Document Pack - Audit Committee - 11 June 2025
West Dunbartonshire Council · 11 June 2025
Back to Audit Committee — 11 June 2025 and its agenda
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Agenda Audit Committee Date: Wednesday, 11 June 2025 Time: 14:00 Venue: Civic Space, 16 Church Street, Dumbarton G82 1QL Contact: Lynn Straker, Committee Officer lynn.straker@west-dunbarton.gov.uk committee.admin@west-dunbarton.gov.uk Dear Member Please attend a meeting of the Audit Committee as detailed above. The business is shown on the attached agenda. Yours faithfully PETER HESSETT Chief Executive Page 1
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Distribution: Councillor Gordon Scanlan (Chair) Provost Karen Murray Conaghan (Vice Chair) Councillor Ian Dickson Councillor Fiona Hennebry Councillor John Millar Councillor Martin Rooney Councillor Clare Steel Councillor Sophie Traynor All other Councillors for information Chief Executive Chief Officers Date of issue: 29 May 2025 Page 2
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AUDIT COMMITTEE WEDNESDAY, 11 JUNE 2025 AGENDA 1 APOLOGIES 2 DECLARATIONS OF INTEREST Members are invited to declare if they have an interest in any of the items of business on this agenda and the reasons for such declarations. 3 MINUTES OF PREVIOUS MEETINGS 7 - 8 Submit for approval, as a correct record, the Minutes of Meeting of the Audit Committee held on 19 February 2025. 4 OPEN FORUM The Committee is asked to note that no open forum questions have been submitted by members of the public. 5 INTERNAL AUDIT PLAN 2024/25 – PROGRESS TO 9 - 39 30 APRIL 2025 Submit report by Chief Officer – Resources advising Members of progress to 30 April 2025 against the Internal Audit Plan for 2024/25. 6 PUBLIC INTEREST DISCLOSURES AND OTHER 41 - 46 INTERNAL AUDIT INVESTIGATIONS 1 NOVEMBER 2024 TO 31 MARCH 2025 Submit report by Chief Officer – Resources advising Members of the outcome of investigations into allegations and disclosures in line with public interest disclosure and business irregularities policies received by Internal Audit between 1 November 2024 and 31 March 2025. 7 EXTERNAL AUDIT PROGRESS REPORT 47 - 57 Submit report by Director of External Auditor – Forvis Mazars, providing an update on the External Audit Progress report. 8/ Page 3
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8 EXTERNAL AUDIT ENQUIRIES – 2023/24 ACCOUNTS 59 - 71 Submit report by Chief Officer – Resources informing Members of External Audit’s requirement for the provision of information regarding the Council’s approach to dealing with fraud, litigation, laws and regulations as part of their audit of the Council’s 2023/24 Statement of Accounts and 2023/24 Trust Accounts. 9 INTERNAL AUDIT ANNUAL REPORT TO 31 MARCH 2025 73 - 85 Submit report by Chief Officer – Resources advising Members of the work undertaken by Internal Audit in respect of the 2024/25 Annual Audit Plan and advising Members of the contents of the Assurance Statement given to Members of West Dunbartonshire Council, the Chief Executive and the Section 95 Officer (Chief Officer - Resources) in support of the Annual Governance Statement. This report outlines how audit assurances are obtained. 10 ANNUAL REPORT ON THE AUDIT COMMITTEE 87 - 92 Submit report by Chief Officer – Resources providing Members with the Audit Committee Chair’s 2024/25 Annual Report on the Audit Committee 11 REVIEW OF INTERNAL AUDIT CHARTER 93 - 102 Submit report by Chief Officer – Resources providing Members with the updated Internal Audit Charter (the Charter) for approval. The Charter defines the terms of reference for the Council’s Internal Audit function to carry out its role to enable the Chief Audit Executive to prepare the annual Internal Audit opinion on the adequacy of the Council’s overall control environment. 12 CODE OF GOOD GOVERNANCE AND ANNUAL 103 - 112 GOVERNANCE STATEMENT 2024/25 Submit report by Chief Officer – Resources advising Members of the outcome of the annual self-evaluation undertaken of the Council’s compliance with its Code of Good Governance and inviting Members to consider the Annual Governance Statement that will be published in the Council’s Abstract of Accounts. 13 TREASURY MANAGEMENT STRATEGY AND 113 - 149 ANNUAL INVESTMENT STRATEGY Submit report by Chief Officer – Resources providing Members with the opportunity to further scrutinise the Treasury Management Strategy Statement and Annual Investment Strategy and the indicators contained within. 14/ Page 4
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14 GLOBAL INTERNAL AUDIT STANDARDS 149 - 154 Submit report by Chief Officer – Resources informing Members of the new Global Internal Audit Standards (UK public sector) that came into effect from 1 April 2025 and internal audit teams in the public sector will be working to implement these new internal audit standards by 31 March 2026. ________________________________________________________________________ Page 5
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AUDIT COMMITTEE At a Meeting of the Audit Committee held in Council Chambers, Clydebank Town Hall, 5 Hall Street, on Wednesday, 19 February 2025 at 10.00 a.m. Present: Provost Karen Murray Conaghan and Councillors Ian Dickson, Fiona Hennebry, Martin Rooney, Gordon Scanlan, Claire Steel and Sophie Traynor. Attending: Peter Hessett, Chief Executive; Laurence Slavin, Chief Officer – Resources; Laura Mason, Chief Officer – Education; Victoria Rogers, Chief Officer – People and Technology; Amanda Graham, Chief Officer – Citizen, Culture and Facilities; Andi Priestman, Shared Service Manager – Audit and Fraud; Caleb Oguche, External Auditor – Forvis Mazars and Lynn Straker, Committee Officer. Apologies: Apologies for absence were intimated on behalf of Councillor John Millar and Gail MacFarlane, Chief Officer – Roads and Neighbourhood. Councillor Gordon Scanlan in the Chair DECLARATIONS OF INTEREST It was noted that there were no declarations of interest in any of the items of business on the agenda. MINUTES OF PREVIOUS MEETING The Minutes of Meeting of the Audit Committee held on 4 December 2024 were submitted and approved as a correct record. OPEN FORUM The Committee noted that no open forum questions had been submitted by members of the public. Item 3 Page 7
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INTERNAL AUDIT PLAN 2024/25 – PROGRESS TO 31 DECEMBER 2024 A report was submitted by the Chief Officer – Resources advising of progress to 31 December 2024 against the Internal Audit Plan for 2024/25. After discussion and having heard the Shared Service Manager – Audit Fraud, the Chief Officer – Resources and the Chief Officer – Education in further explanation and in answer to Members’ questions, the Committee agreed to note the contents of this report. STRATEGIC RISKS 2022-2027 A report was submitted by the Chief Officer – People and Technology providing an update on the strategic risks for 2022-2027. After discussion and having heard the Chief Officer – People and Technology, the Chief Executive and the Chief Officer – Resources in further explanation and in answer to Members’ questions, the Committee agreed to note the strategic risks as detailed in the report. TREASURY MANAGEMENT MID-YEAR REPORT 2024/2025 A report was submitted by the Chief Officer – Resources providing Members with the opportunity to further scrutinise the Prudential Indicators on treasury management to 30 September 2024. After discussion and having heard the Chief Officer – Resources in further explanation and in answer to Members’ questions, the Committee agreed:- (1) to note the treasury management stewardship information within the appended report; (2) to approve the 2024/25 revised estimates of treasury and prudential indicators as advised within the appended report (Tables A, B, C, D, E, F, H, L and N); and (3) to note that the appended report will be referred to the Audit Committee for further scrutiny. The meeting closed at 10.32 a.m. Page 8
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WEST DUNBARTONSHIRE COUNCIL Report by Chief Officer – Resources Audit Committee: 11 June 2025 Subject: Internal Audit Plan 2024/25 – Progress to 30 April 2025 1. Purpose 1.1 The purpose of this report is to advise Members of progress to 30 April 2025 against the Internal Audit Plan for 2024/25. 1.2 The report also advises Members of: • recently issued Internal Audit reports and action plans • the status of implementation progress relating to action plans from previously issued Internal Audit reports. 2. Recommendations 2.1 It is recommended that Members note the contents of this report. 3. Background 3.1 The annual audit plan for 2024/25 was approved by the Audit Committee on 4 December 2024. This report provides information on the progress in implementing the plan. 3.2 When audit reports are issued by Internal Audit, an action plan is agreed with management in relation to issues highlighted by the audit report. Progress on implementing the actions is monitored by Internal Audit on a monthly basis and reported to the Audit Committee. 4. Main Issues 4.1. The annual audit plan sets out the audit coverage for the year utilising available staff resources to enable the Shared Service Manager – Audit & Fraud to provide the annual internal audit opinion regarding the adequacy and effectiveness of internal control within the Council. 4.2 In accordance with the risk-based audit methodology, for each audit, one of four audit opinions is expressed: Strong In our opinion there is a sound system of internal controls designed to ensure that the organisation is able to achieve its objectives. Satisfactory In our opinion isolated areas of control weakness were identified which, whilst not systemic, put some organisation objectives at risk. Item 5 Page 9
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Requires Improvement In our opinion systemic and/or material control weaknesses were identified such that some organisation objectives are put at significant risk. Unsatisfactory In our opinion the control environment was considered inadequate to ensure that the organisation is able to achieve its objectives. 4.3 Detailed findings and recommendations reported to management are graded using the following criteria: Red In our opinion the control environment is insufficient to address the risk and this could impact the Council as a whole. Corrective action must be taken and should start immediately. Overseen to completion by Corporate Management Team. Amber In our opinion there are areas of control weakness which we consider to be individually significant but which are unlikely to affect the Council as a whole. Corrective action must be taken (some exceptions may be agreed with Internal Audit) within reasonable timeframe. Overseen to completion by Chief Officer/Head of Service. Green In our opinion the risk area is well controlled or our audit highlighted areas for minor control improvement and/or areas of minor control weakness. Process improvements/efficiencies may be actioned at management discretion in consultation with Internal Audit. Managed by service owner. Not reported in Audit Committee papers. 4.4 There were 2 audit reviews finalised since the February 2025 Audit Committee. Void Management (May 2025) 4.5 The Council has a legal duty to ensure void (empty) properties meet the legal Re- Let Standards prior to a new tenancy agreement being entered into. The Council has 10,444 housing properties and aims to minimise the number of empty properties by effectively managing a high standard maintenance and repair service to ensure a quick efficient turnaround process is in place to avoid lost rental income. The average turnaround time to inspect and repair empty homes is 12 days, but actual days recorded in quarter 2 of 2024-25 was 15 days. Despite not achieving this target, the average length of time to re let properties target is 30 days which was exceeded with 27.6 days for quarter 2. This performance indicator is reported to the Scottish Housing Network on a quarterly basis. 4.6 The objective of this audit was to provide management and the Audit Committee with an assessment of the adequacy and effectiveness of the governance, risk management and control procedures surrounding the key risks in relation to the void management process. 4.7 The review focused on the high-level processes and procedures in relation to void management and concentrated on identified areas of perceived higher risk such as correct void management actions are not initiated in a timely manner, the amount of Page 10
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voids rental loss is not completely and accurately calculated and voids repair costs are not completely and accurately budgeted and monitored in a timely manner. 4.8 The update of Council Tax records for void properties was excluded from this review as this will be subject to a separate audit of the council tax billing and collection process. 4.9 The overall control environment opinion was Satisfactory. There were 4 AMBER issues identified as follows: Adequacy of Tenant Rechargeable Repairs Process (Amber) When a property becomes void, Building Services Officers (BSO) perform inspections to assess any work required to be carried out as standard before a new tenant moves in. Items left behind by the former tenants in the void properties require to be cleared out prior to any repair work being carried out. The audit identified that former tenants are not being fully recharged for personal items left and cleared out of the properties. The total clear out costs from 01.04.2024 to 31.10.2024 amounted to £248k of which only £153k has been invoiced as a recharge to former tenants. It was noted that clear out recharge costs are exempt on void properties when a former tenant has died. Where the clearing out recharge process to former tenants is not adequate there is a risk that the Council may not recover these additional costs. Adequacy of Job Costing Process (Amber) The Council’s Schedule of Rates is used for raising the void job orders on the QL Housing Management System for the in-house team. However, the audit identified that officers responsible for raising the job orders currently do not estimate the labour time and therefore the operatives are not provided with an expected timescale to complete the job. In the absence of accurately estimating labour time when job orders are raised, there is a risk that resource allocation and cost control may not be properly managed resulting in unanticipated delays, overspends and/or increased backlogs. Lack of monitoring and authorisation of repairs costs to void properties (Amber) During 2024-25 expenditure approval limits were agreed for repair work being carried out to void properties. This allowed Building Services to approve up to £12k of expenditure per property. Where costs were greater than £12k, further approval from Housing Operations was required. Audit testing identified that for 2 properties, although the estimated repair costs were under £12k, the actual costs were in excess of the agreed approval limit but approval was not sought from Housing Operations. Where there is no authorisation of additional costs and monitoring of job progression there is a risk that costs are not being properly controlled. Page 11
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Value for Money when using external contractors (Amber) Between September and December 2024 there was a reduction in the number of void property and high value repair jobs being carried out. However, the audit identified that only one contractor from the approved list is currently undertaking void repairs jobs. Competitive quotes are not being obtained in line with procurement processes to ensure value for money is achieved prior to issuing these void property repair jobs. Where a sufficient number of quotes are not obtained when issuing jobs to contractors, there is a risk that value for money cannot be demonstrated. 4.10 The audit identified 8 issues, 4 of which we consider to be individually significant and an action plan is in place to address all issues by 30 November 2025. Housing Repairs and Maintenance (May 2025) 4.11 Building Services deliver the Councils’ Maintenance, Repairs and Capital Funded Asset Improvement Projects such as new kitchen/bathroom installations and roof renewals. The service is responsible for carrying out repairs/alterations, capital investment improvements and safety checks to Tenant & Owner Occupied properties factored by West Dunbartonshire Council on an annual basis. Building Services currently work from 3 depots, namely Cochno Street, Clydebank covering the geographical area of Clydebank and Overburn Avenue & Elm Road, Dumbarton covering both Alexandria and Dumbarton geographical areas. The 2024/25 Housing Revenue Account repairs and maintenance budget was set at £14.983m. 4.12 The objective of this audit was to provide management and the Audit Committee with an assessment of the adequacy and effectiveness of the governance, risk management and controls over the key risks faced by West Dunbartonshire Council in relation to Housing Repairs & Maintenance. 4.13 The audit excluded repairs and maintenance in respect of non-domestic properties which is managed by the Resources Service as this would be subject to a separate audit review. 4.14 The overall control environment opinion was Requires Improvement. There were 2 RED and 11 AMBER issues identified as follows: Adequacy of Housing Client Function (Red) The audit identified that there is no separate client function within Housing. Currently Building Services deliver a repairs and maintenance service for West Dunbartonshire Council’s housing stock and the budgets for housing repairs (i.e. the client) fall under the same service area. This has resulted in a number of issues including: • There is limited financial oversight from Housing Services in relation to the housing repairs and maintenance budget to ensure best value repairs are being ordered, authorisation limits are adhered to and orders are raised against the correct budget. Page 12
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• Housing Services do not monitor and scrutinise the performance of Building Services and external contractors in relation to repairs and maintenance. • Current budget reports produced by Finance capture actual costs incurred by the repairs and maintenance team, however forecasting of expenditure is difficult as significant cost variations can be applied to jobs by the repairs and maintenance team in terms of original estimates versus final costs. Where there is no separate monitoring function within housing there is a risk that the repairs and maintenance service provided is not efficient or does not deliver value for money to tenants of rented properties. Lack of Checking of Overtime Claims (Red) The audit identified that there are no controls in place to ensure that overtime claimed by operatives working for the emergency call out service are valid and appropriate for the hours worked. Specifically, supervisors approve overtime claims without carrying out any checks to ensure the hours claimed were valid. The total amount of overtime paid for the period 1 April 2024 to 31 March 2025 in relation to emergency callouts was £536,284. Where supervisors do not check that the overtime claimed was valid and appropriate, there is a risk that invalid claims are processed and fraud or error goes undetected. Adequacy of Stock Control Procedures (Amber) The audit identified some issues regarding the adequacy of stock control procedures as follows: • Although stock items have a unique identifier (commodity code) there is no barcoding system in use which results in the QL Housing Management System requiring to be updated manually when items are entered into and removed from stores. The audit identified that the manual input and update of stores records is time-consuming and prone to human error and can result in difficulties when reconciling stock. • The functionality of the QL Housing Management System for automatic re- ordering of materials when the minimum level has been reached has not been fully developed. Stock is re-ordered based on the experience of stores staff. • In relation to stock checks, there are no perpetual stock checks carried out throughout the year. The stock is only reconciled once a year as part of the year end process. • Due to current staffing issues, physical security surrounding the stores is not sufficient to prevent unauthorised access. • There is no documented guidance for staff working in the stores. Where manual processes are prone to human error, this may result in some items being unavailable when required. Lack of regular stock counts could result in errors, losses or thefts occurring which may go undetected. Page 13
