratic Services Perth & Kinross Council Council Offices 2 High Street Perth PH1 5PH 7(i)(a) Page 35 of 64
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20-02 Climate Change Contents by Section 1. Introduction 2. Executive Summary 3. Audit Background Information 4. Scope and Limitations 5. Assessment of the Control Environment 6. Summary of Findings 7. Conclusions 8. Acknowledgement 9. Action Implementation & Follow Up 10. Management Action Plan 11. Authorisation 12. Distribution 13. Assessment Definitions Page 36 of 64
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1. Introduction 1.1 The audit of climate change was undertaken as part of the Internal Audit Plan for 2022/23, which was approved by the Audit Committee on 28 June 2022. 1.2 The indicative scope for the audit was to provide support, advice and challenge to the strategic arrangements in place to fulfil the Council’s climate change duties. 1.3 This audit is linked to Strategic Risk 2: The actions and decisions of the Council fail to affect the behavioural and cultural change required to mitigate the causes of and reduce the impact of climate change in Perth and Kinross. 2. Executive Summary 2.1 The audit has found that reasonable assurance can be placed on controls overall in relation to the limited sphere of influence the Council has regarding climate change. 2.2 Areas of good practice have been highlighted in Section 5 of this report, and there are 5 actions arising from the findings in Section 6. An action plan is included at Section 10. Once these actions are completed, Internal Audit should be able to place substantial assurance on the arrangements in place. 3. Audit Background Information 3.1 The Council’s key risks were reported to the Audit & Risk Committee in June 2024. The Strategic Risk Register. classifies Climate Change as a Priority 1 risk (Risk SR02). A Priority 1 risk is where ‘Risk remains extreme even after all identified controls and treatments have been applied. There are significant risks, which may have a serious impact on the Council and the achievement of its objectives if not managed. Immediate management action needs to be taken to reduce the level of risk.’ Given this priority, the Chief Internal Auditor has decided to include a review of this this in the Internal Audit work for 2022/23. The Register details key controls that are in place and key actions thought necessary by officers to mitigate the risk. 3.2 In December 2019, the Council approved an Interim Climate Emergency Report and Action Plan (Report No 19/362 refers). This highlighted the Intergovernmental Panel on Climate Change’s (IPCC) concerns in relation to keeping the global average temperature rise below 1.5°C, which had been also reflected at COP26. 3.3 In December 2021, a report was submitted to the Council that provided an update on the climate action progress made since the Council approved the Interim Climate Emergency Report and Action Plan. It also provided a summary of public engagement undertaken and the latest emissions update. Based on this evidence, the Climate Strategy and Action Plan was developed and approved by the Council, (Report No. 21/245 refers). Page 37 of 64
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3.4 The Council has a legal responsibility for emissions reductions and climate resilience both within the Council’s operations and the Perth and Kinross geographic area. As such, the Climate Change Strategy and Action Plan covers the identified necessary actions for the Council to undertake for both areas. 3.5 The Council has signed up to a number of initiatives, becoming signatories to the Covenant of Mayors, the Edinburgh Declaration and the Glasgow Food and Climate Declaration (Report No. 21/209 refers). 3.6 The Action Plan is broken down into eight thematic areas. The first five from the interim plan, aligned with significant emissions sectors: transport; buildings and energy; business and industry; waste; and land use, and a further three included in the updated plan: climate resilience – as a result of the Council’s legal duty in this area; education and engagement – to address behavioural change; governance – to recognise the importance of clear governance and performance monitoring in delivering improvement. There is a roadmap for each theme within the Strategy and a detailed Action Plan. 4. Scope and Limitations 4.1 The review consisted of identifying and testing controls in place to ensure delivery of the Climate Change Strategy and Action Plan. 4.2 The review identified the design and substance of the key controls listed in the Council’s Strategic Risk Register and tested their effectiveness. It also considered the progress of the key actions listed on the Register. 4.3 To arrive at an opinion on the achievement of the control objective, the review included interviews with officers and a review of systems and documents in use. 4.4 Internal Audit recognises that many of the big drivers for climate change are outwith the control of the Council and that, for those areas within the influence of the Council, funding required from Scottish and/or UK Government may not be forthcoming. It is noted that progress against our targets from 2011 to 2021 has been very slow and if it continues on this path, the probability of the Council meeting the Scottish and UK Government targets are slim / unlikely. However, the overall achievement of climate objectives, at this point in time, is not the subject of this audit review but will be considered for inclusion in future Internal Audit plans. 5. Assessment of the Control Environment 5.1 The table below contains a summary of the findings against each control objective and Internal Audit’s assessment of the adequacy and effectiveness of the controls in place to meet each of the objectives agreed for this audit. Further details, including any improvement actions, are set out in the Management Action Plan. Page 38 of 64