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Lack of Recovery Plan to Reduce Overspend (Amber) The HRA 2024/25 responsive repairs budget was set at £7.1m with a forecast savings target of circa £200k. The budget savings target was planned to be managed by the repairs service becoming more efficient and the introduction of a new repairs policy in 2024/25 to manage demand on a more prioritised and cost- effective basis to deliver a balanced budget. The audit identified the HRA 2024/25 budget forecast revenue expenditure was circa £8m at the September Building Services Board and there was no documented recovery plan setting out measures required to reduce the overspend and deliver a balanced HRA responsive repairs budget for 2024/25. Ineffective budget monitoring, forecasting and the absence of clear action plans to reduce overspends and deliver a balanced budget in this area can lead to financial instability and limits the ability to make informed financial decisions. Adequacy of Monitoring the Schedule of Rates for Specifying and Controlling Repairs & Maintenance Work (Amber) The Schedule of Rates is updated on the QL Housing Management System to reflect changes to material and labour costs for each standard repair job carried out, however operatives and contractors have significant discretion over job variations i.e. the actual labour time to perform standard jobs and additional materials used. The audit identified that there is no review of costs and performance to ensure that repairs and maintenance jobs undertaken are within agreed industry standards. Failure to review and monitor costs and ensure performance against repairs and maintenance jobs are within the agreed industry standards can lead to poor budget management and in terms of forecasting expenditure could result in unanticipated budget overspends and inaccurate performance measurement and reporting. Lack of Post Inspections (Amber) In relation to post inspections, the new Housing Repairs Policy approved by the Housing Committee in November 2024 states ‘We will carry out post inspections of a range of repairs to ensure that they are completed to a high standard’. However, it is not specific in terms of the number/targets of post inspections to be carried out. From discussions with senior officers, due to conflicting demands on resources, post inspections are not being carried out. Where post inspections are not carried out, management cannot be confident that service standards and the right first-time strategy are being adhered to. Page 14
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Inefficient Allocation of Resources (Amber) The audit identified that the Dynamic Resource Scheduling system is not working efficiently. This is mainly due to the service relying on manual intervention when scheduling multi-trade jobs due to a lack of system functionality which results in Job Planners having to manually assign jobs to multiple operatives over multiple dates which is time-consuming to undertake. Failure to use the Dynamic Resource Scheduling System efficiently will result in the continuation of manual intervention more specifically for multi-trade jobs which is time-consuming and not an efficient use of Job Planners time. Lack of Risk Assessments – secondary employment (Amber) The audit identified that for those employees with secondary employment, risk assessments had not been carried out. Where employees have secondary employment and risk assessments have not been carried out, there is a risk that performance at work could be impacted or a conflict of interest has occurred which has not been properly managed. Adequacy of Monitoring of Vehicle Usage (Amber) The audit identified that although there are some vehicle tracking reports reviewed and management intervention carried out by service supervisors/managers, there is no consistency in the approach taken in relation to how investigations should be carried out where issues have been identified e.g. erratic driving or journeys outside West Dunbartonshire Council boundaries. Where adequate monitoring is not carried out, there is a risk that the service cannot demonstrate that vehicles are being efficiently and effectively utilised. Completeness and Accuracy of Right First Time Performance Indicator (Amber) Within the West Dunbartonshire Council Housing Charter there is an agreed performance indicator for Right First Time reactive repairs. The audit identified that this indicator is prepared by one officer using data extracted from the QL Housing Management System however there is no independent check of the indicator to ensure completeness and accuracy. Where there is no independent check of performance indicator calculations management cannot be confident that the performance indicator reported is correct. Lack of a Standard Operating Procedures Manual (Amber) There are a number of manual processes which are not covered by QL Housing Management System procedures and written procedural guidance is not available for these processes. Where no comprehensive procedures manual is in place there is a risk that processes are not carried out in a consistent manner or at all. Page 15
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Compliance with HMRC Benefit in Kind Guidelines (Amber) A Home Start Protocol is in place for operatives who have been allocated a Council vehicle. The audit identified the following issues: • The protocol was last reviewed and approved in February 2016. Management have confirmed that the protocol is planned to be reviewed by 30 September 2025. • The protocol states that data from tracker and fuel emission technologies will be used to monitor fleet movements’, however routine checks of vehicle tracking is not carried out by management to ensure employees are complying with the protocol. • The protocol states that employees will be required to sign a personal use disclaimer form on an annual basis however these were last signed off by relevant employees in March 2022. Failure to adhere to HMRC guidelines may result in incorrect taxation for employees and the potential for fines being imposed on the council. Adequacy of Contract Monitoring(Amber) Building Services enters into a number of contracts for the supply of goods and materials and for the execution of works. For service led procurement between £10,000 and £49,999, the procuring service is required to log details of the planned contract with procurement through populating the contract award notice on PCS quick quote unless a framework has been agreed. Audit testing identified some issues in relation to a specific supplier including: • The supplier was not identified on the register of suppliers on Public Contracts Scotland (PCS). • Management were unable to provide sufficient evidence to demonstrate that the correct procurement route had been followed. • Expenditure incurred from 1/4/24 to 31/12/24 for this supplier was in excess of £60,000. The corporate procurement team should lead procurement of contracts in excess of £50,000 but in this case they have had no involvement. In addition, although key budgets are monitored there is no monitoring undertaken at an individual contract level. Where there is a lack of contract management and monitoring, management cannot be confident that all contracts are being managed in accordance with relevant financial regulations. 4.15 The audit identified 16 issues, 2 of which we consider to be material control issues and 11 of which we consider to be non-material systemic control issues resulting in an overall control environment opinion of Requires Improvement. 4.16 An action plan is in place to address all issues by 31 March 2026 and a follow up audit will be undertaken as part of the 2026/27 internal audit plan to provide additional assurance on this area. Page 16
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4.17 In relation to audit work for the Integration Joint Board, work is now complete for the 2024/25 audit plan with regular reporting to the Integration Joint Board Audit & Performance Committee. 4.18 In relation to the Valuation Joint Board, the audit for 2024-25 is now complete. 4.19 In relation to the Leisure Trust, audit planning is underway. 4.20 Internal Audit Action Plans In relation to audit action plans, these are monitored by Internal Audit on a monthly basis. The status report at 30 April 2025 is provided at Appendix 2. Ongoing Corporate Fraud Team Work 4.21 The Corporate Fraud team’s day to day work continues to focus on referrals relating to council tax reduction/single person discounts, joint working with DWP in relation to housing benefit and council tax reduction, referrals relating to housing tenancies and investigating relevant national fraud initiative matches. 4.22 The Internal Audit Team and the Corporate Fraud Team continue to work together as appropriate in order to ensure a joined-up approach to fraud investigation and detection for example in relation to whistleblowing enquiries. National Fraud Initiative 4.23 The National Fraud Initiative is a series of biennial exercises run by the Cabinet Office and Audit Scotland to identify or prevent fraud and error by matching electronic data held by public bodies. Participating bodies are required to investigate data discrepancies within a set timescale and report back on any savings. 4.24 In relation to the 2024 exercise, a significant number of matches have now been received at 30 April 2025 in relation to a range of datasets including Housing Benefit, Council Tax Reduction, Payroll, Business Rates, Creditors and Blue Badges. Progress is as follows: Matches Received Number Investigated No Issue Fraud (1) Error (2) Value of Fraud/Error 8243 610 524 6 80 £4312.36 (1) Fraud relates to CTR cases where income was not declared. Recovery is in progress. (2) Errors relate to blue badges which had not been cancelled on the system and one case where CTR was not updated in relation to a deceased case. Benchmarking 4.25 In accordance with the Council’s Strategic Improvement Framework, the Council’s Internal Audit service continues to be part of a benchmarking group which involves seven other Councils. 4.26 Meetings will continue to take place during 2025 to review performance and identify other areas for sharing of best practice. Page 17
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5. People Implications 5.1 There are no people implications. 6. Financial and Procurement Implications 6.1 The Corporate Fraud Team activity can result in actual recoveries, charges and re-billings. The total amount of actual recoveries, charges and re-billings identified from 1 April 2024 to 31 March 2025 was £123,651. 6.2 There are no procurement implications arising from this report. 7. Risk Analysis 7.1 There is a risk that failure to deliver the Internal Audit Plan would result in an inability to provide a reasonable level of assurance over the Council’s system of internal financial control to those charged with governance. The main basis for providing assurance is coverage of the planned risk-based audits. Every endeavour is made to ensure that no material slippage occurs in risk-based audits by concentrating resources on these audits. 8. Equalities Impact Assessment (EIA) 8.1 There are no direct equalities impacts arising from the report however where an agreed action results in a change in process this will be considered for equalities impact by the relevant service. 9. Consultation 9.1 This report has been subject to consultation with appropriate Chief Officers. 10. Strategic Assessment 10.1 This report helps ensure strong governance and will help support delivery of the Council Plan, and in particular priority 4: Inclusive and Adaptable, with the Council seeking to provide high quality and adaptable services that deliver value for money. .................................... Laurence Slavin Chief Officer - Resources Date: 13 May 2025 Person to Contact: Andi Priestman, Shared Service Manager – Audit & Fraud E-mail: andi.priestman@west-dunbarton.gov.uk Appendices: 2024/25 Annual Audit Plan – Progress to 30 April 2025 (Appendix 1) Status of Internal Audit Action Plans at 30 April 2025 (Appendix 2) Internal Audit Reports - Copies available on request Page 18
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Wards Affected: All wards Page 19
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2024-2025 Internal Audit Annual Audit Plan – Progress to 30 April 2025 Audit/Status Not Started Planning Fieldwork Fieldwork Complete Draft Report Final Report Date Reported to Audit Committee Risk-Based Reviews Void Management ✓ ✓ ✓ ✓ ✓ June 2025 Housing Repairs and Maintenance ✓ ✓ ✓ ✓ ✓ June 2025 Budgetary Control ✓ Participatory Budgeting ✓ Corporate Procurement ✓ Regularity Audits Payroll High Earners – Quarterly Review 2024-25 exercise is underway. Residential Care Homes – Overtime Not started. Other Work Integration Joint Board – Internal Audit Service The 2024/25 audit plan is complete. Valuation Joint Board – Internal Audit Service The 2024/25 audit plan is complete. Leisure Trust – Internal Audit Service The planning for the 2024/25 audit is underway. National Fraud Initiative Matches for the 2024 Exercise have now been received and investigations are underway. Completion of 23/24 Audit Plan Audits Completed: Debt Recovery; UK Shared Prosperity Fund; Commercial Waste Income Billing and Collection. Item 5 Appendix 1 Page 21
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REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTION PLANS AT 30 APRIL 2025 Summary: Section 1 Summary of Management Actions due for completion by 30/4/2025 There were 4 actions due for completion by 30 April 2025, 3 actions have been reported as completed and for one action, a revised completion date has been agreed. Section 2 Summary of Current Management Actions Plans at 30/4/2025 At 30 April 2025 there were no audit reports delayed due to management not finalising the action plan within agreed timescales. Section 3 Current Management Actions at 30/4/2025 At 30 April 2025 there were 63 current audit action points. Section 4 Analysis of Missed Deadlines At 30 April 2025 there were 4 audit action points where the original agreed deadline has been missed. Section 5 Summary of Action Plan Points by Audit Year Item 5 Appendix 2 Page 23
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REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTION PLAN POINTS SUMMARY OF ACTION PLANS DUE FOR COMPLETION BY 30.04.2025 SECTION 1 Strategic Area No. of Actions Due No. of Actions Completed Deadline missed Revised Date set* Deadline missed Revised Date to be set* Roads and Neighbourhood 1 1 Housing and Employability 3 3 Total 4 3 1 * These actions are included in the Analysis of Missed Deadlines – Section 4 Page 24
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REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTION PLAN POINTS SUMMARY OF CURRENT ACTION PLANS AT 30.04.2025 SECTION 2 CURRENT ACTIONS BY STRATEGIC AREA Roads and Neighbourhood Due for completion June 2025 1 Due for completion December 2025 1 Total Actions 2 HSCP - Health and Community Care Due for completion June 2025 1 Total Actions 1 Education Learning and Attainment Due for completion May 2025 1 Total Actions 1 Regulatory & Regeneration Due for completion June 2025 1 Total Actions 1 Housing & Employability Due for completion May 2025 10 Due for completion June 2025 24 Due for completion July 2025 8 Due for completion August 2025 4 Due for completion September 2025 3 Due for completion November 2025 1 Due for completion December 2025 1 Due for completion January 2026 1 Due for completion March 2026 7 Total Actions 59 Total current actions: 64 Page 25
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REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTION PLAN POINTS CURRENT ACTION PLANS AT 30.04.2025 SECTION 3 Status Key On track Complete Overdue – update required Missed original due date Current Internal Audit Action Plans Supplier Management (Report Issued March 2023) Code Agreed Action Status Original Due Date Due Date Assigned To Managed By IAAP/158 HSCP Formal Contract and Supplier Management (Amber) Development of a Contracts Register to be stored centrally and controlled by the CCQ Team. By the due date it will have been developed to include a risk register in RAG format to cover contract start date, end date, extension date, CI scores, spend status, Quality monitoring information. Risk register will also be used to programme in more to review services well ahead of contract end date. 31-Dec-2023 30-Jun-2025 HSCP Head of Strategy and Transformation Chief Officer HSCP Board Fleet Management (Report Issued May 2023) Code Agreed Action Status Original Due Date Due Date Assigned To Managed By IAAP/176 Lack of measuring of individual vehicle efficiency/Co2 emissions (Amber) Management will further consider reporting of Co2 emissions as part of the net zero strategy and transition to electric vehicles. In relation to vehicle efficiency, as fuel efficiency is affected by individual driver style, management will consider whether driver information scores could be collated and provided to management to prioritise or target individual training. 31-Oct-2024 30-Jun-2025 Chief Officer Roads and Neighbourhood Chief Officer Roads and Neighbourhood Page 27
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REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTION PLAN POINTS CURRENT ACTION PLANS AT 30.04.2025 SECTION 3 Status Key On track Complete Overdue – update required Missed original due date CSA Education Procedures (Report Issued May 2024) Code Agreed Action Status Original Due Date Due Date Assigned To Managed By IAAP/231 Adequacy of School Fund Procedures A review of the procedures will be undertaken and updated to reflect up to date practice and provide sufficient guidance to staff involved in maintaining and managing school funds. A copy of the updated school fund procedures will be disseminated to Heads of establishments. 31-Mar-2025 31-May-2025 Senior Education Officer Chief Officer – Education, Learning and Attainment Code Agreed Action Status Original Due Date Due Date Assigned To Managed By IAAP/235 Procurement Awareness Training Chief Officer, Regulatory & Regeneration is hoping to recruit to the vacant Procurement Manager post by early June 2024. The incoming Procurement Manager will be provided with the opportunity to agree the revised training and guidance. 31-Aug-2024 30-Jun-2025 Chief Officer, Regulatory & Regeneration Chief Officer, Regulatory & Regeneration Corporate Procurement below £10k (Report Issued June 2024) Page 28
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REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTION PLAN POINTS CURRENT ACTION PLANS AT 30.04.2025 SECTION 3 Status Key On track Complete Overdue – update required Missed original due date UK Shared Prosperity Fund Assurance Review (Report Issued June 2024) Code Agreed Action Status Original Due Date Due Date Assigned To Managed By IAAP/237 Inadequate policies and procedures to support closure of the fund (Amber) Management are in regular discussions with Government officials about continuity of UKSP Funds. Should these discussions prove to be unsuccessful and there is no further funding from this source, WDC has a full set of HR policies relating to staff terms and conditions and processes for dealing with the loss of funding. We will begin to implement the appropriate course of action three months in advance of the fund closing. As an update, the funding has been extended into Year 4 (25/26) and a report will be presented to IRED Committee in February 2025 on further year funding. 31-Dec-2024 31-Dec-2025 Chief Officer Housing & Employability/ Chief Officer, Resources Chief Executive Void Management (Report Issued May 2025) Code Agreed Action Status Original Due Date Due Date Assigned To Managed By IAAP/255 /1 Adequacy of Tenant Rechargable Repairs Process (Amber) As part of Void working group remit conduct annual review of pre-termination process and paperwork, unless required to be reviewed sooner. 31-Aug-2025 31-Aug-2025 Housing Operations Manager Chief Officer Housing and Employability IAAP/255 /2 Adequacy of Tenant Rechargable Repairs Process (Amber) Introduced new work code to identify clear out recharges, to allow CAS to include description when issuing re-charge letter. 30-Jun-2025 30-Jun-2025 IHMS Change Officer Chief Officer Housing and Employability IAAP/255 /3 Adequacy of Tenant Rechargable Repairs Process (Amber) Review recharge process to include guidance for staff to follow should previous tenant query/dispute recharge amount invoiced for and be incorporated into Void Procedure and Recharge processes. 30-Jun-2025 30-Jun-2025 Maintenance Manager/ Housing Operations Manager Chief Officer Housing and Employability Page 29
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REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTION PLAN POINTS CURRENT ACTION PLANS AT 30.04.2025 SECTION 3 Status Key On track Complete Overdue – update required Missed original due date Code Agreed Action Status Original Due Date Due Date Assigned To Managed By IAAP/255 /4 Adequacy of Tenant Rechargable Repairs Process (Amber) Design and implement new PowerBi clear out report. 31-Jul-2025 31-Jul-2025 Housing Operations Manager Chief Officer Housing and Employability IAAP/256 /1 Adequacy of Job Costing Process (Amber) Review how SORs labour times and QL system data is being used by supervisors to ensure effective resource planning and implement any necessary changes to ensure and improve efficiency. 30-Jun-2025 30-Jun-2025 Maintenance Manager Chief Officer Housing and Employability IAAP/256 /2 Adequacy of Job Costing Process (Amber) Review the existing reporting cycle for void property estimated costs against recharge costs to ensure these are effective and informative. 30-Jun-2025 30-Jun-2025 Building Services Manager Chief Officer Housing and Employability IAAP/256 /3 Adequacy of Job Costing Process (Amber) Continue to report void management data at appropriate forums including Building Services Board. 31-Mar-2026 31-Mar-2026 Housing Operations Manager Chief Officer Housing and Employability IAAP/257 /1 Lack of monitoring and authorisation of repairs costs to void properties (Amber) Review void authorisation processes with Housing Operations and agree if further checks and balances within empty homes management are necessary. 30-Jun-2025 30-Jun-2025 Building Services Manager Chief Officer Housing and Employability IAAP/257 /2 Lack of monitoring and authorisation of repairs costs to void properties (Amber) Review in-service variation processes and identify necessary improvement actions. 30-Jun-2025 30-Jun-2025 Maintenance Manager/IHMS Change Officer/ Support Services Coordinator Chief Officer Housing and Employability IAAP/257 /3 Lack of monitoring and authorisation of repairs costs to void properties (Amber) Implement any necessary changes to the variation process and agreed authorisation processes. 31-Jul-2025 31-Jul-2025 Housing Operations Manager Chief Officer Housing and Employability IAAP/258 /1 Ensuring Value for Money when using external contractors (Amber) Carry out a review of non-specialist void contractor rates and compare against the National Schedule of Housing Rates to establish if these are comparable and provide Value for Money. 30-Jun-2025 30-Jun-2025 Contracts Co- ordinator Chief Officer Housing and Employability IAAP/258 /2 Ensuring Value for Money when using external contractors (Amber) Carry out analysis of the anticipated demand for non-specialist contractors for void properties repairs in 2025/2026 and 2026/2027. 30-Jun-2025 30-Jun-2025 Maintenance Coordinators/ Contract Coordinator Chief Officer Housing and Employability Page 30
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REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTION PLAN POINTS CURRENT ACTION PLANS AT 30.04.2025 SECTION 3 Status Key On track Complete Overdue – update required Missed original due date Code Agreed Action Status Original Due Date Due Date Assigned To Managed By IAAP/258 /3 Ensuring Value for Money when using external contractors (Amber) If appropriate arrange and carryout a full tender exercise to engage a void property contractor from an existing framework or arrange an open tender exercise. 30-Nov-2025 30-Nov-2025 Contracts Manager Chief Officer Housing and Employability Housing Repairs and Maintenance (Report Issued May 2025) Code Agreed Action Status Original Due Date Due Date Assigned To Managed By IAAP/263 /1 Adequacy of Housing Client Function (Red) Carry out a review of the Client Function to identify any areas that require improvement to ensure quality, value for money repair and maintenance services are provided. 31-Jul-2025 31-Jul-2025 Building Services Manager Chief Officer Housing and Employability IAAP/263 /2 Adequacy of Housing Client Function (Red) Implement any necessary Client Function changes identified. 31-Mar-2026 31-Mar-2026 Building Services Manager Chief Officer Housing and Employability IAAP/263 /3 Adequacy of Housing Client Function (Red) Develop Building Services 2025/2026 improvement action plan to include appropriate financial management, service costs recovery and budget management actions. 30-Jun-2025 30-Jun-2025 Building Services Manager Chief Officer Housing and Employability IAAP/263 /4 Adequacy of Housing Client Function (Red) Present Building Services 2025/2026 improvement action plan to the Building Service Board for approval. 30-Jun-2025 30-Jun-2025 Building Services Manager Chief Officer Housing and Employability IAAP/263 /5 Adequacy of Housing Client Function (Red) Complete actions within Building Services 2025/2026 action plan. 31-Mar-2026 31-Mar-2026 Building Services Manager Chief Officer Housing and Employability IAAP/263 /6 Adequacy of Housing Client Function (Red) Carry out a review of variation procedure and authorisation limits and implement any necessary changes ensuring robust procedures are in place and provide value for money services. 30-Jun-2025 30-Jun-2025 Contracts Co- ordinator/ Support Services Co-ordinator Chief Officer Housing and Employability Page 31
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REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTION PLAN POINTS CURRENT ACTION PLANS AT 30.04.2025 SECTION 3 Status Key On track Complete Overdue – update required Missed original due date Code Agreed Action Status Original Due Date Due Date Assigned To Managed By IAAP/264 /1 Lack of Checking of Overtime Claims (Red) Develop an out of hours report of work completed in overtime from QL Housing Management System data. 30-Apr-2025 30-Apr-2025 IHMS Change Officer Chief Officer Housing and Employability IAAP/264 /2 Lack of Checking of Overtime Claims (Red) Ensure responsible officers are checking overtime claims completed by craft team members and these reconcile with the out of hours report before approval and presentation to Coordinators. 30-Jun-2025 30-Jun-2025 Maintenance Manager Chief Officer Housing and Employability IAAP/264 /3 Lack of Checking of Overtime Claims (Red) Review and update Building Services overtime request, approval and payment processes. 31-May-2025 31-May-2025 Building Services Manager Chief Officer Housing and Employability IAAP/264 /4 Lack of Checking of Overtime Claims (Red) Rollout revised overtime request, approval and payment process to responsible officers. 31-May-2025 31-May-2025 Maintenance Manager Chief Officer Housing and Employability IAAP/264 /5 Lack of Checking of Overtime Claims (Red) Monitor and review revised processes to ensure effectiveness. 31-Jul-2025 31-Jul-2025 Building Services Manager Chief Officer Housing and Employability IAAP/265 /1 Adequacy of Stock Control Procedures (Amber) Complete the procurement of an appropriate barcoding hardware and software solution. 30-Jun-2025 30-Jun-2025 Contracts Manager Chief Officer Housing and Employability IAAP/265 /2 Adequacy of Stock Control Procedures (Amber) Implement a barcoding solution to warehouse operations. 31-Jul-2025 31-Jul-2025 Contracts Co- ordinator Chief Officer Housing and Employability IAAP/265 /3 Adequacy of Stock Control Procedures (Amber) Present a decision paper to the IHMS Project Board to approve development of the automatic reordering module. 30-Jun-2025 30-Jun-2025 IHMS Change Officer Chief Officer Housing and Employability IAAP/265 /4 Adequacy of Stock Control Procedures (Amber) Following approval, complete necessary work implement, test and go live on QL system. 31-Aug-2025 31-Aug-2025 IHMS Change Officer Chief Officer Housing and Employability Page 32
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REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTION PLAN POINTS CURRENT ACTION PLANS AT 30.04.2025 SECTION 3 Status Key On track Complete Overdue – update required Missed original due date Code Agreed Action Status Original Due Date Due Date Assigned To Managed By IAAP/265 /5 Adequacy of Stock Control Procedures (Amber) Fully implement phase 2 of the review of Building Services structure in warehouse services. 31-May-2025 31-May-2025 Contracts Co- ordinator Chief Officer Housing and Employability IAAP/265 /6 Adequacy of Stock Control Procedures (Amber) Complete regular stock takes ensuring every commodity has been counted and anomalies identified are investigated and rectified. Provide stock valuation reports for 2024/2025. 31-May-2025 31-May-2025 Contracts Co- ordinator Chief Officer Housing and Employability IAAP/265 /7 Adequacy of Stock Control Procedures (Amber) Review warehouse facilities security arrangements and implement necessary changes ensuring stock is appropriately managed and secured. 31-May-2025 31-May-2025 Contracts Co- ordinator Chief Officer Housing and Employability IAAP/265 /8 Adequacy of Stock Control Procedures (Amber) Develop written procedures for stores and stock control to include version control and will be approved by the Chief Officer. 31-May-2025 31-May-2025 Contracts Co- ordinator Chief Officer Housing and Employability IAAP/265 /9 Adequacy of Stock Control Procedures (Amber) Training will be provided and distribution of the new procedures to all stores staff will be recorded in a register. Staff will sign the register to confirm receipt of the procedures. 31-May-2025 31-May-2025 Contracts Co- ordinator Chief Officer Housing and Employability IAAP/266 /1 Lack of Recovery Plan to reduce overspend (Amber) Develop a cost recovery plan for 2025/2026 and gain approval of the plan from the Building Services Board. 30-Jun-2025 30-Jun-2025 Building Services Manager Chief Officer Housing and Employability IAAP/266 /2 Lack of Recovery Plan to reduce overspend (Amber) Complete actions in the cost recovery plan for 2025/2026 reporting progress at the Building Services Board and other appropriate forums. 31-Mar-2026 31-Mar-2026 Building Services Manager Chief Officer Housing and Employability IAAP/266 /3 Lack of Recovery Plan to reduce overspend (Amber) Drive down tenant and resident reactive repair demand in line with the criteria within the new repairs policy. 31-Mar-2026 31-Mar-2026 Building Services Manager Chief Officer Housing and Employability IAAP/267 /1 Adequacy of monitoring of Schedule of Rates for Specifying and Controlling Repairs & Maintenance Work (Amber) Compare the percentage of variation on non emergency reactive repairs completed in 2024/2025 to previous years. 31-May-2025 31-May-2025 Contracts Co- ordinator Chief Officer Housing and Employability Page 33
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REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTION PLAN POINTS CURRENT ACTION PLANS AT 30.04.2025 SECTION 3 Status Key On track Complete Overdue – update required Missed original due date Code Agreed Action Status Original Due Date Due Date Assigned To Managed By IAAP/267 /2 Adequacy of monitoring of Schedule of Rates for Specifying and Controlling Repairs & Maintenance Work (Amber) Review in service variation processes and identify necessary improvement actions. 31-May-2025 31-May-2025 Maintenance Manager Chief Officer Housing and Employability IAAP/267 /3 Adequacy of monitoring of Schedule of Rates for Specifying and Controlling Repairs & Maintenance Work (Amber) Implement any necessary changes identified in the variation processes. 31-Jul-2025 31-Jul-2025 Maintenance Manager Chief Officer Housing and Employability IAAP/267 /4 Adequacy of monitoring of Schedule of Rates for Specifying and Controlling Repairs & Maintenance Work (Amber) Reduce the average percentage of variation on non emergency reactive repairs by 5% in 2025/2026 compared the level in 2024/2025. 31-Mar-2026 31-Mar-2026 Maintenance Manager Chief Officer Housing and Employability IAAP/268 /1 Lack of Post Inspections (Amber) Rollout interim workaround for the post inspection process. 30-Apr-2025 30-Apr-2025 IHMS Change Officer Chief Officer Housing and Employability IAAP/268 /2 Lack of Post Inspections (Amber) Complete fix in QL post inspection module. 30-Jun-2025 30-Jun-2025 Support Services Co-ordinator Chief Officer Housing and Employability IAAP/268 /3 Lack of Post Inspections (Amber) Monitor the post inspection process to ensure adherence identifying failures and review data at full management team weekly catch up meetings. 30-Jun-2025 30-Jun-2025 Maintenance Manager Chief Officer Housing and Employability IAAP/268 /4 Lack of Post Inspections (Amber) Report post inspection performance to Building Services Board and other appropriate forums. 30-Jun-2025 30-Jun-2025 Building Services Manager Chief Officer Housing and Employability IAAP/268 /5 Lack of Post Inspections (Amber) Review post inspection targets to ensure these are effective and repair standards are being met / improved. 30-Sep-2025 30-Sep-2025 Maintenance Manager Chief Officer Housing and Employability IAAP/269 /1 Inefficient Allocation of Resources (Amber) Include an action in the Building Services 2025/2026 improvement action plan to have an effective imprest stock provision in place. 30-Jun-2025 30-Jun-2025 Building Services Manager Chief Officer Housing and Employability Page 34
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REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTION PLAN POINTS CURRENT ACTION PLANS AT 30.04.2025 SECTION 3 Status Key On track Complete Overdue – update required Missed original due date Code Agreed Action Status Original Due Date Due Date Assigned To Managed By IAAP/269 /2 Inefficient Allocation of Resources (Amber) Develop alternative scheduling and appointment system to replace DRS. 31-Jul-2025 31-Jul-2025 IHMS Change Officer Chief Officer Housing and Employability IAAP/269 /3 Inefficient Allocation of Resources (Amber) Seek approval from Building Services Board to implement new system. 31-Aug-2025 31-Aug-2025 Building Services Manager Chief Officer Housing and Employability IAAP/269 /4 Inefficient Allocation of Resources (Amber) Implement new scheduling and appointment system. 30-Sep-2025 30-Sep-2025 Building Services Manager/IHMS Change Officer Chief Officer Housing and Employability IAAP/270 /1 Lack of Risk Assessments for Staff with Secondary Employment (Amber) Include a reminder in scheduled toolbox talks and team briefs team members require to inform management of any secondary paid work/employment as detailed within terms and conditions of employment. 30-Jun-2025 30-Jun-2025 Building Services Co-ordinators Chief Officer Housing and Employability IAAP/270 /2 Lack of Risk Assessments for Staff with Secondary Employment (Amber) Review and if necessary complete risk assessments for employees that have informed management of secondary paid work. 31-Aug-2025 31-Aug-2025 Building Services Co-ordinators Chief Officer Housing and Employability IAAP/271 /1 Adequacy of Monitoring of Vehicle Usage (Amber) Develop a formal fuel emission and tracking guidance procedure and rollout for use within service. 30-Sep-2025 30-Sep-2025 Contracts Manager Chief Officer Housing and Employability IAAP/271 /2 Adequacy of Monitoring of Vehicle Usage (Amber) Continue to monitor automated reports from webfleet system and take appropriate action in line with Fuel Emission and Tracking Protocol and appropriate Council policies. 31-Mar-2026 31-Mar-2026 Maintenance Manager/ Contracts Manager Chief Officer Housing and Employability IAAP/272 /1 Completeness and Accuracy of Right First Time Performance Indicator (Amber) Reconcile Right First Time data for year 2024/2025 and present performance information for review. 30-Jun-2025 30-Jun-2025 Building Services Support Oficer Chief Officer Housing and Employability IAAP/272 /2 Completeness and Accuracy of Right First Time Performance Indicator (Amber) Review performance data for accuracy. 30-Jun-2025 30-Jun-2025 IHMS Change Officer Chief Officer Housing and Employability Page 35
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REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTION PLAN POINTS CURRENT ACTION PLANS AT 30.04.2025 SECTION 3 Status Key On track Complete Overdue – update required Missed original due date Code Agreed Action Status Original Due Date Due Date Assigned To Managed By IAAP/273 /1 Lack of Standard Operating Procedure Manual (Amber) Review procedure file within x-drive to identify if there are gaps in available procedures that are not available within QL to ensure team members have appropriate guidance to effectively complete tasks. 30-Jun-2025 30-Jun-2025 Maintenance Co- ordinators Chief Officer Housing and Employability IAAP/273 /2 Lack of Standard Operating Procedure Manual (Amber) Develop and add any necessary procedures and processes to procedures file within the x-drive. 31-Dec-2025 31-Dec-2025 Maintenance Co- ordinators Chief Officer Housing and Employability IAAP/274 /1 Compliance with HMRC Benefit in Kind Guidelines (Amber) Instruct responsible officers to issue and collate signed personal use disclaimer forms for homestart team members for 2024/2025 year. 31-May-2025 31-May-2025 Maintenance Co- ordinators Chief Officer Housing and Employability IAAP/274 /2 Compliance with HMRC Benefit in Kind Guidelines (Amber) Review process for homestart personal use disclaimer protocol to ensure this is fit for purpose and exercise is carried out annually. 31-Jul-2025 31-Jul-2025 Projects Manager Chief Officer Housing and Employability IAAP/274 /3 Compliance with HMRC Benefit in Kind Guidelines (Amber) Carry out a review of the homestart protocol with workforce, TUs and transport service ensuring this remains fit for purpose. 31-Jan-2026 31-Jan-2026 Maintenance Manager/Projects Manager Chief Officer Housing and Employability IAAP/275 /1 Adequacy of Contract Monitoring (Amber) Instruct team to desist issuing work to the identified contractor. 30-Apr-2025 30-Apr-2025 Building Services Manager Chief Officer Housing and Employability IAAP/275 /2 Adequacy of Contract Monitoring (Amber) Review the Councils’ current term contracts and identify a suitable contract/contractor that is equipped to carry out the type of work required. Instruct team on revised process and details of the contractor to be engaged. 30-Jun-2025 30-Jun-2025 Contracts Manager/ Maintenance Manager Chief Officer Housing and Employability Page 36
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REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTION PLAN POINTS ANALYSIS OF MISSED DEADLINES AT 30.04.2025 SECTION 4 Status Key On track Complete Overdue – update required Missed original due date –new date set Report Agreed Action Original Due Date Revised Date Management Comments Supplier Management (March 2023) HSCP Formal Contract and Supplier Management (Amber) Development of a Contracts Register to be stored centrally and controlled by the CCQ Team. By the due date it will have been developed to include a risk register in RAG format to cover contract start date, end date, extension date, CI scores, spend status, Quality monitoring information. Risk register will also be used to programme in more to review services well ahead of contract end date. 31-Dec-2023 30-Sep-2024 30-Jun-2025 This works remains a key workstream for the HSCP however, a number of challenges and additional pressures on capacity have prevented the completion of this audit action by the due date. It is anticipated that the team will have concluded these other priority workstreams to allow them to complete this work by June 2025. Corporate Procurement Below £10k (Report Issued June 2024) Procurement Awareness Training (Amber) Chief Officer, Regulatory & Regeneration is hoping to recruit to the vacant Procurement Manager post by early June 2024. The incoming Procurement Manager will be provided with the opportunity to agree the revised training and guidance. 31-Aug-2024 30-Jun-2025 The new procurement modules are estimated to be published by mid- June and will include a <£10k module. Fleet Management (Report Issued May 2023) Lack of measuring of individual vehicle efficiency/Co2 emissions (Amber) Management will further consider reporting of Co2 emissions as part of the net zero strategy and transition to electric vehicles. In relation to vehicle efficiency, as fuel efficiency is affected by individual driver style, management will consider whether driver information scores could be collated and provided to management to prioritise or target individual training. 31-Oct-2024 30-Apr-2025 30-Jun-2025 Service agreements have been developed for services and piloted within Roads and Neighbourhood. The agreements contain a range of information that is recorded on’ fleetmaster’ and include the fleet list and associated costs for each service. This will provide services with a clear understanding of the ongoing costs. Comparative figures will be provided for each year to illustrate/monitor the changes in costs and fuel use which will assist in monitoring Co2 efficiency and collating/recording or transforming fuel use into carbon emission tonnage. The summary info in the agreement will include, for example the number and type of vehicles, annual maintenance costs, associated costs for the fleet and fuel usage. Discussions are ongoing with services to finalise all service agreements for implementation by 30 June 2025. Page 37
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REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTION PLAN POINTS CURRENT ACTION PLANS AT 30.04.2025 SECTION 4 Status Key On track Complete Overdue – update required Missed original due date Report Agreed Action Original Due Date Revised Date Management Comments CSA Education Procedures (May 2024) Adequacy of School Fund Procedures A review of the procedures will be undertaken and updated to reflect up to date practice and provide sufficient guidance to staff involved in maintaining and managing school funds. A copy of the updated school fund procedures will be disseminated to Heads of establishments. 31-Mar-2025 31-May-2025 The policy will be drafted by the end of March and discussed with Heads of Establishment at the May Business Meeting. Page 38
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REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTION PLANS SUMMARY OF ACTIONS BY AUDIT YEAR SECTION 5 Status at 30 April 2025 Audit Year No of Agreed Actions No of actions complete Current actions by Grade Red Amber Green* 2020/2021 25 25 0 0 0 2021/2022 51 50 0 0 1 2022/2023 51 46 0 2 3 2023/2024 62 47 0 3 12 2024/2025 80 8 10 49 13 Total 269 176 10 54 29 * Green actions are within the Council’s risk appetite and are therefore not included in Audit Committee reports. Page 39
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WEST DUNBARTONSHIRE COUNCIL Report by Chief Officer - Resources Audit Committee: 11 June 2025 Subject: Public Interest Disclosures and other Internal Audit Investigations 1 November 2024 to 31 March 2025 1. Purpose 1.1 The purpose of this report is to advise Committee of the outcome of investigations into allegations and disclosures in line with public interest disclosure and business irregularities policies received by Internal Audit between 1 November 2024 and 31 March 2025. 2. Recommendations 2.1 It is recommended that Members note the content of this report. 3. Background 3.1 A disclosure in the public interest is where a concern is raised by a Council employee about a danger or illegality that has a public interest aspect to it. A confidential reporting facility is managed by Internal Audit as part of the Council’s Public Interest Disclosure Policy. Internal Audit maintains a central record of all concerns raised under the Public Interest Disclosure Policy. All such disclosures are investigated by Internal Audit, including liaising with Services and HR as appropriate. 3.2 Members of the public can also contact Internal Audit to raise issues of concern and such matters are investigated as appropriate, although they are not regarded as public interest disclosures in terms of legislation. 4. Main Issues Public Interest Disclosure Cases 4.1 There were 4 outstanding cases from the previous report to Audit Committee on 4 December which require an update to this meeting. Ref/ Date Service Area Detail Status 01/0424 14/0924 21/1024 23/1024 27/1224 09.12.24 Roads & Neighbourhood Drug misuse by employees whist on duty. Referred to Service – ongoing. Item 6 Page 41