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No. Control Objective Action Rating Control Objective Assessment 5 4 3 2 1 1. To ensure the adequacy of governance arrangements to deliver on the Council’s Climate Change Strategy. 1 3 1 Reasonable Assurance 5.2 The auditor has assessed that reasonable assurance can be placed on controls overall in relation to the limited sphere of influence the Council has regarding climate change. Meaning: 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. 5.3 A summary of the key findings and actions are provided in section 5. In addition, the following areas of good practice have been highlighted during the audit: 5.4 The governance structure is good, in terms of: thematic working groups; Climate Change Board; Climate Change and Sustainability Committee; and Council. These working groups, Board and Committee meet regularly. 5.5 There are standing items on the Climate Change Board agenda to review the action log and for updates to be provided by the Climate Change and Sustainability Team Leader and from each of the Theme Leads. 5.6 There is a template in use for the Climate Change and Sustainability Team Leader to direct their reporting of data to the Climate Change Board. The template heading requests the preparer’s name and the date of preparation. It has six sections and an appendix: • Key actions since last Board Meeting; • Status Tracker; • Recruitment and budget update; • Key risks to development and delivery; • Looking ahead; • Funding; and • Summary of Top Actions Classified as Red (Appendix). 5.7 There is a template in use for each thematic working group Lead to direct the reporting of data to the Climate Change Board. The template heading requests the working group name and the date of preparation. It has five sections: • Key progress since last Board Meeting; • Priorities for the next two months; • Successes/challenges/areas for assistance to raise at Board meeting; Page 39 of 64
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• Comments on any Top or High Priority Actions with Red Status and what is being done to get these back on track; and • Funding opportunities – summary of any opportunities on the horizon (if not able to pursue them, why not e.g. capacity). 6. Summary of Findings 6.1 Below is a summary of key findings and actions, which are reflected in the Management Action Plan, detailed in section 9. 6.2 Governance Structure: We noted that there are at least seven stakeholders who are involved in assisting PKC achieve its Climate Change Strategy and Targets see below list of the parties. 1. Climate Change Board 2. Climate Change Sustainability Committee 3. Perth and Kinross Climate Change Commission 4. Executive Director (Communities) as Executive Sponsor 5. Climate Change Working Group Theme Leads 6. Climate Change Team 7. The Council There are clear terms of reference and responsibilities are in place for most of these. There is clarity of the role of the Climate Change Working Groups but there is scope to improve clarity of the role of the theme leads regarding their expectations. Working groups and other parties involved submit data against their actions plans. These are collated by the Climate Change Team and provided to the Climate Change Board for scrutiny and challenge. Internal Audit has been informed that the Perth and Kinross Climate Change Commission (PKCCC) is undertaking a review of how it functions and its effectiveness. However there was an undertaking that the PKCCC will provide an annual report on its work and in doing so will provide its assessment of the Council’s progress”. No annual report has been prepared since its establishment in May 2022. Action Point 1 The Climate Change Board consists of officers from across the Council, with sufficient seniority to effect change. With the new leadership structure being implemented, the Service has informed Internal Audit that there will be a review of membership of the Board, along with its role within the overall Council governance structures, to ensure that this is the case going forward. Action Point 2 6.3 Action Plans There are eight themes: Transport; Building and Energy; Waste and Resources; Business and Industry; Land Use; Climate Resilience; Page 40 of 64
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Governance: and Education and Engagement. Each theme has a lead and working group. There are 182 strategic actions in the Climate Change Master Action Plan, with 89 KPIs. Each working group is responsible for updating their action plan and this is compiled into the master document. Internal Audit reviewed this master document and found that it does not detail targets for all key performance indicators nor was progress recorded for many of the indicators reviewed. Of the 182 actions, 97 actions (53%) do not have specific start or end date, with 90 (49.4%) also not having milestones. Two different files are used to capture information, one for Action Plan and one for KPIs and targets. It is a little challenging to reconcile the two files. There is scope to streamline these documents to limit duplication, gaps and overlaps. Action Point 3 6.4 Resourcing of priority actions. The Council has identified 25 actions as top priority and funding was provided for these 25 top priorities. However, A review of the Master Action Plan that 9 of these top priority actions had available resources, 7 had partial resources (i.e. for feasibility / design), and 9 were without allocated resources. Action Point 4 6.5 Buy in from community and private sectors. Taking the necessary comprehensive and