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Ref/ Date Service Area Detail Status 19/1024 23.10.24 Housing & Employability Potential breach of code of conduct/social media policy. Referred to Service – ongoing 20/1024 25.10.24 Road & Neighbourhood Allegation of bullying Referred to Service. Closed - no evidence to substantiate allegation however management action has been taken to remind staff of required operational practices. 22/1024 25.10.24 Housing & Employability Fraudulent Overtime Claims Closed - included in 2024-25 audit plan. 4.2 There were 11 new disclosures received during the period 1 November 2024 to 31 March 2025 as follows: Ref/ Date Service Area Detail Status 24/1124 01.11.24 Education, Learning and Attainment Health and Safety issue at gym facility. Referred to service – management action has been taken to resolve issue. 25/1124 29.11.24 Housing & Employability Potential breach of working practices. Investigation ongoing. 26/1224 04.12.24 Housing & Employability Allegation of corrupt working practices. Closed – included in 2024- 25 audit plan. 28/1224 10.12.24 HSCP Allegation of missing medication. Referred to service – medication audit carried out. No evidence to substantiate allegation however some process improvements were identified. 30/1224 16.12.24 Housing and Employability Misuse of Council vehicle. Referred to service – ongoing. 31/1224 19.12.24 HSCP Allegation of fraudulent overtime claims. Closed – included in 2024- 25 Audit Plan. 33/1224 31.12.24 HSCP Allegation of misuse of corporate purchase card. Closed – misuse identified and report issued to management and management action instigated. Page 42
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39/0225 20.2.25 Housing & Employability Allegation of recruitment irregularity. Closed – no irregularity identified. 40/0225 21.2.25 Roads and Neighbourhood Allegation of misuse of council vehicle. Closed - Referred to service. Management have carried out a number of random spot checks and there is no evidence to substantiate the allegation. 41/0225 21.2.25 HSCP Allegation of theft of council stock items. Links to previous investigation 12-0824. Review of stock control process will be included in 2025-26 audit plan. 43/0325 12.03.25 Roads & Neighbourhood Allegation that dog is being brought into workplace. Referred to service – no evidence to substantiate allegation but staff are reminded that no dogs are allowed on the premises. 4.3 Activity relating to public interest disclosure for recent reporting periods is as follows: Period No. of Cases 1st January 2017 to 30th June 2017 1 1st July 2017 to 31st December 2017 7 1st January 2018 to 30th June 2018 2 1st July 2018 to 31st December 2018 3 1st January 2019 to 30th June 2019 5 1st July 2019 to 30th June 2020 8 1st July 2020 to 31st December 2020 4 1st January 2021 to 18th August 2021 15 19th August 2021 to 31st January 2022 7 1st February 2022 to 15th July 2022 7 16th July 2022 to 18th January 2023 5 19th January to 18th July 2023 19 19th July 2023 to 24th January 2024 10 27th January to 31 October 2024 18 1 November 2024 to 31 March 2025 11 Other investigations (non public interest disclosure cases) 4.4 There were 3 outstanding other referrals investigated by Internal Audit during the period 1 November 2024 to 31 March 2025: Ref/ Date Service Area Detail Status 51/0324 25.3.24 Roads & Neighbourhood Allegation of misuse of drugs/alcohol whilst on duty. Referred to Service – ongoing. Page 43
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07/0524 10.5.24 HSCP Fraudulent overtime claims. Closed – audit included within 24/25 annual audit plan. 18/0924 27.9.24 Resources Allegation that some organisations are not being invoiced correctly or at all. Ongoing – draft report with recommendations for control improvement issued to management. 4.5 There were 9 new referrals received during the period 1 November 2024 to 31 March 2025 as follows: Ref/ Date Service Area Detail Status 29/1124 13.11.24 Regulatory and Regeneration Imprest discrepancy. Closed – unable to conclude on the reason for the discrepancy. Report with recommendations for control improvements issued to management. 32/1224 28.12.24 Regulatory and Regeneration Allegation of non- compliance with taxi licence conditions. Closed – Spot checks were carried out by the Service and no evidence was identified to substantiate the allegation. 34/0125 13.01.25 Housing and Employability Allegation of theft of Council materials. Closed – included in 2024/25 audit plan. 35/0125 24.01.25 Housing and Employability Allegation of misuse of council vehicle. Ongoing – draft report issued to management with recommendations. 36/0125 29.01.25 Roads and Neighbourhood Allegation of misuse of council facilities and theft of council resources for personal gain. Closed – links to previous referral. Recommendations made have not been fully implemented but are now being progressed. 37/0225 19.02.25 Roads and Neighbourhood Allegation of misuse of council vehicle. Ongoing. 38/0225 19.02.25 Citizens, Culture and Facilities Management Allegation of theft of council materials. Ongoing. 42/0225 27.02.25 Housing and Employability Allegation that staff are sitting around in vans for long periods of time and leaving work early. Closed – insufficient information provided in the referral to progress. 44/0325 13.03.25 Housing and Employability Allegation that staff are working elsewhere whilst off sick. Closed – allegation substantiated and report issued to management. Page 44
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4.6 Activity relating to other investigation referrals for recent reporting periods is as follows: Period No. of Cases 1st January 2017 to 30th June 2017 3 1st July 2017 to 31st December 2017 5 1st January 2018 to 30th June 2018 5 1st July 2018 to 31st December 2018 4 1st January 2019 to 30th June 2019 14 1st July 2019 to 30th June 2020 8 1st July 2020 to 31st December 2020 2 1st January 2021 to 18th August 2021 1 19th August 2021 to 31st January 2022 2 1st February 2022 to 15th July 2022 2 16th July 2022 to 18th January 2023 5 19th January to 18th July 2023 0 19th July 2023 to 24th January 2024 10 27th January to 31st October 2024 11 1st November 2024 to 31st March 2025 9 4.7 A follow up process is in place to ensure recommendations made have been implemented. Outcomes are used to inform internal audit planning for future years. 5. People Implications 5.1 There are no personnel implications with this report. 6. Financial and Procurement Implications 6.1 There are neither financial nor procurement implications with this report. 7. Risk Analysis 7.1 There are risks to the Council in financial, legal, operational and reputational terms of not providing a service to enable a disclosure in the public interest and to ensure that all public interest disclosure and other concerns raised with Internal Audit are properly investigated. 8. Equalities Impact Assessment (EIA) 8.1 There is no requirement to undertake an equality impact screening. 9. Consultation 9.1 This report has been subject to consultation with appropriate Chief Officers. Page 45
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10. Strategic Assessment 10.1 The Public Interest Disclosure Policy and Business Irregularity Procedures contribute to the Council's strategic priorities by ensuring that early warnings of malpractice may mitigate the extent of financial losses to the Council, contribute to better asset management by utilising employees to manage risks to the organisation's reputation and support fit for purpose services through the continuation and promotion of robust employment practice. .................................... Laurence Slavin Chief Officer - Resources Date: 11 June 2025 Person to Contact: Andi Priestman, Shared Service Manager – Audit & Fraud Email: andi.priestman@west-dunbarton.gov.uk Appendix: None Background Papers: Public Interest Disclosure Policy; Business Irregularity Procedures Wards Affected: All Page 46
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Audit Progress Report West Dunbartonshire Council May 2025 Item 7 Page 47
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Contents 1. Audit progress and update to our audit strategy and plan 2. Forvis Mazars and other relevant publications Page 48
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01Audit progress and update to our audit strategy and plan Page 49
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Audit progress and update to audit strategy and plan Purpose of this report This report provides the Audit Committee with information about progress in delivering our responsibilities as external auditors for West Dunbartonshire Council. 2023/24 audit status We are progressing our audit of the Council’s annual accounts for the year ended 31 March 2024. See page five for details of the matters outstanding at the time of reporting. We also include our audit timetable on page seven. We have met regularly with officers to discuss audit progress and will continue to do so. Changes to our audit approach We provided details of our intended audit approach in the Annual Audit Plan presented to you on 4 September 2024.The significant risks we identified remain as: ▪ Management override of controls ▪ Valuation of property, plant and equipment ▪ Valuation of the net defined benefit liability. We have reviewed and updated our risk assessment following the conclusion of the 2022/23 audit. This has resulted in us identifying an enhanced risk relating to the Council’s liabilities from service concession arrangements. See page six for a detailed description of the risk and our planned response. Materiality Our provisional materiality at the planning stage of the audit was set at £11.309m for the Council (Group: £11.523m) using a benchmark of 2% of gross revenue expenditure at surplus/deficit level, with performance materiality set at £7.916m for the Council (Group: £8.066m). We received updated financial statements on 28th March and reassessed the risk factors considered in setting materiality. This resulted in a revised performance materiality of £6.809m (Group: £6.936m). Our final materiality will be set when we receive the updated annual report and accounts with all corrected audit adjustments. 2024/25 Best Value thematic work - Transformation We have started our review of how the Council is redesigning services to maintain outcomes and deliver services more efficiently. We held an initial meeting with People and Change and Business Support officers in April and are scheduling further discussions with officers on community and third sector engagement in transformation projects. Page 50
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5 Status of our audit Our audit of the 2023/24 annual accounts is progressing. The main areas where work is outstanding are outlined below. Area of work Property, plant and equipment: We identified material differences between the fixed asset register and the annual accounts and valuation reports. Officers have investigated and identified issues with how depreciation and revaluation entries have been made in the asset register. Officers are reviewing and updating the asset register. We will require the updated asset register to complete our testing of this account area. High Area of work Leases: Officers are updating the schedule of leases where the Council is the Lessor. Supporting information provided for audit did not agree to the financial statements’ disclosure. We will perform sample testing of leases on receipt of the corrected schedule. Medium Area of work Other areas with outstanding queries: We are working with officers to obtain outstanding information to complete our audit work in the following areas: Financial Instruments, Cost of Service Expenditure, Taxation and Non-Specific Grant Income, Council and Group Cash Flow Statements, Short-Term Creditors, Movement in Reserves Statements and consolidation procedures. Medium Area of work Audit quality control and completion procedures: Our audit work is undergoing initial stages of review by the Engagement manager and director and further quality and compliance checks. In addition, there are residual procedures to complete, including updating post balance sheet event considerations to the point of issuing the opinion, obtaining management representations and agreeing adjustments to the final set of accounts. Medium Area of work Annual report and accounts and letter of representation: We will complete our final review of the annual report and accounts upon receipt of the signed version of the accounts and letter of representation. Low Status High - Likely to result in a material adjustment or a significant change to disclosures in the financial statements. Medium - Potential to result in a material adjustment or a significant change to disclosures in the financial statements. Low - Not considered likely to result in a material adjustment or a change to disclosures in the financial statements. Page 51
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Other key judgement areas 6 Enhanced risks Blank Description Fraud Error Judgement Planned response 1 Liabilities from service concession arrangements The Council has a Public Private Partnership (PPP) contract for the provision of three secondary schools and one primary school, and a Design-Build-Finance-Maintain (DBFM) contract for one secondary school. The contracts include the build of the schools as well as their maintenance and provision of related facilities over the period of each contract. The assets used to provide services at the schools are recognised on the Council’s Balance Sheet as operational assets and as a finance lease liability. The Council has recognised an asset of £131.6 million and a liability of £86.4 million for PPP and DBFM in its 2023/24 annual accounts. The method of accounting for service concession arrangements can be complex and involves management judgement. The Council has identified it as a critical accounting judgement. There is a potential risk of material misstatement if the Council does not appropriately account for its service concession arrangements. No Yes Yes We will address this risk by reviewing the processes and relevant controls that the Council has in place over the financial models. We will also: • update our understanding of the service concession arrangements at the Council; • review the current financial models to ensure they have been appropriately updated with the inputs and for any substantial changes; • test material inputs into the model and agree outputs to the annual accounts; and • review accounting policies and other related disclosures in the annual accounts to ensure they are in line with the Code. Page 52
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Planning and risk assessment Nov 2024 (Completed) • Planning our visit and developing our understanding of the Council • Initial opinion and Best Value risk assessments • Risk identification and assessment • Considering proposed accounting treatments and accounting policies • Developing the audit strategy and planning the audit work to be performed • Agreeing timetable and deadlines • Risk assessment analytical procedures • Determination of materiality Interim Dec 2024 – Jan 2025 (Completed) • Updating understanding of key business processes • Performing walkthroughs • Testing including tests of IT general controls • Reassessment of audit plan and revision if necessary • Quality review of unaudited annual accounts Fieldwork Feb – Aug 2025 (In progress) • Review of updated unaudited annual accounts • Delivering our audit strategy starting with significant risks and high-risk areas including detailed testing of transactions, account balances and disclosures • Detailed work to examine and assess wider scope and Best Value arrangements • Communicating progress and issues • Clearance meeting Completion Sept – Oct 2025 • Final review of annual accounts • Final engagement director review • Agreeing content of letter of representation • Reporting to the Council • Reviewing subsequent events • Signing the independent auditor’s report 7 Audit timeline Page 53
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02Forvis Mazars and other relevant publications Page 54
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Forvis Mazars and other relevant publications 1. Forvis Mazars – Local Government Risk Report 2025/26 The report deep dives into the known and emerging risks for Local Authorities in 2025/26, as well as what they should include in their internal audit plans. Link: Annual Local Government Risk Report for 2025/26 - Forvis Mazars - United Kingdom 2. Forvis Mazars – Public sector in focus: Charting the road ahead This report addresses the significant challenges faced by the public and social sectors, including economic pressures, workforce strategies, and rising demand for services. It emphasises the need for innovative strategies and effective partnerships to navigate these complexities and highlights the importance of operational and technological innovation to improve service delivery and build resilience in public sector organisations. Link: Public sector in focus: Charting the road ahead - Forvis Mazars - United Kingdom 3. Forvis Mazars – Industrial action and operational exposure: Lessons from Birmingham’s bin disruption Following on from recent industrial action by Birmingham City Council's waste collection contractors, this article highlights lessons from the disruption, including: - How third-party risk becomes operational risk; - Embedding third-party resilience into operations; and - A strategic approach to resilience. Link: Industrial action and operational exposure: Lessons from Birmingham’s bin disruption - Forvis Mazars - United Kingdom 4. Audit Scotland - Local government in Scotland: Financial bulletin 2023/24 This publication focuses on Scotland’s councils continued exposure to severe financial pressure and the need for continuous consultation with relevant stakeholders. Link: Local government in Scotland: Financial bulletin 2023/24 | Audit Scotland Page 55
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Forvis Mazars and other relevant publications (continued) 5. Audit Scotland – Council Tax rises in Scotland The publication "Council Tax rises in Scotland" by the Accounts Commission discusses the financial pressures leading all 32 Scottish councils to increase council tax rates for 2025/26, highlighting the need for transparent budget decisions and community engagement to manage rising costs and demands. Link: Council Tax rises in Scotland | Audit Scotland 6. Audit Scotland – Transparency, transformation and the sustainability of council services The publication "Transparency, transformation and the sustainability of council services" by the Accounts Commission highlights the urgent need for Scottish councils to adopt more transparent and transformative financial practices to ensure the sustainability of services amidst growing financial pressures. It emphasises the importance of clear budget decisions and community involvement in addressing these challenges. Link: Transparency, transformation and the sustainability of council services | Audit Scotland Page 56
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Contact Forvis Mazars Tom Reid Director Tom.Reid@mazars.co.uk Forvis Mazars LLPis theUK firm ofForvis Mazars Global, aleading global professionalservices network. Forvis Mazars LLPis a limited liability partnership registeredin EnglandandWaleswith registerednumberOC308299and with its registered officeat 30Old Bailey, London, EC4M 7AU. Registeredto carryon auditwork in theUK by theInstituteofCharteredAccountantsin England andWales.Details aboutour audit registration canbe viewed atwww.auditregister.org.uk under referencenumberC001139861. VATnumber: GB 839 835673 © Forvis Mazars 2025.All rights reserved. Page 57
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WEST DUNBARTONSHIRE COUNCIL Report by Chief Officer – Resources Audit Committee: 11 June 2025 Subject: External Audit Enquiries – 2023/24 Accounts 1. Purpose 1.1 The purpose of this report is to: • inform members of External Audit’s requirement for the provision of information regarding the Council’s approach to dealing with fraud, litigation, laws and regulations as part of their audit of the Council’s 2023/24 Statement of Accounts and 2023/24 Trust Accounts. • allow members to comment on the response related to ‘Those Charged with Governance’. 2. Recommendations 2.1 It is recommended the Audit Committee: • consider the enquiries for those charged with governance for the 2023/24 Council Accounts and 2023/24 Trust Accounts • approve the submission of the draft responses set out in appendix 1 for the Council and appendix 2 for the Trust Funds to the Council’s external auditors. 3. Background 3.1 As part of the annual audit approach taken by the Council’s external auditors, Forvis Mazars (Mazars), they seek responses to a range of enquiries concerning the Council’s approach and reporting arrangements for a number of key areas relating to themes surrounding fraud, litigation, laws and regulations together with some areas specific to the accounts such as related parties and estimates used in the accounts. The responses to these provided by officers will inform the approach taken by Mazars to the audit of the 2023/24 Accounts. 4. Main Issues 4.1. In addition to the officer enquiries, Mazars require a response to several enquiries relating to the arrangements for identifying, responding to and managing risks around fraud from ‘those charged with governance’. Details of the specific enquiries and a proposed response to each is provided in Appendix 1 for the Council and 2 for the Trust Funds for members to review and comment on ahead of agreeing the final version for submission to Mazars. 5. People Implications 5.1 There are no people implications. Item 8 Page 59