urgent action on climate change requires the Council to work in partnership with our communities, businesses and organisations at an unprecedented scale. The PKCCC was formed in May 2022. Its aim is to bring together people and organisations from the public, private and civic sectors who work collaboratively to help drive, guide, support and monitor climate action. The PKCCC is to provide independent active leadership and support for cross- sector collaboration and action on climate change. However, it is unclear from the website whether private sector organisations are represented, as individuals only are named, and the PKCCC is yet to measure and report since its establishment, as detailed in paragraph 5.2 above. Internal Audit has been advised that the PKCCC is reviewing its approach and membership. It may be helpful to have explicit links to the external organisations that individuals represent, where this is the case, to demonstrate the representation of such organisations and to for the Council to consider whether the PKCCC is a control measure for the strategic risk register. Action Point 1 Page 41 of 64
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7. Conclusion 7.1 The Internal Audit review is able to place reasonable assurance on the overall control environment for the Council’s arrangements for Climate Change at this time. The agreed actions, once implemented, should enable Internal Audit to place substantial assurance on these. 8. Acknowledgements 8.1 Internal Audit would like to thank all officers who were involved in this audit, particularly the officers within the Climate Change team and Property Services. 9. Action Implementation & Follow up 9.1 Responsibility for the maintenance of adequate and effective controls rests with management. Where the audit has identified areas for management action, these are identified in the Management Action Plan. Where a decision is taken by management not to act in response to finding from this review, it is the responsibility of management to assess and accept the risk arising from non-implementation. 9.2 Achievement of the agreed actions is monitored through Internal Audit’s ‘follow up’ arrangements. Page 42 of 64
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10. Management Action Plan Action Point Para. No Finding Risk Rating Agreed Action & Evidence Action Owner Target Completion Date 1 5.2 1. Perth and Kinross Climate Change Commission (PKCCC) is required to provide an annual report on its work and provide its assessment of the Council’s progress. No annual report has been produced since its establishment in May 2022 2 It may be helpful to have explicit links to the external organisations that individuals represent, where this is the case, to demonstrate the representation of such organisations and to for the Council to consider whether the PKCCC is a control measure for the strategic risk register. 3 3 Agreed action: Climate Change Strategic Lead to work with PKCCC to review Commission’s role, membership and performance and to ensure that any annual reporting requirements are adhered to. Agreed evidence: Outcome of the review and annual report Agreed action: The Strategic Lead, Environment will work with, and consider, the outcome of the PKCCC’s own review in relation to the matters raised in this finding. Agreed evidence: F Crofts, Strategic Lead, Environment F Crofts, Strategic Lead, Environment December 2024 December 2024 Page 43 of 64
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Outcome of review and updated Risk Register 2 5.2 The Climate Change Board consists of officers from across the Council, with sufficient seniority to effect change. With the new leadership structure being implemented, the Service has informed Internal Audit that there will be a review of membership of the Board, along with its role within the overall Council governance structures, to ensure that this is the case going forward 2 The Strategic Lead will review the membership of the Board to ensure that it remains relevant and fit for purpose following the leadership review. Agreed evidence: Outcome of review F Crofts, Strategic Lead, Environment December 2024 3 5.3 Action Plans. The Action Plan does not detail targets for all key performance indicators nor was progress recorded for many of the indicators reviewed. Of the 182 actions, 97 actions (53%) do not have specific start or end date, with 90 (49.4%) also not having milestones. Two different files are used to capture information, one for Action Plan and one for KPIs and targets. It is a little challenging to reconcile the two files and there is scope to streamline these documents to limit duplication, gaps and overlaps. 3 Agreed action: The Climate Change & Smart Investment Manager will support the Climate Change Board to review and approve actions in Climate Change Action Plan with milestones, KPI and targets. As part of this, the documents will be reviewed to ensure that they fully and completely record both actions and KPIs S Marone, Climate Change & Smart Investment Manager December 2024 Page 44 of 64
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Agreed evidence: Revised documentation considered by the Climate Change Board 4 5.4 Lack of resources both financial and capacity. The Council has identified 25 actions as top priority and funding was provided for these 25 top priorities. However, we noted from our review of the Master Action Plan that 9, of these top priority actions had available resources, 7 had partial resources (i.e. for feasibility / design), and 9 were without allocated resources. 4 Agreed action: The Climate Change & Smart Investment Manager will support the Climate Change Board to review the actions to ensure that resourcing is appropriately reflected to deliver these top priority actions Agreed evidence: Outcome of review from the Climate Change Board. S Marone, Climate Change & Smart Investment Manager September 2024 Page 45 of 64
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11. Authorisation 11.1 The auditor for this assignment was M Stewart. The supervising auditor was I Iman. This report is authorised for issue: 12. Distribution 12.1 This report has been distributed to: T Glen, Chief Executive B Renton, Executive Director (Communities) A Williams, Director, Economy, Place & Learning C Mailer, Director, Strategy, People & Resources F Crofts, Strategic Lead, Environment D Littlejohn, Strategic Lead, Economy, Development & Planning S Crawford, Strategic Lead, Property Services S Merone, Climate Change & Smart Investment Manager L Simpson, Strategic Lead, Legal & Governance Committee Services External Audit Page 46 of 64
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13. Assessment Definitions 13.1 The following table contains the definitions of the control objective assessment. Control Objective Assessment Level of assurance Definition 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. 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. 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. 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. 13.2 The following table contains the definitions applied by Internal Audit in rating audit findings/actions. Risk Rating for Individual Findings Rating Rating description Definition 5 Critical Significant observations / major concerns which require immediate action. Management will need to add these to the appropriate Service risk register Issue represents a control weakness which could cause, or is causing, severe disruption of the process or severe adverse effect on the ability to achieve process objectives 4 High Significant observations regarding the absence / failure of key controls requiring urgent action. Management should consider adding these to the appropriate Service / divisional risk register Issue represents a control weakness which could have, or is having, major adverse effect on the ability to achieve process objectives Page 47 of 64
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3 Medium Observations regarding the effectiveness of key controls requiring reasonably urgent action. Management should consider these when updating any divisional / team risk registers Issue represents a control weakness which could have, or is having, significant adverse effect on the ability to achieve process objectives 2 Low Minor observations regarding the adequacy of controls which require action to improve the efficiency, effectiveness, or economy of operations or which otherwise require to be brought to the attention of Senior Management Issue represents a minor control weakness with minimal but reportable impact on the ability to achieve process objectives 1 Trivial / Minor Very minor observations which will be raised during the audit and may not be included within the final report Issue represents a very minor control weakness with negligible impact on the ability to achieve process objectives. The issue will be raised during the audit and may not be included within the final report. Page 48 of 64
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(Report No. 24/99) Internal Audit Report All Services 23-06 Fuel March 2024 Final Report Legal and Governance Corporate and Democratic Services Perth & Kinross Council Council Offices 2 High Street Perth PH1 5PH 7(i)(b) Page 49 of 64
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23 - 06 Fuel Contents by Section 1. Introduction 2. Executive Summary 3. Audit Background Information 4. Scope and Limitations 5. Assessment of the Control Environment 6. Summary of Findings 7. Conclusions 8. Acknowledgement 9. Action Implementation & Follow Up 10. Management Action Plan 11. Authorisation 12. Distribution 13. Assessment Definitions Page 50 of 64
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1. Introduction 1.1 The audit of Fuel was undertaken as part of the Internal Audit Plan for 2023/24, which was approved by the Audit Committee on 30 October 2023. 1.2 The indicative scope for the audit was to ensure that arrangements are in place for the safe storage and utilisation of Council fuel supplies. 1.3 This audit was included in the annual audit plan following discussion with the Service as the fuel budget is material and assurance was needed over the storage and utilisation of Council fuel supplies. The last Internal Audit review was undertaken in 2016. 2. Executive Summary 2.1 The audit has found that limited assurance can be placed on the controls in relation to custody and utilisation of council fuel supplies. 2.2 Areas of good practice have been highlighted in Section 5 of this report, and there are 10 findings in Section 6. An action plan is included at Section 10 which details 14 actions in connection with the findings. Once these actions are completed, Internal Audit should be able to place substantial assurance on the arrangements in place. 3. Audit Background Information 3.1 This assignment forms part of the Internal Audit plan for 2023/24, approved by the Audit Committee on 30 October 2023. Whilst this audit does not link directly with the Strategic Risk Register, it was included in annual audit plan following discussions with management and concerns had been raised regarding the custody and utilisation of council fuel supplies. 3.2 There are significant risks, which may have a serious impact on the Council and the achievement of its objectives if not managed and concern over custody and utilisation of council fuel supplies was one of the risks. Immediate management action needs to be taken to reduce the level of risk.’ Given this priority, the Chief Internal Auditor has decided to include a review of this this in the Internal Audit work for 2022/23. 3.3 Council uses fuel, mainly diesel, for its fleet i.e. heavy vehicles in waste management and mechanical equipment in ground maintenance. The fuel budget for the year 2022/23 was £1,605,170, with the actual spend being £1,912,640, a variance of £307,470 (19%). 3.4 The following key stakeholders are involved in the purchase, management, and usage of Council fuel. These are: Corporate – Responsible for procurement of fuel in bulk. Finance – Responsible for issuing charges to each service as per their usage of fuel and ensuring that invoices are paid as per corporate guidelines. Page 51 of 64