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6. Financial and Procurement Implications 6.1 There are no financial implications arising from this report. 6.2 There are no procurement implications arising from this report. 7. Risk Analysis 7.1 There are no specific risk implications arising from this report. 8. Equalities Impact Assessment (EIA) 8.1 There are no direct equalities impacts arising from the report. 9. Consultation 9.1 This report has been subject to consultation with appropriate Chief Officers. 10. Strategic Assessment 10.1 This report relates to strong corporate governance. .................................... Laurence Slavin Chief Officer - Resources Date: 11 June 2025 Person to Contact: Laurence Slavin, Chief Officer - Resources E-mail: laurence.slavin@west-dunbarton.gov.uk Appendices: 1 – External Audit Enquiries for Those Charged with Governance (WDC) 2 – External Audit Enquires for Those Charged with Governance (Trust Funds) Background Papers: None Wards Affected: All wards Page 60
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Item 8 Appendix 1 International Standard for Auditing 240 - The auditor’s responsibility to consider fraud in an audit of financial statements 1) How does the Committee, in its role as those charged with governance, exercise oversight of management's processes in relation to: • undertaking an assessment of the risk that the financial statements may be materially misstated due to fraud or error (including the nature, extent and frequency of these assessments); • identifying and responding to risks of fraud in the organisation, including any specific risks of fraud which management have identified or that have been brought to its attention, or classes of transactions, account balances, or disclosure for which a risk of fraud is likely to exist; • communicating to employees of views on business practice and ethical behaviour (for example by updating, communicating and monitoring against the organisation’s code of conduct); and • communicating to those charged with governance the processes for identifying and responding to fraud or error? Response The Council’s financial statements are prepared by experienced and professionally qualified accountants who are regulated by the standards of their respective institutes. The financial statements reflect the transactions which have been processed by the Council’s financial systems. These systems are protected by internal controls and procedures which are periodically reviewed and tested by internal audit and our external auditors. Consequently although the material misstatement cannot be ruled out, its likelihood is low. The Audit Committee provides oversight and challenge in relation to the financial statements and seeks assurances from the Chief Officer - Resources that the accounts are not materially misstated. Updates are provided to Audit Committee and/or full Council on key areas of the statement, any changes in accounting policies and their impact on the statements. The Audit Committee plays a key oversight role in relation to fraud and error identification. The Committee receives regular progress reports on anti-fraud activities taking place within the Council. The Council has a code of conduct which describes the standards of conduct and practice which all Council employees should follow. The code of conduct is a key component of the Council’s Code of Good Governance. The Council’s Whistleblowing Policy enables any individual to register, in confidence, any concerns regarding alleged misconduct and fraudulent or corrupt activity. This can be found on the Council’s website and intranet. 2) How does the Committee oversee management processes to identify and respond to the risk of fraud and possible breaches of internal control? Is the Committee aware of any breaches of internal control during 2023/24? Please provide details. Response It is the responsibility of management to develop and maintain sound systems of risk management, governance and internal control. This includes the requirement to identify and respond to any identified breaches of internal control. However it is noted that internal control systems, no matter how well designed and operated, are affected by inherent limitations. These include the possibility of poor judgement in decision making; human error; control processes being deliberately circumvented by employees and others; management overriding controls and Page 61
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Appendix 1 unforeseeable circumstances. In terms of oversight, the Council’s Internal Audit function plays a key role in this regard. Internal Audit work is not a substitute for management’s responsibilities for the design and operation of these systems, and is not responsible for identifying all significant control failures. However, the Internal Audit team has an important role in providing assurance on the Council’s control environment and providing a view on the Council’s processes for identifying control failures, and endeavours to plan its work so that work is focused on those areas where there is higher risk. A risk-based audit plan is produced annually based on best practice, taking cognisance of the strategic and operational risk registers and engagement with senior managers. The methodology for prioritising audit work is set out in the audit strategy and plan. Findings are reported as Red, Amber or Green which aligns with the Council’s risk management strategy. Red and Amber findings are reported to Audit Committee together with management’s agreed actions to address these issues. The Audit Committee receive a range of assurances/reports during the year which touch upon aspects of internal control. Reports in 2023/24 have included: • Annual Audit Plans from internal and external audit • Annual Internal Audit Report and Assurance Statement • Internal Audit progress reports • Code of Good Governance and the Annual Governance Statement • Accounting policies, Annual Accounts and External audit Annual Report • Treasury management annual report and updates • Regular reports on National Fraud Initiative • Risk management update on Strategic Risk register • Annual Complaints Report • Responses to External Audit Enquiries to Those Charged with Governance Where deemed necessary the Audit Committee will ask that a relevant officer of the Council is present at Audit Committee meetings to respond to questions on a report being presented. 3) Has the Committee knowledge of any actual, suspected or alleged fraud during the period 1 April 2023 – 31 March 2024? Where appropriate please provide details. Response A number of suspected/alleged instances of fraud occurred during 2023/24. These are detailed within the regular reports to Audit Committee. Cases included those relating to housing benefit/council tax and misuse of council resources. 4) Has the Committee any suspicion that fraud may be occurring within the organisation? Please provide details. • Has the Committee identified any specific fraud risks within the organisation? Please provide details. • Does the Committee have any concerns that there are areas within the organisation that are at risk of fraud? Please provide details. • Are there particular locations within the organisation where fraud is more likely to occur? Please provide details. Response As with any large and complex organisation there are a range of fraud risks and emphasis on reducing fraud risk is continuous. The results of the NFI, internal audit work and reported fraud show some low value frauds. Management and the Audit Committee is kept up to date with fraud risks through updates on counter fraud arrangements, Internal Audit and other ad hoc reports. Page 62
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Appendix 1 Fraud risks are acknowledged in key areas. Members and officers are aware of these and the risks are managed through established risk management processes. 5) Is the Committee satisfied that internal controls, including segregation of duties, exist and work effectively? Please provide details. • If not, where are the risk areas? • What other controls are in place to help prevent, deter or detect fraud? Response Key controls such as the segregation of duties, management review and supervision and authorisation and approval are evident in each of the Council’s core systems. It is acknowledged that maintaining an effective control environment is challenging in a time of reducing resources and a changing operating environment. For this reason, internal audit will have a continued role in supporting the Council in ensuring that an adequate but appropriate control environment is in place. In overall terms, Internal Audit have concluded that reasonable assurance can be provided on the Council’s system of internal control for 2023/24. 6) Is the Committee satisfied that staff are encouraged to report their concerns about fraud, and the types of concerns they are expected to report? Please provide details. Response The Council promotes a zero tolerance toward fraud and promotes a culture that enables individuals to identify potential fraud and empowers them to report their concerns in a safe and secure manner to the appropriate people at the right time. The means by which employees can report fraud are publicised on the Council’s intranet. Fraud issues are widely communicated both internally and externally to provides a deterrent to fraudsters by highlighting the Council’s commitment to identify fraud and take proactive action to pursue fraudsters. 7) From a fraud and corruption perspective, what are considered by the Committee to be high risk posts within the organisation? Please provide details. • How are the risks relating to these posts identified, assessed and managed? Response Fraud and corruption, and associated risks, come in many forms and, consequently, it is not easy to specifically identify specific posts where there are greater risks than others. However there is a general recognition that there is an inherent risk of fraud within an organisation like a Council and the risk of fraud is managed through existing controls and procedures which are in place across the organisation. The Committee takes assurance from the work of internal audit, the established fraud policies in place and ongoing embedding of a culture of fraud awareness through a programme of anti-fraud training and the work of the Council’s fraud team. This helps ensure that issues identified as a result of Internal Audit work or fraud investigations, result in recommendations to management to address gaps in control to ensure that risks are properly mitigated to acceptable levels. 8) Is the Committee aware of any related party relationships or transactions that could give rise to instances of fraud? Please provide details. • How are the risks associated with fraud related to such relationships and transactions mitigated? Response We are not aware of any related party relationships or transactions that could give rise to instances of fraud. Disclosure of significant related party relationships is required for both members and officers in positions of influence. Page 63
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Appendix 1 9) Is the Committee aware of any entries made in the accounting records of the organisation that it believes or suspects are false or intentionally misleading? Please provide details. • Are there particular balances where fraud is more likely to occur? Please provide details. • Is the Committee aware of any assets, liabilities or transactions that it believes were improperly included or omitted from the accounts of the organisation? Please provide details. • Could a false accounting entry escape detection? If so, how? • Are there any external fraud risk factors which are high risk of fraud? Please provide details. Response We are not aware of any accounting entries which are suspected to be false or intentionally misleading. Should management become aware of any suspect accounting entries, these would be subject to immediate investigation through Internal Audit. We are not aware of any assets, liabilities or transactions that have been improperly included or omitted from the Council’s accounts. Should any issues arise it is expected that these would be identified through review and approvals processes. The Council is a complex multidisciplinary organisation so there is a risk that management is unaware of any potential false accounting occurring however this is unlikely given the controls in place for processing transactions. An added control in this area is the review by the external audit team who provide added assurance for transactions which are in excess of the materiality value. Current and emerging risks are identified from a number of sources including the National Anti-Fraud Network (NAFN) and other law enforcement agencies. These are disseminated to relevant Council teams to raise awareness. 10) Is the Committee aware of any organisational, or management pressure to meet financial or operating targets? Please provide details. • Is the Committee aware of any inappropriate organisational or management pressure being applied, or incentives offered, to you or colleagues to meet financial or operating targets? Please provide details. Response The Committee understands that the Council has financial and operating targets to meet and these are progressed through normal management arrangements. However we are not aware of any inappropriate organisational or management pressure to meet financial or operating targets and there is no evidence of any incentive ever being offered to do so.. Monthly budget monitoring is conducted with Chief Officers and service managers and reconciliations of key balances are conducted monthly, and significant variances are investigated. There is regular reporting on Budgetary Control to relevant committees. International Standard for Auditing 250 – Consideration of laws and regulations in an audit of financial statements 11) How does the Committee gain assurance that all relevant laws and regulations have been complied with. For example: • Is the Committee aware of the process management has in place for identifying and responding to changes in laws and regulations? Please provide details. • What arrangements are in place for the Committee to oversee this process? • Is the Committee aware of the arrangements management have in place, for communicating with employees, non-executive directors, partners and stakeholders regarding the relevant laws and regulations that need to be followed? Please provide details. Page 64
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Appendix 1 • Does the Committee have knowledge of actual or suspected instances where appropriate laws and regulations have not been complied with, and if so is it aware of what actions management is taking to address it? Please provide details. Response The Council is subject to a range of legal and regulatory frameworks. The Council has a Local Code of Good Governance and has appointed a Monitoring Officer (Chief Officer Regulatory and Regeneration) to ensure that the Council acts lawfully. All committee reports are subject to legal review and comment to ensure key issues are identified. The Council’s Chief Officer Regulatory and Regeneration is a member of the Senior Management Team and is sighted on any new strategic projects or initiatives with the Council’s Legal Services having specialist officers who provide legal advice and support to particular service areas. As required, training is provided to officers on particular legal issues, some of it being mandatory, for example around data protection and equalities. Accepting that there will be minor operational instances of non-compliance, we are not aware of any instances of significant non-compliance during the financial year. This is supported by the annual review of the Local Code of Good Governance. International Standard for Auditing 501 – Specific consideration of the potential for, and actual, litigation and claims affecting the financial statements 12) Is the Committee aware of any actual or potential litigation or claims that would affect the financial statements? Please provide details. Response The Council’s financial statements disclose contingent liabilities and any provisions for legal claims. The Council’s S95 Officer engages with members of the Council’s Senior Management Team, including the Chief officer Regulatory and Regeneration Service (Council’s Monitoring Officer) as part of the annual accounts preparation process to identify any ongoing or potential cases which require disclosure in the financial statements. International Standard for Auditing 570 – Consideration of the going concern assumption in an audit of financial statements 13) How has the Committee assessed and satisfied itself that it is appropriate to adopt the going concern basis in preparing the financial statements? Response Going concern has been assessed as part of Council’s budget setting process in March 2024. The budget setting process requires the Council’s s95 Officer (Chief Officer - Resources) to provide a view on the robustness of estimates and the adequacy of reserves. No issues in relation to going concern were highlighted as part of the report presented alongside the financial accounts to the Council in October 2024. 14) Has the Committee identified any events or conditions since the assessment was undertaken which may cast significant doubt on the organisation’s ability to continue as a going concern? Please provide details. Response The Council agreed a balanced 2024/25 budget on 6 March 2024 and that report presented future budget gaps that will need to be closed in subsequent years. This is consistent with all Scottish local authorities and reflects the financial climate local authorities are operating in with ongoing real terms funding reductions. The Council delivers a number of non-statutory services which, if required could be reduced or stopped in the event that insufficient funding is made available. Therefore, whilst the Council does Page 65
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Appendix 1 have future budget gaps, there are viable options available to close the gap meaning there is risk to the Council’s ability to continue as a going concern. Page 66
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Item 8 Appendix 2 International Standard for Auditing 240 - The auditor’s responsibility to consider fraud in an audit of financial statements 1) How do the Trustee’s, in their role as those charged with governance, exercise oversight of management's processes in relation to: • undertaking an assessment of the risk that the financial statements may be materially misstated due to fraud or error (including the nature, extent and frequency of these assessments); • identifying and responding to risks of fraud in the organisation, including any specific risks of fraud which management have identified or that have been brought to its attention, or classes of transactions, account balances, or disclosure for which a risk of fraud is likely to exist; • communicating to employees of views on business practice and ethical behaviour (for example by updating, communicating and monitoring against the organisation’s code of conduct); and • communicating to those charged with governance the processes for identifying and responding to fraud or error? Response The Annual Governance Statement within West Dunbartonshire Council’s (WDC) annual financial statements contains a review of the adequacy and effectiveness of the governance framework including the system of internal control. These systems are periodically reviewed and tested by internal audit, and our external auditors. Consequently although the material misstatement cannot be ruled out, its likelihood is low. All financial transactions relating to the delivery of the Trusts are hosted within the WDC ledger, therefore the Trusts rely on the processes and controls implemented by WDC including approval and authorisation processes, defined limits for all authorised signatories and adherence to WDC Financial Regulations. The financial statements reflect the transactions which have been processed by the WDC financial system. The Trust’s financial statements are prepared by experienced and professionally qualified accountants who are regulated by the standards of their respective institutes. The WDC Chief Internal Auditor provides regular reports to the Audit Committee which include information on control issues identified within the partner organisations and any potential impact on the Trusts. If the Trustees became aware of any fraud or suspected fraud then appropriate reporting processes would be followed e.g. the Chief officer - resources would be notified in conjunction with reporting to Internal Audit, Fraud Liaison Officer or Legal teams for cases involving suspected data breaches. Through the Code of Conduct for Staff, all WDC employed staff are obliged to comply with the partner’s Corporate Governance documentation, which includes the responsibilities of managers and other staff arising from the Financial Regulations, SFIs and Fraud Policies – all available on WDC websites and intranet 2) How does the Trust oversee management processes to identify and respond to the risk of fraud and possible breaches of internal control? Is the Trust aware of any breaches of internal control during 2023/24? Please provide details. Response It is the responsibility of management to develop and maintain sound systems of risk management, governance and internal control. This includes the requirement to identify and respond to any identified breaches of internal control. However it is noted that internal control systems, no matter how well designed and Page 67
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operated, are affected by inherent limitations. These include the possibility of poor judgement in decision making; human error; control processes being deliberately circumvented by employees and others; management overriding controls and unforeseeable circumstances. In terms of oversight, the Council’s Internal Audit function plays a key role in this regard. Internal Audit work is not a substitute for management’s responsibilities for the design and operation of these systems, and is not responsible for identifying all significant control failures. Where deemed necessary the Audit Committee will ask that a relevant officer of the Trust is present at Audit Committee meetings to respond to questions on a report being presented. 3) Has the Trust knowledge of any actual, suspected or alleged fraud during the period 1 April 2023 – 31 March 2024? Where appropriate please provide details. Response There have been no suspected/alleged instances of fraud during 2023/24. 4) Has the Trust any suspicion that fraud may be occurring within the organisation? Please provide details. • Has the Trust identified any specific fraud risks within the organisation? Please provide details. • Does the Trust have any concerns that there are areas within the organisation that are at risk of fraud? Please provide details. • Are there particular locations within the organisation where fraud is more likely to occur? Please provide details. Response As with any large and complex organisation there are a range of fraud risks and emphasis on reducing fraud risk is continuous. The results of the NFI, internal audit work and reported fraud show some low value frauds. Management and the Audit Committee is kept up to date with fraud risks through updates on counter fraud arrangements, Internal Audit and other ad hoc reports. Fraud risks are acknowledged in key areas. Members and officers are aware of these and the risks are managed through established risk management processes. 5) Is the Trust satisfied that internal controls, including segregation of duties, exist and work effectively? Please provide details. • If not, where are the risk areas? • What other controls are in place to help prevent, deter or detect fraud? Response Key controls such as the segregation of duties, management review and supervision and authorisation and approval are evident in each of WDC’s core systems. It is acknowledged that maintaining an effective control environment is challenging in a time of reducing resources and a changing operating environment. For this reason, internal audit will have a continued role in supporting the Council in ensuring that an adequate but appropriate control environment is in place. In overall terms, Internal Audit have concluded that reasonable assurance can be provided on the Trust’s system of internal control for 2023/24. 6) Is the Trust satisfied that staff are encouraged to report their concerns about fraud, and the types of concerns they are expected to report? Please provide details. Response The Council promotes a zero tolerance toward fraud and promotes a culture that enables individuals to identify potential fraud and empowers them to report their concerns in a safe Page 68
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and secure manner to the appropriate people at the right time. The means by which employees can report fraud are publicised on the Council’s intranet. Fraud issues are widely communicated both internally and externally to provides a deterrent to fraudsters by highlighting the Council’s commitment to identify fraud and take proactive action to pursue fraudsters. 7) From a fraud and corruption perspective, what are considered by the Trust to be high risk posts within the organisation? Please provide details. • How are the risks relating to these posts identified, assessed and managed? Response Fraud and corruption, and associated risks, come in many forms and, consequently, it is not easy to specifically identify specific posts where there are greater risks than others. However there is a general recognition that there is an inherent risk of fraud within an organisation like a Council and partner organisations the risk of fraud is managed through existing controls and procedures which are in place across the organisation. The Trust takes assurance from the work of internal audit, the established fraud policies in place and ongoing embedding of a culture of fraud awareness through a programme of anti-fraud training and the work of the Council’s fraud team. This helps ensure that issues identified as a result of Internal Audit work or fraud investigations, result in recommendations to management to address gaps in control to ensure that risks are properly mitigated to acceptable levels. 8) Is the Trust aware of any related party relationships or transactions that could give rise to instances of fraud? Please provide details. • How are the risks associated with fraud related to such relationships and transactions mitigated? Response We are not aware of any related party relationships or transactions that could give rise to instances of fraud. Disclosure of significant related party relationships is required for both members and officers in positions of influence. Page 69
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9) Is the Trust aware of any entries made in the accounting records of the organisation that it believes or suspects are false or intentionally misleading? Please provide details. • Are there particular balances where fraud is more likely to occur? Please provide details. • Is the Trust aware of any assets, liabilities or transactions that it believes were improperly included or omitted from the accounts of the organisation? Please provide details. • Could a false accounting entry escape detection? If so, how? • Are there any external fraud risk factors which are high risk of fraud? Please provide details. Response We are not aware of any accounting entries which are suspected to be false or intentionally misleading. Should management become aware of any suspect accounting entries, these would be subject to immediate investigation through Internal Audit. We are not aware of any assets, liabilities or transactions that have been improperly included or omitted from the Trust’s accounts. Should any issues arise it is expected that these would be identified through review and approvals processes. Current and emerging risks are identified from a number of sources including the National Anti-Fraud Network (NAFN) and other law enforcement agencies. These are disseminated to relevant teams to raise awareness. 10) Is the Trust aware of any organisational, or management pressure to meet financial or operating targets? Please provide details. • Is the Trust aware of any inappropriate organisational or management pressure being applied, or incentives offered, to you or colleagues to meet financial or operating targets? Please provide details. Response The Trustees are not aware of any inappropriate organisational or management pressure to meet financial or operating targets and there is no evidence of any incentive ever being offered to do so. International Standard for Auditing 250 – Consideration of laws and regulations in an audit of financial statements 11) How does the Trust gain assurance that all relevant laws and regulations have been complied with. For example: • Is the Trust aware of the process management has in place for identifying and responding to changes in laws and regulations? Please provide details. • What arrangements are in place for the Trust to oversee this process? • Is the Trust aware of the arrangements management have in place, for communicating with employees, non-executive directors, partners and stakeholders regarding the relevant laws and regulations that need to be followed? Please provide details. • Does the Trust have knowledge of actual or suspected instances where appropriate laws and regulations have not been complied with, and if so is it aware of what actions management is taking to address it? Please provide details. Response WDC is subject to a range of legal and regulatory frameworks. The Council has a Local Code of Good Governance and has appointed a Monitoring Officer (Chief Officer Regulatory and Regeneration) to ensure that the Council acts lawfully. All Trustee reports are subject to legal review and comment to ensure key issues are identified. The Council’s Chief Officer Regulatory and Regeneration is a member of the Senior Management Team and is sighted on any new strategic projects or initiatives with the Page 70
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Council’s Legal Services having specialist officers who provide legal advice and support to particular service areas. As required, training is provided to officers on particular legal issues, some of it being mandatory, for example around data protection and equalities. Accepting that there will be minor operational instances of non-compliance, we are not aware of any instances of significant non-compliance during the financial year. This is supported by the annual review of the Local Code of Good Governance. International Standard for Auditing 501 – Specific consideration of the potential for, and actual, litigation and claims affecting the financial statements 12) Is the Trust aware of any actual or potential litigation or claims that would affect the financial statements? Please provide details. Response Given the size and the nature of the transactions of the Trust there are no known litigations or claims that would affect the financial statements. International Standard for Auditing 570 – Consideration of the going concern assumption in an audit of financial statements 13) How has the Trust assessed and satisfied itself that it is appropriate to adopt the going concern basis in preparing the financial statements? Response No issues in relation to going concern were highlighted to the Trustees. 14) Has the Trust identified any events or conditions since the assessment was undertaken which may cast significant doubt on the organisation’s ability to continue as a going concern? Please provide details. Response The Trustees are not aware of any events or concerns since the assessment was undertaken that would cast doubt on the Trusts ability to continue as a going concern. Page 71
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WEST DUNBARTONSHIRE COUNCIL Report by Chief Officer – Resources Audit Committee: 11 June 2025 Subject: Internal Audit Annual Report to 31 March 2025 1. Purpose 1.1 The purpose of this report is to advise Members of the work undertaken by Internal Audit in respect of the 2024/25 Annual Audit Plan and to advise Members of the contents of the Assurance Statement given to Members of West Dunbartonshire Council, the Chief Executive and the Section 95 Officer (Chief Officer - Resources) in support of the Annual Governance Statement. This report outlines how audit assurances are obtained. 2. Recommendations 2.1 It is recommended that Members note the contents of this report. 3. Background 3.1 The Public Sector Internal Audit Standards (PSIAS) became effective on 1st April 2013 (revised in 2017) and require that: “The chief audit executive [WDC: Shared Service Manager Audit & Fraud] must deliver an annual internal audit opinion and report that can be used by the organisation to inform its governance statement. The annual internal audit opinion must conclude on the overall adequacy and effectiveness of the organisation’s framework of governance, risk management and control. The annual report must incorporate: • The opinion; • A summary of the work that supports the opinion; and • A statement on conformance with the Public Sector Internal Audit Standards and the results of the quality assurance and improvement programme”. 3.2 Progress reports were provided to the Audit Committee at each meeting during 2024/25 on Internal Audit activity and progress against the annual audit plan. Item 9 Page 73
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4. Main Issues 4.1 Internal Audit has implemented a new risk-based audit methodology which means that for each audit, one of the following opinions is expressed: Strong In our opinion there is a sound system of internal controls designed to ensure that the organisation is able to achieve its objectives. Satisfactory In our opinion isolated areas of control weakness were identified which, whilst not systemic, put some organisation objectives at risk. Requires Improvement In our opinion systemic and/or material control weaknesses were identified such that some organisation objectives are put at significant risk. Unsatisfactory In our opinion the control environment was considered inadequate to ensure that the organisation is able to achieve its objectives. 4.2 Detailed findings and recommendations reported to management are graded using the following criteria: Red In our opinion the control environment is insufficient to address the risk and this could impact the Council as a whole. Corrective action must be taken and should start immediately. Overseen to completion by Corporate Management Team. Amber In our opinion there are areas of control weakness which we consider to be individually significant but which are unlikely to affect the Council as a whole. Corrective action must be taken (some exceptions may be agreed with Internal Audit) within reasonable timeframe. Overseen to completion by Chief Officer/Head of Service. Green In our opinion the risk area is well controlled or our audit highlighted areas for minor control improvement and/or areas of minor control weakness. Process improvements/efficiencies may be actioned at management discretion in consultation with Internal Audit. Managed by service manager. Not reported in Audit Committee papers. 4.3 The status of the Audit Plan for 2024/25 is set out at Appendix 1. Page 74
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4.4 The 2024/25 Internal Audit Annual Report and Assurance Statement is set out at Appendix 2. There are four overall Audit Opinion types as follows: Satisfactory Controls evaluated are adequate, appropriate and effective to provide reasonable assurance that risks are being managed and objectives should be met. • A limited number of amber rated issues may have been identified, but generally only green issues have been found in individual audit assignments. • None of the individual assignment reports have an overall opinion of Requires Improvement or Unsatisfactory. Generally Satisfactory with some improvement needed A few specific control weaknesses were noted: generally however, controls evaluated are adequate, appropriate and effective to provide reasonable assurance that risks are being managed and objectives should be met. • A number of amber rated issues identified in individual audit assignments that collectively do not significantly impact the system of internal control. • Red rated issues that are isolated to specific systems or processes. • None of the individual assignment reports have an overall opinion of Unsatisfactory. Major improvement needed Numerous specific control weaknesses were noted. Controls evaluated are unlikely to provide reasonable assurance that risks are being managed and objectives should be met. • A high number of amber rated issues that collectively have a significant impact on some parts of the system of internal control but are not widespread. • A number of red rated issues that collectively have a significant impact on some parts of the system of internal control but are not widespread. • A small number of individual assignment reports have an overall opinion of Requires Improvement or Unsatisfactory. Unsatisfactory Controls evaluated are not adequate, appropriate or effective to provide reasonable assurance that risks are being managed and objectives should be met. • Amber and red rated issues identified in individual assignments that collectively are widespread to the system of internal control. • A high number of individual assignment reports have an overall opinion of Requires Improvement or Unsatisfactory. Page 75
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4.5 On the basis of Internal Audit work performed in 2024/25 it can be concluded that the majority of the Council’s control procedures are operating as expected during the period under review, although it is recognised that work is ongoing with management to continue to make good progress in implementing agreed action plans arising from Internal Audit reviews. 4.6 However, there was one audit where a Requires Improvement rating was given in relation to Housing Repairs and Maintenance. Work is underway to implement a number of agreed internal audit actions to improve the governance, risk management and control arrangements in this area. 4.7 Therefore the overall audit opinion is Generally Satisfactory with some improvement needed. 4.8 Performance indicators for the Audit and Fraud service were reviewed for 2024/25 and reporting on performance against target is included within the service delivery plan. 5. People Implications 5.1 There are no people implications. 6. Financial and Procurement Implications 6.1 As a result of Corporate Fraud Team activity, actual recoveries, charges and re-billings of £123,651 have been identified during 2024/25. 6.2 There are no procurement implications arising from this report. 7. Risk Analysis 7.1 There is a risk that failure to deliver the Internal Audit Plan would result in an inability to provide a minimum level of assurance over the Council’s system of internal financial control to those charged with governance. 8. Equalities Impact Assessment (EIA) 8.1 There is no requirement for an EIA. 9. Consultation 9.1 This report has been subject to consultation with appropriate Chief Officers. 10. Strategic Assessment 10.1 This report helps ensure strong governance and will help support delivery of the Council Plan, and in particular priority 4: Inclusive and Adaptable, with the Page 76
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Council seeking to provide high quality and adaptable services that deliver value for money. .................................... Laurence Slavin Chief Officer - Resources Date: 11 June 2025 Person to Contact: Andi Priestman, Shared Service Manager – Audit & Fraud E-mail: andi.priestman@west-dunbarton.gov.uk Appendices: 1 – Status of Audit Plan 2024/25 2 - Internal Audit Annual Report and Assurance Statement for the year ended 31 March 2025 Background Papers: Audit Committee – 4 December 2024: Internal Audit Plan 2024/25 Wards Affected: All wards Page 77
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Audit Plan 2024/25: Completed Audits Report Title Status Findings Control Environment Opinion Red Amber Green Risk Based Reviews 2023/24 Audit Plan Commercial Waste Income Billing and Collection Final Report 0 3 3 Satisfactory Debt Recovery Final Report 0 1 2 Satisfactory UK Shared Prosperity Fund Final Report 0 3 1 Satisfactory 2024/25 Audit Plan Housing Repairs and Maintenance Final Report 2 11 3 Requires Improvement Void Management Final Report 0 4 4 Satisfactory Participatory Budgeting Planning N/A N/A N/A N/A Budgetary Control Planning N/A N/A N/A N/A Corporate Procurement Planning N/A N/A N/A N/A Regularity Audits High Earners – Quarterly check Fieldwork is underway. Residential Care Homes – Overtime Planning is underway. Other Work IJB Internal Audit Service 2024/25 Audit Plan – complete. Valuation Joint Board 2024/25 Audit Plan - complete. WD Leisure Trust 2024/25 Audit Plan – Planning is underway. Council Tax Refunds – Assurance Review Review complete. No significant issues arising. Posties Park – Post Project Review Fieldwork is underway. Item 9 Appendix 1 Page 79
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Assurance Statement for the year ended 31 March 2025 From the Shared Service Manager – Audit & Fraud To the Members of West Dunbartonshire Council, the Chief Executive and the Section 95 Officer (Chief Officer - Resources) As Shared Service Manager - Audit & Fraud of West Dunbartonshire Council, I am pleased to present my annual statement on the adequacy and effectiveness of the internal financial control system of the Group Accounts prepared by the Council for the year ended 31 March 2025. Respective responsibilities of management and internal auditors in relation to internal control It is the responsibility of the Council’s senior management to establish an appropriate and sound system of internal financial control and to monitor the continuing effectiveness of that system. It is the responsibility of the Shared Service Manager – Audit & Fraud to provide an annual overall assessment of the robustness of the internal financial control system. The Council’s framework of governance, risk management and internal control The Council has a responsibility to ensure that its business is conducted in accordance with legislation and proper standards. The governance framework comprises the systems and processes, culture and values by which the Council is directed and controlled and how it accounts to communities. It enables the Council to monitor the achievement of its strategic priorities and to consider whether those objectives have led to the delivery of appropriate services and value for money. The main objectives of the Council’s internal control systems are to ensure: • Adherence to management policies and directives in order to achieve the organisation’s objectives. • Economic, efficient, effective and safe use of resources and assets. • The relevance, reliability and integrity of information, so ensuring as far as possible the completeness and accuracy of records. • Compliance with statutory requirements. The system of internal control is a significant element of the governance framework. Any system of control can only ever provide reasonable and not absolute assurance that control weaknesses or irregularities do not exist or that there is no risk of material errors, losses, fraud, or breaches of laws or regulations. Accordingly, the Council is continually seeking to improve the effectiveness of its systems of internal control in order to identify and prioritise the risks that would prevent the achievement of the Council’s strategic objectives. Item 9 Appendix 2 Page 81