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Support Team – Responsible for regularly updating fuel system “FuelTran” with fuel deliveries for each depot, preparing KPIs reports, notifying fleet man- ager of any issues pertaining to fuel system and providing fuel reports from system. Services requesting fuel fob and fuel cards – Responsible for. • Ensuring the fuel fob/card use is appropriate and authorised. • Ensuring that correct mileages are entered for each transaction. • Ensuring the security of the fuel fob/cards at all times. • Requesting the appropriate fuelling method on the vehicle justification form or, should an alternative fuelling method be required after delivery, requesting this directly from the Fleet Manager The Fleet Manager is responsible for- the following aspects of fuel management; • Fuel card contract and its subsequent management. • Management of contract for bulk fuel and ad blue. • Management of contract for provision of electric charging. • The availability of appropriate fuel at all depots. • Appropriate contingency plans in place for fuel shortages. • Arranging the appropriate fuelling method as detailed on the Corporate Justification Form or subsequent requests. • Ensuring the safe delivery of fuel when at depot, ensuring the health & safety of staff, visitors and contractors on site. • Ensuring that all fuel is stored appropriately at depots with only authorised personnel having access when taking deliveries. • Ensuring only authorised staff can request fuel orders for depots and that they follow the procedure. • Undertaking an annual fuel usage audit and report discrepancies to Services to investigate. • Monitor and reduce amount of HGV idling. • Management of fuel software contract. 4. Scope and Limitations 4.1 The review consisted of identifying controls in place to ensure safe custody and appropriate utilisation of council fuel supplies. 4.2 The review identified and compiled a risk register for the management and custody of fuel and tested the adequacy and effectiveness of controls in place to mitigate those risks. 4.3 To arrive at an opinion on the achievement of the control objective, the review included interviews with officers and a review of systems and documents in use. 4.4 The contracting arrangements for the procurement of fuel was excluded from the scope of this review and may be considered for inclusion as part of future Internal Audit activity. Page 52 of 64
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5. Assessment of the Control Environment 5.1 The table below contains a summary of the findings against each control objective and Internal Audit’s assessment of the adequacy and effectiveness of the controls in place to meet each of the objectives agreed for this audit. Further details, including any improvement actions, are set out in the Management Action Plan. No. Control Objective Action Rating Control Objective Assessment 5 4 3 2 1 1 To ensure that arrangements are in place for the safe storage and utilisation of Council fuel supplies 4 6 4 Limited Assurance 5.2 The auditor has assessed that limited assurance can be placed on the controls in relation to custody and utilisation of council fuel supplies. 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. 5.3 A summary of the key findings and actions are provided in section 5. In addition, the following areas of good practice which have been highlighted during the audit: • There are policies and procedures for fuel management. • Fuel Fobs and Fuel Cards are used to obtain fuel from the pumps. • Disbursed fuel is captured in FuelTran system along with details such as fuel fobs, dates, litres, and date & time. • Access to Depots and fuel pumps is controlled and is subject to CCTV surveillance. • Services are recharged on monthly basis by the Finance team for fuel used. 6. Summary of Findings 6.1 Below is a summary of key findings and actions, which are reflected in the Management Action Plan, detailed in section 9. 6.2 Monthly Fuel Audit: The Fuel Policy requires a monthly audit to be carried out by Fleet Management with a comparison being made between actual fuel /held in tanks and that expected within the FuelTran system. Fleet Management informed us that this exercise has not been completed since the COVID pandemic, but an annual exercise has been undertaken. The Service recognises that this is a key control in identifying discrepancies, which will be re-established. Action Point 1 Page 53 of 64