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The work of internal audit Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of governance, risk management and internal control processes. During 2024/25 the Council’s Internal Audit Section operated in accordance with the Public Sector Internal Audit Standards (PSIAS) which were adopted from 1st April 2013 (revised in 2017) by the relevant public sector Internal Audit Standard setters. PSIAS applies the Institute of Internal Auditors International Standards to the UK Public Sector. PSIAS requires that a Quality Assurance and Improvement Programme (QAIP) is developed in order to provide assurance that internal audit activity: • Is conducted in accordance with an Internal Audit Charter. • Operates in an efficient and effective manner. • Is perceived to be adding value and improving operations. An internal self-assessment of internal audit practices has been carried out by Internal Audit every year since PSIAS became effective on 1st April 2013, with improvements identified and implemented as appropriate. PSIAS also requires, as outlined in Standard 1300 “QAIP”, that: “External assessments must be conducted at least once every five years by a qualified, independent assessor or assessment team from outside the organisation. External assessments can be in the form of a full external assessment or a self-assessment with independent external validation”. The last external review was carried out in 2016. The next external review was due to be carried out by 31 March 2021 however this was deferred due to the pandemic. The external review has now been rescheduled due to the implementation of the new Global Internal Audit Standards (UK public sector). The internal review for 2024-25 confirms a high level of compliance and that the Internal Audit Section generally conforms with the requirements of PSIAS. The Internal Audit Section undertakes an annual programme of work based on a risk assessment process which is revised on an ongoing basis to reflect evolving risks and changes within the Council. All Internal Audit reports identifying control weaknesses and/or areas of non-compliance with expected controls are brought to the attention of management and the Audit Committee together with appropriate recommendations and agreed action plans. It is management’s responsibility to ensure that proper consideration is given to Internal Audit reports and that appropriate action is taken on audit recommendations. The internal auditor is required to ensure that appropriate arrangements are made to determine whether action has been taken on internal audit recommendations or that management has understood and assumed the risk of not taking action. Agreed actions arising from Internal Audit reports are followed up on a monthly basis as action dates fall due. Page 82
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Regular reporting on action plan implementation is provided on a monthly basis to senior management and to each meeting of the Audit Committee. Internal Audit and Corporate Fraud staff regularly attended the following external user group meetings: • SLACIAG, the purpose of which is to develop and improve the practice of internal audit activity with Scottish local authorities. It achieves this by meeting to discuss issues of common concern, commissioning work to develop ideas, sharing good practice, working in partnership with other professional / governing bodies and promoting SLACIAG as the representative body for internal audit in local authorities; and • The Scottish Local Authority Investigators Group (SLAIG): This group consists of fraud practitioners from local authorities in Scotland, with the objectives of: o Raising the profile of the counter fraud agenda; o Sharing good practice; o Raising awareness of the risk of fraud; and o Ensuring that fraud is investigated in a professional manner. Basis of Opinion My evaluation of the control environment is informed by a number of sources: • The audit work undertaken by Internal Audit during the year to 31 March 2025. • The assessment of risk completed during reviews of the annual audit plan. • The Code of Good Governance self-assessment process undertaken by the Chief Officers for the services for which they were responsible during the year to 31 March 2025. • The Council’s Annual Governance Statement for the year ended 31 March 2025. • Reports issued by the Council’s External Auditors, Audit Scotland, and other review agencies. • My knowledge of the Council’s governance, risk management and performance management and monitoring arrangements. Limitation to Resources or Scope of Internal Audit Work There were no significant threats identified to the independence of the internal audit activity such as inappropriate scope or resource limitations. Opinion The report concludes that the majority of West Dunbartonshire Council’s established internal control procedures operated as intended to meet management's control requirements for each area reviewed by Internal Audit in 2024/25. The overall audit opinion is Generally Satisfactory with some improvement needed. Page 83
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There was one audit review, Housing Repairs and Maintenance, which received a Requires Improvement control environment opinion. There were a number of control issues identified and work is ongoing to implement the agreed action plan in relation to the audit which will be monitored and reported to CMT and Audit Committee on a regular basis. It is also intended to carry out a follow up review of this area as part of the 2026/27 internal audit plan to provide additional assurance. Signature: Andi Priestman Title: Shared Service Manager – Audit & Fraud Date: 13 May 2025 Page 84
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Opinion Types Satisfactory Controls evaluated are adequate, appropriate and effective to provide reasonable assurance that risks are being managed and objectives should be met. • A limited number of amber rated issues may have been identified, but generally only green issues have been found in individual audit assignments. • None of the individual assignment reports have an overall opinion of Requires Improvement or Unsatisfactory. Generally Satisfactory with some improvement needed A few specific control weaknesses were noted: generally however, controls evaluated are adequate, appropriate and effective to provide reasonable assurance that risks are being managed and objectives should be met. • A number of amber rated issues identified in individual audit assignments that collectively do not significantly impact the system of internal control. • Red rated issues that are isolated to specific systems or processes. • None of the individual assignment reports have an overall opinion of Unsatisfactory. Major improvement needed Numerous specific control weaknesses were noted. Controls evaluated are unlikely to provide reasonable assurance that risks are being managed and objectives should be met. • A high number of amber rated issues that collectively have a significant impact on some parts of the system of internal control but are not widespread. • A number of red rated issues that collectively have a significant impact on some parts of the system of internal control but are not widespread. • A small number of individual assignment reports have an overall opinion of Requires Improvement or Unsatisfactory. Unsatisfactory Controls evaluated are not adequate, appropriate or effective to provide reasonable assurance that risks are being managed and objectives should be met. • Amber and red rated issues identified in individual assignments that collectively are widespread to the system of internal control. • A high number of individual assignment reports have an overall opinion of Requires Improvement or Unsatisfactory. Page 85
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WEST DUNBARTONSHIRE COUNCIL Report by Chief Officer - Resources Audit Committee: 11 June 2025 Subject: Annual Report on the Audit Committee – 2024/25 1. Purpose 1.1 The purpose of this report is to provide members with the Audit Committee Chair’s 2024/25 Annual Report on the Audit Committee. 2. Recommendations 2.1 It is recommended that members: i) Review and endorse the Chair’s Annual Report on the Audit Committee for 2024/25. ii) Agree that the report should be presented to a future meeting of the Council in line with best practice guidance. 3. Background 3.1 It is important that the Committee fully complies with best practice guidance on Audit Committees to ensure it can demonstrate its effectiveness as a foundation for sound corporate governance for the Council. The Chartered Institute of Public Finance and Accountancy (CIPFA) issued an updated guidance note Audit Committees Practical Guidance for Local Authorities and Police 2022 Edition which incorporates CIPFA’s Position Statement: Audit Committees in Local Authorities and Police. This sets out CIPFA’s view of the role and functions of an Audit Committee. The CIPFA Audit Committee Guidance includes the production of an annual report on the performance of the Audit Committee against its remit for submission to the Council. 3.2 The Audit Committee Chair’s 2024/25 Annual Report, attached at Appendix 1, provides assurance to the Council over the activity of the Audit Committee. 4. Main Issues 4.1 The Audit Committee Chair’s 2024/25 Annual Report is appended with the main issues identified being: • The Audit Committee has met four times during the financial year with every meeting being quorate. • The Audit Committee sought assurance on the adequacy and effectiveness of the Council’s systems of corporate governance and internal control for efficient operations and for the highest standards of probity and accountability. This was achieved through reports received Item 10 Page 87
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from internal audit, other Council functions and external audit with focus in particular on internal control and governance. • The Audit Committee has provided assurance to the Council as detailed in the appendix. 5. People Implications 5.1 There are no personnel issues with this report. 6. Financial and Procurement Implications 6.1 There are neither financial nor procurement implications arising directly from this report. 7. Risk Analysis 7.1 There is a risk that the Audit Committee does not comply with best practice guidance in relation to demonstrating its effectiveness in providing a foundation for sound corporate governance. The annual report provides this assurance to the Council on the activity of the Committee. 8. Equalities Impact Assessment (EIA) 8.1 There is no requirement for an EIA. 9. Consultation 9.1 This report has been subject to consultation with appropriate Chief Officers. In addition, services have been consulted in the update of action plans. 10. Strategic Assessment 10.1 This report helps ensure strong governance and will help support delivery of the Council Plan, and in particular priority 4: Inclusive and Adaptable, with the Council seeking to provide high quality and adaptable services that deliver value for money. .................................... Laurence Slavin Chief Officer - Resources Date: 11 June 2025 ______________________________________________________________ Person to Contact: Andi Priestman, Shared Service Manager – Audit & Fraud E-mail: andi.priestman@west-dunbarton.gov.uk Appendix: Annual Report on the Audit Committee 2024/25 Background Papers: N/A Page 88
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West Dunbartonshire Council Audit Committee 2024/25 Annual Report from the Chair Introduction This annual report has been prepared to inform West Dunbartonshire Council of the work carried out by the Council’s Audit Committee during the financial year 2024/25. Meetings The Audit Committee met four times during 2024/25 comprising meetings on 12 June, 4 September, 4 December and 5 February to consider reports relevant to the Audit cycle and other matters as deemed appropriate. Pre-Agenda meetings were also held ahead of Committee involving the Chair and appropriate officers. The purpose and remit of Audit Committee as detailed in the Council’s Standing Orders is to: • Monitor, and make recommendations on the development of the Audit activity of the Council. • Scrutinise the monitoring and review activity of the thematic and regulatory committees. To fulfil this remit, the Audit Committee sought assurance on the adequacy and effectiveness of the Council’s systems of governance, risk management and internal control to ensure efficient operations and the highest standards of probity and accountability. This was achieved through reports received from Internal Audit, other Council functions and External Audit with focus in particular on internal control and governance. At each meeting of the Audit Committee it considered significant findings from Internal Audit reports together with monitoring the progress made by management in completing agreed actions to improve the Council’s control environment. It also considered the external audit strategy memorandum for the 2023/24 audit from the external auditors (Mazars). The Audit Committee also received reports on: • Prudential Indicators and Treasury Management. • Risk Management. • National Fraud Initiative. • Annual Complaints Report 2023-2024. • Code of Good Governance and the Annual Governance Statement. • Best Value Thematic Review – Workforce Innovation. The minutes of Audit Committee meetings are first confirmed as a correct record at the next Audit Committee before being remitted to Council for approval. Item 10 Appendix 1 Page 91
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Membership of the Audit Committee In accordance with West Dunbartonshire Council’s Standing Orders membership of the Audit Committee comprises eight Elected Members and one Lay Member who is not a member of any political party. The quorum of the Audit Committee is three Elected Members. The Chair of the Audit Committee is from the Opposition (as is the Vice Chair). Every meeting of the Audit Committee during 2024/25 was quorate. Attendance by Officers All meetings were attended by the Chief Executive and Chief Officer – Resources. Other senior officers also attended meetings as appropriate for items on the Agenda for which their presence was relevant. Representatives from the Council’s external auditors - Mazars - were present at relevant meetings. Assurance Statement to the Council The Audit Committee provides the following assurance to the Council: • The Council has received the Minutes of the Audit Committee meetings throughout the year. • The Audit Committee has operated in accordance with its agreed terms of reference, and accordingly with the audit committee principles in the CIPFA Position Statement relating to its Audit functions. • It did this through reports received from Internal Audit, External Audit, and assurances from Management. It focussed on matters of governance, risk management and internal control; giving advice to the Council on the value of the audit process; on the integrity of financial reporting; and on governance arrangements. • For all audit reports, the Audit Committee considered whether it was satisfied that an adequate management response was in place to ensure action would be taken to manage risk and address concerns on governance, risk management and internal control arrangements. The Committee acknowledges that all the audit recommendations are input to Pentana, the Council’s performance management system, and that there is a system in place of ongoing follow-up by Internal Audit and reporting thereon. • The Audit Committee has received and considered material to fulfil its scrutiny role on treasury management activity. Conclusion Based on the reports received and reviewed by the Committee they are in agreement with the Shared Service Manager – Audit & Fraud’s annual audit report which confirms that reasonable assurance can be placed upon the adequacy and effectiveness of the Council’s internal control system in 2024/25. I am satisfied that active monitoring and follow up of recommendations is in place in respect of agreed management action. Councillor Scanlan Chair of the Audit Committee 11 June 2025 Page 92
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WEST DUNBARTONSHIRE COUNCIL Report by Chief Officer - Resources Audit Committee: 11 June 2025 Subject: Review of Internal Audit Charter 1. Purpose This report provides the Audit Committee with the updated Internal Audit Charter (the Charter) for approval. The Charter defines the terms of reference for the Council’s Internal Audit function to carry out its role to enable the Chief Audit Executive to prepare the annual Internal Audit opinion on the adequacy of the Council’s overall control environment. 2. Recommendations 2.1 It is recommended that Members approve the revised Internal Audit Charter. 3. Background 3.1 The Local Authority Accounts (Scotland) Regulations 2014 require a local authority to operate a professional and objective internal auditing service which is provided in accordance with recognised internal auditing standards and practices. These standards and practices are set out in the Global Internal Audit Standards (UK public sector) and require Internal Audit to have suitable operational independence from the organisation. 3.2 The 2014 Regulations provide the mandate for the Internal Audit function to operate in West Dunbartonshire Council alongside relevant sections in the Council’s Local Code of Good Governance and Financial Regulations. 3.3 The Global Internal Audit Standards state that the Chief Audit Executive must develop and maintain an Internal Audit Charter that specifies, at a minimum, the following: • Purpose of Internal Auditing. • Commitment to adhering to the Global Internal Audit Standards. • Mandate, including scope and types of services to be provided, and the Audit Committee’s responsibilities and expectations regarding management’s support of the Internal Audit function. • Organisational position and reporting relationships. Item 11 Page 93
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3.4 The Chief Audit Executive must periodically review the Internal Audit Charter and present it to ‘senior management’ (Corporate Management Team) and the ‘board’ (Audit Committee) for approval to confirm that it accurately reflects their understanding and expectations of the Internal Audit function. 4. Main Issues 4.1 The revised Internal Audit Charter at Appendix 1 to this report expands upon the regulatory and policy framework outlined in paragraphs 3.1 and 3.2. The Institute of Internal Auditor’s model Internal Audit Charter format has been used as it has been designed to conform with the Global Internal Audit Standards, whilst customising it to address the unique organisational aspects that affect the Internal Audit Mandate, Scope and Internal Audit assurance and advisory services within UK Local Government. 4.2 The main significant changes to the Internal Audit Charter since its previous approval by the Audit Committee on 3 May 2023, reflect the following: Section Amendment Purpose Set out essential conditions to fulfil the purpose of internal auditing as set out in Global Internal Audit Standards Domain I Mandate Update to reference compliance with Global Internal Audit Standards. The legal requirements i.e. Local Authority Accounts (Scotland) Regulations 2014 have been added Independence, Organisational Position and Reporting Relationships Clarify the Council’s Internal Audit function’s position within the organisation, including the nature of the CAE’s functional reporting relationship with the Audit Committee Audit Committee Oversight Relevant updates by standard setters to the role of the Audit Committee in respect of the Internal Audit function Chief Audit Executive Roles and Responsibilities Explicit references to cover the arrangements for appropriate resourcing Objectivity Inclusion of arrangements for avoiding conflicts of interest if Internal Audit undertakes non-audit activities Scope and Types of Internal Audit Services Defines the types of Internal Audit activity, nature and scope of advisory and consultancy services, and scope of Internal Audit assurance engagements Page 94
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5. People Implications 5.1 There are no personnel issues. 6. Financial and Procurement Implications 6.1 The Internal Audit function must have sufficient staff and other resources to enable it to fulfil its mandate and to carry out the objectives of the Internal Audit Charter. This is to deliver a programme of independent and objective audit assurance work alongside other available sources of assurance to enable the Chief Audit Executive to prepare Internal Audit assurance and annual opinions on the adequacy of the Council’s overall control environment. The Internal Audit function’s resources are set out in the Internal Audit Strategy. 7. Risk Analysis 7.1 The Local Authority Accounts (Scotland) Regulations 2014, that require a local authority to operate a professional and objective internal auditing service in accordance with recognised standards and practices, provide the mandate for the Internal Audit function to operate in West Dunbartonshire Council along with relevant sections in the Council’s Local Code of Corporate Governance and Financial Regulations. This Internal Audit Charter expands upon that framework. 7.2 Approval of the Internal Audit Charter (Appendix 1), as recommended in this report, will ensure that the Council’s Internal Audit function is tasked to carry out its role in accordance with the Global Internal Audit Standards (UK public sector) effective from 1 April 2025. 8. Equalities Impact Assessment (EIA) 8.1 There are no issues. 9. Consultation 9.1 This report has been subject to consultation with appropriate Chief Officers. 10. Strategic Assessment 10.1 This report helps ensure strong governance and will help support delivery of the Council Plan, and in particular priority 4: Inclusive and Adaptable, with the Council seeking to provide high quality and adaptable services that deliver value for money. ......................................... Laurence Slavin Chief Officer - Resources Date: 11 June 2025 _________________________________________________ Page 95