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6.3 Override of fuel readings in the FuelTran system: The Council uses the FuelTran system for managing its fuel. This system captures the disbursement of fuel from pumps but it is not linked to the tanks at the depots, to capture the actual fuel in those tanks. When a delivery is received into the tank, the Depot Supervisor enters the quantity of each delivery received as per the delivery note into the FuelTran system. Depot Supervisors can adjust the quantity of fuel recorded in the FuelTran system by entering manual adjustments. The Depot Supervisor and Fleet Assistant Manager stated that these adjustments are done when there are discrepancies between fuel quantity as per the system and fuel in tank measured using dipstick. The usual reasons for discrepancies were a time lag between the manual process of the fuel being delivered and the details of the delivery being recorded on Fueltran. During this lapse in time fuel may be withdrawn by multiple vehicles on a daily basis creating a discrepancy. Other reasons for smaller scale discrepancies might include the manufacturers stated margin of loss which is deemed to be between 0.5% and 1%, presence of condensation and the fuel settling down after delivery causing the gauge needle to jump around. There is no oversight of the manual adjustments made in the system as they are as they are not reported to Fleet Management nor investigated. Action Point 2 6.4 Monitoring fuel budget: The audit revealed that there were variances between the budget and actual expenditure on fuel. It is a Services responsibility to monitor their own budgets for the draw down of fuel. To enable this, summary information is provided to Services by the Finance team, once it has been reviewed by the Assistant Fleet Manager. There is scope to improve the provided to Services in order to ensure that they are able to fully monitor the usage by their vehicles and plant. Action Point 3 6.5 Fuel disbursements: Fuel is issued for vehicles and plant via fuel fobs or fuel cards, based on the completion of a justification sheet, and the appropriate assessment and approval from Services and Fleet Management. From a sample of 19 fuel fobs/cards for the period April 2022 to March 2023, with total usage of £505,630, justification sheets were not available for 13 fobs/cards, which represented 68% of spend. A further sample of 16 fuel fobs/cards for the period from April 2023 to October 2023 with total usage of £215,353 was reviewed and the justification sheets could not be located for 74% of spend. The Service advised that they believed this to be as a result of moving between a paper and electronic method of capturing and storing these forms and they were confident that the fuel fobs and cards in use would have had appropriate authorisation prior to their being issued. Action Point 4 6.6 Fuel Fobs / Fuel cards disabled from system: Fuel fobs / cards are disabled from the FuelTran system once they are no longer to be used for that Page 54 of 64
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vehicle. These can then be re-issued to other vehicles as required. Whilst records were held which recorded fobs/cards being disabled, only the month was recorded rather than the exact date. Action Point 5 6.7 Faulty fuel gage and fuel pump instruments: Fuel pumps in use record individual disbursements of fuel against the relevant fuel fob. The pumps also have the facility to record cumulative fuel disbursements from when a delivery has been received. These pump readings should be recorded for each delivery, however this has not been possible in all cases because of a broken gage at the Friarton pump. Fleet Management was not aware of this fault. Action Point 6 6.8 Policies and Procedures: Fleet Management have policies and procedures in place, however some of the fuel management procedures are out of date (e.g. procedures for the safe delivery of fuel), and are no longer relevant and have not been updated since 2015. Action Point 7 6.9 Receiving Fuel at Depots: The audit found that delivery notes held were not always signed by Council staff to verify receipt of delivery. The majority of fuel is delivered to Friarton and Blairgowrie, where fuel delivery is always supervised. During discussion, it was revealed that Council staff are sometimes not present during fuel delivery at Kinross, Crieff and Pitlochry, which tends to be when there has been a breakdown in communication regarding the timing of these deliveries and the relevant foreman is not on site at the time of delivery. Where this has occurred, the foreman will undertake a reasonableness check with reference to the tank Guage. The lack of Council staff being present to receive the delivery is not in accordance with fuel procedures. Action Point 8 6.10 Fuel usage per fleet or per mechanical equipment: As noted in 5.4 above, it is difficult to predict fuel usage on some of the larger vehicles by calculating miles per vehicle, due to the hydraulic connected to the engine which means they can be using fuel whilst not travelling any distance. However, it was noted that there was no analysis of fuel usage per vehicle or per mechanical equipment in order to identify any vehicle that is using more fuel than usual. The fuel budget is not based on mileage per vehicle or hours per mechanical equipment, this makes it difficult to analyse fuel usage per vehicle. The fuel usage of each vehicle is recorded into the system. However, no independent verification is done of odometer of the vehicles or equipment to confirm figures in the system. Action Point 9 6.11 Ordering Fuel: There is no specified quantity re-order level figure set and approved by Fleet Management for ordering fuel, instead it is left to the discretionary of each Depot supervisor to place an order for fuel as and when they need it. Action Point 10 Page 55 of 64
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7. Conclusion 7.1 The Internal Audit review is able to place limited assurance on the overall control environment for Climate Change at this time. The agreed actions, once implemented, should enable Internal Audit to place reasonable assurance on these. 8. Acknowledgements 8.1 Internal Audit would like to thank all officers who were involved in this audit: A Brown, Assistant Fleet Manager. P Taggart, Fleet Manager L Dow, Support Service J McMahon, Friarton Depot Supervisor F Souter, Finance Officer. N Taylor, Direct Services Manager 9. Action Implementation & Follow up 9.1 Responsibility for the maintenance of adequate and effective controls rests with management. Where the audit has identified areas for management action, these are identified in the Management Action Plan. Where a decision is taken by management not to act in response to finding from this review, it is the responsibility of management to assess and accept the risk arising from non-implementation. 9.2 Achievement of the agreed actions is monitored through Internal Audit’s ‘follow up’ arrangements. Page 56 of 64
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10. Management Action Plan Action Point Para. No Finding Risk Rating Agreed Action & Evidence Action Owner Target Completion Date 1 6.2 Monthly Fuel Audit The Fuel Policy requires a monthly audit to be carried out by Fleet Management with a comparison being made between actual fuel held in tanks and that expected within the FuelTran system. Fleet Management informed us that this exercise has not been completed since the COVID pandemic, but recognise that this is a key control in identifying discrepancies, which should be re- established. 4 The monthly audit lapsed during the covid pandemic and has not recommenced following the Fleet Manager leaving. 1. A quarterly audit of all the depots fuel will be carried out by Fleet Manager. Any discrepancies will be identified, investigated and any adjustments will be recorded with a reason and signed off by Fleet Manager. 2. The Fuel Policy will be updated regarding the frequency of this audit. P Taggart, Fleet Manager P Taggart, Fleet Manager April 2024 April 2024 2 6.3 Override of fuel readings in the FuelTran system: There is no oversight of the manual adjustments made in the system as they are as they are not reported to Fleet Management nor investigated.. 4 1. A record of any changes will be kept and any adjustments will be reviewed and verified by an officer designated by A Brown, Assistant Fleet Manager April 2024 Page 57 of 64
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the Fleet Manager. Following this, a yearly audit will be carried out. 2. In addition the service is exploring installing new gauges and are also looking at the possibility of a direct link between the fuel tank gauge and Fueltran. 3 6.4 Monitoring fuel budget: It is a Services responsibility to monitor their own budgets for the draw down of fuel. To enable this, summary information is provided to Services by the Finance team, once it has been reviewed by the Assistant Fleet Manager. There is scope to improve the provided to Services in order to ensure that they are able to fully monitor the usage by their vehicles and plant. 2 1. The information provided to Services will be expanded to include All information provided to Fleet Management to enable Services to better monitor their fuel usage. This will highlight if their year’s spend is on target and highlight in advance if there will be an overspend. 2. This matter will also be added to the agenda of the quarterly fleet user group for consideration. P Taggart, Fleet Manager April 2024 Page 58 of 64
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4 6.5 Fuel disbursements: From a sample of 19 fuel fobs/cards for the period April 2022 to March 2023, with total usage of £505,630, justification sheets were not available for 13 fobs/cards, which represented 68% of spend. A further sample of 16 fuel fobs/cards for the period from April 2023 to October 2023 with total usage of £215,353 was reviewed and the justification sheets could not be located for 74% of spend. The Service advised that they believed this to be as a result of moving between a paper and electronic method of capturing and storing these forms and they were confident that the fuel fobs and cards in use would have had appropriate authorisation prior to their being issued. 3 1. Each Service will be provided with a list of fuel fobs and cards currently issued to their vehicles and Services will be required to confirm and validate their fobs/cards in use. 2. Going forward, a record of all justification forms will be filled in a central point. A Brown, Assistant Fleet Manager A Brown, Assistant Fleet Manager April 2024 April 2024 5 6.6 Fuel Fobs / Fuel cards disabled from system Fuel fobs / cards are disabled from the FuelTran system once they are no longer to be used for that vehicle. These can then be re-issued to other vehicles as required. Whilst records were held which recorded fobs/cards being disabled, only the month was recorded rather than the exact date. 3 A new spreadsheet has been established for when a fuel fob has been disabled. This includes the date of disablement, the vehicle registration and the fuel fob number, the new vehicle that the fob has been reallocated to and date. The key fob number or card number will be entered on to our fuel management system Key2 and a reconciliation will be carried out quarterly. L Dow. Support Services Officer April 2024 Page 59 of 64
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6 6.7 Pump readings should be recorded for each delivery, however this has not been possible in all cases because of a broken gage at the Friarton pump. Fleet Management was not aware of this fault. 3 Fleet Management will ensure that the broken gauge is fixed, as part of an existing service contract. If required, new fuel gauges will be fitted which will be connected to the fuel tanks and new gauges fitted to the fuel pumps. When gauges are fitted, the Service will arrange to carry out a calibration test of the gauges every 6 months. A yearly audit will take place at each financial year and will be recorded. P Taggart, Fleet Manager September 2024 7 6.8 Policies and Procedures: Fleet Management have policies and procedures in place, however some of the fuel management procedures are out of date (e.g. procedures for the safe delivery of fuel), and are no longer relevant and have not been updated since 2015 2 The Fleet Manager will review the policies and procedures to ensure that they are fit for purpose and remain relevant and ensure that staff are aware of the revised procedures. P Taggart, Fleet Manager May 2024 8 6.9 Receiving Fuel at Depots: Delivery notes held were not always signed by Council staff to verify receipt of delivery. During discussion, it was revealed that Council staff are sometimes not present during fuel delivery.. 3 The Service will ensure that the Foreman at the outlying depots will take delivery of fuel, sign the delivery note given by the fuel company and scan the A Brown, Assistant Fleet Manager March 2024 Page 60 of 64
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delivery note to a designated member of staff who will enter the delivery into Fueltran. 9 6.10 Fuel usage per fleet or per mechanical equipment: As noted in 6.4 above, it is difficult to predict fuel usage on some of the larger vehicles by calculating miles per vehicle, due to the hydraulic connected to the engine which means they can be using fuel whilst not travelling any distance. However, it was noted that there was no analysis of fuel usage per vehicle or per mechanical equipment in order to identify any vehicle that is using more fuel than usual. The fuel budget is not based on mileage per vehicle or hours per mechanical equipment, this makes it difficult to analyse fuel usage per vehicle. The fuel usage of each vehicle is recorded into the system. However, no independent verification is done of odometer of the vehicles or equipment to confirm figures in the system. 3 A report will be provided to services showing their fuel spend and will highlight the top four and the lowest four vehicles/equipment. The responsible person for fuel for each service will be provided with access to Fueltran to check and verify the vehicle mileages they are responsible for. A Brown, Assistant Fleet Manager April 2024 10 6.11 Ordering Fuel: There is no specified quantity re- order level figure set and approved by Fleet Management for ordering fuel, instead it is left to the discretionary of each Depot supervisor to place an order for fuel as and when they need it. 2 An agreed fuel level will be set for each depot depending on usage. This will be entered into the Fueltran system. A Brown, Assistant Fleet Manager March 2024 Page 61 of 64
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11. Authorisation 11.1 The auditor for this assignment was I Iman. The supervising auditor was J Clark. This report is authorised for issue: 12. Distribution 12.1 This report has been distributed to: T Glen, Chief Executive B Renton, Executive Director (Communities) A Williams, Director, Economy, Place & Learning C Mailer, Director, Strategy, People & Resources F Crofts, Strategic Lead – Environment M Butterworth, Head of Environmental & Consumer Services N Taylor, Direct Services Manager P. Taggart, Fleet Manager A Brown, Assistant Fleet Manager L Simpson, Head of Legal & Governance Committee Services External Audit 13. Assessment Definitions 13.1 The following table contains the definitions of the control objective assessment. Control Objective Assessment Level of assurance Definition 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. 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. 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. 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. Page 62 of 64
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13.2 The following table contains the definitions applied by Internal Audit in rating audit findings/actions. Risk Rating for Individual Findings Rating Rating description Definition 5 Critical Significant observations / major concerns which require immediate action. Management will need to add these to the appropriate Service risk register Issue represents a control weakness which could cause, or is causing, severe disruption of the process or severe adverse effect on the ability to achieve process objectives 4 High Significant observations regarding the absence / failure of key controls requiring urgent action. Management should consider adding these to the appropriate Service / divisional risk register Issue represents a control weakness which could have, or is having, major adverse effect on the ability to achieve process objectives 3 Medium Observations regarding the effectiveness of key controls requiring reasonably urgent action. Management should consider these when updating any divisional / team risk registers Issue represents a control weakness which could have, or is having, significant adverse effect on the ability to achieve process objectives 2 Low Minor observations regarding the adequacy of controls which require action to improve the efficiency, effectiveness, or economy of operations or which otherwise require to be brought to the attention of Senior Management Issue represents a minor control weakness with minimal but reportable impact on the ability to achieve process objectives 1 Trivial / Minor Very minor observations which will be raised during the audit and may not be included within the final report Issue represents a very minor control weakness with negligible impact on the ability to achieve process objectives. The issue will be raised during the audit and may not be included within the final report. Page 63 of 64
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