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Person to Contact: Andi Priestman, Shared Service Manager – Audit & Fraud Email: andi.priestman@west-dunbarton.gov.uk Appendices: Appendix 1 – Internal Audit Charter Background Papers: Report to Audit and Performance Review Committee on 3 May 2023 (Internal Audit Charter Update) Global Internal Audit Standards (UK Public Sector) Wards Affected: All Wards Page 96
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Internal Audit Charter and Mandate Item 11 Appendix 1 Purpose The purpose of the internal audit function is to strengthen West Dunbartonshire Council’s ability to create, protect, and sustain value by providing the Audit Committee and management with independent, risk-based, and objective assurance, advice, insight, and foresight. The internal audit function enhances West Dunbartonshire Council’s: • Successful achievement of its objectives. • Governance, risk management, and control processes. • Decision-making and oversight. • Reputation and credibility with its stakeholders. • Ability to serve the public interest. The internal audit function is most effective when: • Internal auditing is performed by competent professionals in conformance with the Institute of Internal Auditors Global Internal Audit Standards (UK public sector) which are set in the public interest. • The internal audit function is independently positioned with direct accountability to the audit committee. • Internal auditors are free from undue influence and committed to make objective assessments. Commitment to Adhering to the Global Internal Audit Standards The internal audit function will adhere to the mandatory elements of The Institute of Internal Auditors' International Professional Practices Framework, which are the Global Internal Audit Standards (UK public sector) and Topical Requirements. The chief audit executive (Shared Service Manager – Audit & Fraud) will report annually to the audit committee and senior management regarding the internal audit function’s conformance with the Global Internal Audit Standards (UK public sector) which will be assessed through a quality assurance and improvement program. Mandate The Council ’s internal audit function mandate is found in section 7 of The Local Authority Accounts (Scotland) Regulations 2014 which states that “A local authority must operate a professional and objective internal auditing service in accordance with recognised standards and practices in relation to internal auditing.” Authority The internal audit function’s authority is created by its direct reporting relationship to the Audit Committee. Such authority allows for unrestricted access to the Audit Committee. The Audit Committee authorises the internal audit function to: • Have full and unrestricted access to all functions, data, records, information, physical property, and personnel pertinent to carrying out internal audit responsibilities. Internal auditors are accountable for confidentiality and safeguarding records and information. • Allocate resources, set frequencies, select subjects, determine scopes of work, apply techniques, and issue communications to accomplish the function’s objectives. • Obtain assistance from the necessary personnel of West Dunbartonshire Council and other specialised services from within or outside West Dunbartonshire Council to complete internal audit services. Page 97
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Internal Audit Charter and Mandate Appendix 1 Independence, Organisational Position and Reporting Relationships The chief audit executive will be positioned at a level in the organisation that enables internal audit services and responsibilities to be performed without interference from management, thereby establishing the independence of the internal audit function. (See “Mandate” section.) The chief audit executive will report functionally to the Audit Committee and administratively (for example, day-to-day operations) to the Chief Officer, Resources. This positioning provides the organisational authority and status to bring matters directly to senior management and escalate matters to the Audit Committee, when necessary, without interference and supports the internal auditors’ ability to maintain objectivity. The chief audit executive will confirm to the Audit Committee, at least annually, the organisational independence of the internal audit function. If the governance structure does not support organisational independence, the chief audit executive will document the characteristics of the governance structure limiting independence and any safeguards employed to achieve the principle of independence. The chief audit executive will disclose to the Audit Committee any interference internal auditors encounter related to the scope, performance, or communication of internal audit work and results. The disclosure will include communicating the implications of such interference on the internal audit function’s effectiveness and ability to fulfil its mandate. Changes to the Mandate and Charter Circumstances may justify a follow-up discussion between the chief audit executive, Audit Committee, and senior management on the internal audit mandate or other aspects of the internal audit charter. Such circumstances may include but are not limited to: • A significant change in the Global Internal Audit Standards (UK public sector). • A significant reorganisation within the organisation. • Significant changes in the chief audit executive, Audit Committee, and/or senior management. • Significant changes to the organisation’s strategies, objectives, risk profile, or the environment in which the organisation operates. • New laws or regulations that may affect the nature and/or scope of internal audit services. Audit Committee Oversight The Terms of Reference for the Audit Committee is set out in the Council’s Scheme of Administration including its Purpose and Functions. The following requirements expand upon that in respect of its responsibilities in establishing appropriate and effective arrangements for audit and assurance. To establish, maintain, and ensure that West Dunbartonshire Council’s internal audit function has sufficient authority to fulfill its duties, the Audit Committee will: • Discuss with the chief audit executive and senior management the appropriate authority, role, responsibilities, scope, and services (assurance and/or advisory) of the internal audit function. • Ensure the chief audit executive has unrestricted access to and communicates and interacts directly with the Audit Committee, including in private meetings without senior management present. • Discuss with the chief audit executive and senior management other topics that should be included in the internal audit charter. • Participate in discussions with the chief audit executive and senior management about the “essential conditions,” described in the Global Internal Audit Standards (UK public sector), which establish the foundation that enables an effective internal audit function. • Approve the internal audit function’s Charter, which includes the internal audit mandate and the scope and types of internal audit services. Page 98
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Internal Audit Charter and Mandate Appendix 1 • Review the Internal Audit Charter annually with the chief audit executive to consider changes affecting the organisation, such as the employment of a new chief audit executive or changes in the type, severity, and interdependencies of risks to the organisation; and approve the internal audit charter annually. • Approve the risk-based internal audit annual plan. • Provide input to the Internal Audit function’s human resources administration and budgets i.e. advocate to Senior Management for sufficient budget and resources allowing the Internal Audit function to fulfill its mandate and accomplish its Plan. • Review the Internal Audit function’s expenses. • Provide input to Senior Management on the appointment and removal of the Chief Audit Executive, ensuring adequate competencies and qualifications and conformance with the Global Internal Audit Standards (UK public sector). • Review and provide input to Senior Management on the Chief Audit Executive’s performance. • Receive communications from the chief audit executive about the internal audit function including its performance relative to its plan. • Ensure a quality assurance and improvement program has been established and review the results annually. • Make appropriate enquiries of senior management and the chief audit executive to determine whether scope or resource limitations are inappropriate. • Receive communications from the Chief Audit Executive on the statutory audit opinion on the levels of assurance of the adequacy of governance, risk management and internal controls of the organisation, based on Internal Audit findings and conclusions arising from relevant work undertaken over the year, to inform the annual governance review process. • Oversee the tracking and implementation of the actions agreed following audits. Chief Audit Executive Roles and Responsibilities Ethics and Professionalism The chief audit executive will ensure that internal auditors: • Conform with the Global Internal Audit Standards (UK public sector), including the principles of Ethics and Professionalism: integrity, objectivity, competency, due professional care and confidentiality. • Understand, respect, meet, and contribute to the legitimate and ethical expectations of the organisation and be able to recognise conduct that is contrary to those expectations. • Encourage and promote an ethics-based culture in the organisation. • Report organisational behaviour that is inconsistent with the organisation’s ethical expectations, as described in applicable policies and procedures. Objectivity The chief audit executive will ensure that the internal audit function remains free from all conditions that threaten the ability of internal auditors to carry out their responsibilities in an unbiased manner, including matters of engagement selection, scope, procedures, frequency, timing, and communication. If the chief audit executive determines that objectivity may be impaired in fact or appearance, the details of the impairment will be disclosed to appropriate parties. Internal auditors will maintain an unbiased mental attitude that allows them to perform engagements objectively such that they believe in their work product, do not compromise quality, and do not subordinate their judgement on audit matters to others, either in fact or appearance. Internal auditors will have no direct operational responsibility or authority over any of the activities they review. Accordingly, internal auditors will not implement internal controls, develop procedures, install systems, or engage in other activities that may impair their judgement, including: Page 99
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Internal Audit Charter and Mandate Appendix 1 • Assessing specific operations for which they had responsibility within the previous year. • Performing operational duties for West Dunbartonshire Council or its affiliates. • Initiating or approving transactions external to the internal audit function. • Directing the activities of any West Dunbartonshire Council employee that is not employed by the internal audit function, except to the extent that such employees have been appropriately assigned to internal audit teams or to assist internal auditors. Internal auditors will: • Disclose impairments of independence or objectivity, in fact or appearance, to appropriate parties and at least annually, such as the chief audit executive, Audit Committee, management, or others. • Exhibit professional objectivity in gathering, evaluating, and communicating information. • Make balanced assessments of all available and relevant facts and circumstances. • Take necessary precautions to avoid conflicts of interest, bias, and undue influence. Managing the Internal Audit Function The chief audit executive has the responsibility to: • At least annually, develop a risk-based internal audit plan that considers the input of the Audit Committee and senior management. Discuss the plan with the Audit Committee and senior management and submit the plan to the Audit Committee for review and approval. • Communicate the impact of resource limitations on the internal audit plan to the Audit Committee and senior management. • Review and adjust the internal audit plan, as necessary, in response to changes in West Dunbartonshire Council’s business, risks, operations, programs, systems and controls. • Communicate with the Audit Committee and senior management if there are significant interim changes to the internal audit annual plan. • Ensure internal audit engagements are performed, documented, and communicated in accordance with the Global Internal Audit Standards and laws and/or regulations. • Follow up on engagement findings and confirm the implementation of recommendations or action plans and communicate the results of internal audit services to the Audit Committee and senior management at least quarterly and for each engagement as appropriate. • Ensure the internal audit function collectively possesses or obtains the knowledge, skills, and other competencies and qualifications needed to meet the requirements of the Global Internal Audit Standards and fulfil the internal audit mandate. • Identify and consider trends and emerging issues that could impact West Dunbartonshire Council and communicate to the audit committee and senior management as appropriate. • Consider emerging trends and successful practices in internal auditing. • Establish and ensure adherence to methodologies designed to guide the internal audit function. • Ensure adherence to West Dunbartonshire Council’s relevant policies and procedures unless such policies and procedures conflict with the internal audit charter or the Global Internal Audit Standards. Any such conflicts will be resolved or documented and communicated to the Audit Committee and senior management. • Co-ordinate activities and consider relying upon the work of other internal and external providers of assurance and advisory services. If the chief audit executive cannot achieve an appropriate level of coordination, the issue must be communicated to senior management and if necessary escalated to the Audit Committee. Page 100
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Internal Audit Charter and Mandate Appendix 1 Communication with the Audit Committee and Senior Management The chief audit executive will report annually to the Audit Committee and senior management regarding: • The internal audit function’s mandate. • The internal audit annual plan and performance relative to its plan. • Internal audit budget. • Significant revisions to the internal audit annual plan and budget. • Potential impairments to independence, including relevant disclosures as applicable. • Results from the quality assurance and improvement program, which include the internal audit function’s conformance with The IIA’s Global Internal Audit Standards and action plans to address the internal audit function’s deficiencies and opportunities for improvement. • Significant risk exposures and control issues, including fraud risks, governance issues, and other areas of focus for the Audit Committee that could interfere with the achievement of West Dunbartonshire Council’s strategic objectives. • Results of assurance and advisory services. • Resource requirements. • Management’s responses to risk that the internal audit function determines may be unacceptable or acceptance of a risk that is beyond West Dunbartonshire Council’s risk appetite. Quality Assurance and Improvement Program The chief audit executive will develop, implement, and maintain a quality assurance and improvement program that covers all aspects of the internal audit function. The program will include external and internal assessments of the internal audit function’s conformance with the Global Internal Audit Standards, as well as performance measurement to assess the internal audit function’s progress toward the achievement of its objectives and promotion of continuous improvement. The program also will assess, if applicable, compliance with laws and/or regulations relevant to internal auditing. Also, if applicable, the assessment will include plans to address the internal audit function’s deficiencies and opportunities for improvement. Annually, the chief audit executive will communicate with the Audit Committee and senior management about the internal audit function’s quality assurance and improvement program, including the results of internal assessments (ongoing monitoring and periodic self-assessments) and external assessments. External assessments will be conducted at least once every five years by a qualified, independent assessor or assessment team from outside West Dunbartonshire Council. Scope and Types of Internal Audit Services The scope of internal audit services covers the entire breadth of the organisation, including all of West Dunbartonshire Council’s activities, assets, personnel and collaborative/arms-length arrangements which are set out within the audit universe. The scope of internal audit activities also encompasses but is not limited to objective examinations of evidence to provide independent assurance and advisory services to the Audit Committee and management on the adequacy and effectiveness of governance, risk management and control processes for West Dunbartonshire Council. The nature and scope of advisory services may be agreed with the party requesting the service, provided the internal audit function does not assume management responsibility. Opportunities for improving the efficiency of governance, risk management, and control processes may be identified during advisory engagements. These opportunities will be communicated to the appropriate level of management. Page 101
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Internal Audit Charter and Mandate Appendix 1 Internal audit engagements may include evaluating whether: • Risks relating to the achievement of West Dunbartonshire Council’s strategic objectives are appropriately identified and managed. • The actions of West Dunbartonshire Council’s officers, directors, management, employees, and contractors or other relevant parties comply with West Dunbartonshire Council’s policies, procedures, and applicable laws, regulations, and governance standards. • The results of operations and programs are consistent with established goals and objectives. • Operations and programs are being carried out effectively and efficiently. • Established processes and systems enable compliance with the policies, procedures, laws, and regulations that could significantly impact West Dunbartonshire Council. • The integrity of information and the means used to identify, measure, analyse, classify, and report such information is reliable. • Resources and assets are acquired economically, used efficiently and sustainably, and protected adequately. Approved by Audit Committee 11 June 2025 Page 102
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WEST DUNBARTONSHIRE COUNCIL Report by Chief Officer - Resources Audit Committee: 11 June 2025 Subject: Code of Good Governance and Annual Governance Statement 2024/25 1. Purpose 1.1 The purpose of this report is to: • Advise Committee of the outcome of the annual self-evaluation undertaken of the Council’s compliance with its Code of Good Governance; and • Invite Committee to consider the Annual Governance Statement that will be published in the Council’s Abstract of Accounts. 2. Recommendations 2.1 The Committee is asked to: i) Note the outcome of the recent self-evaluation process in considering how the Council currently meets the agreed Code of Good Governance, together with the issues identified and improvement actions; and ii) Consider the detail of the Annual Governance Statement and approve the actions identified by management to improve the internal control environment. 3. Background 3.1 Delivering Good Governance in Local Government: Framework, published by CIPFA in association with Solace in 2007, set the standard for local authority governance in the UK. CIPFA and Solace reviewed the Framework in 2015 to ensure it remained ‘fit for purpose’ and published a revised edition in spring 2016. The current Delivering Good Governance in Local Government: Framework (CIPFA/Solace, 2016) has applied to annual governance statements prepared for the financial year 2016/17 onwards. 3.2 The concept underpinning the revised Framework is that it assists local government in taking responsibility for developing and shaping an informed approach to governance, aimed at achieving the highest standards in a measured and proportionate way. This Framework is intended to assist authorities individually in reviewing and accounting for their own unique approach. The overall aim is to ensure that: Item 12 Page 103
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• resources are directed in accordance with agreed policy and according to priorities; • there is sound and inclusive decision making; and • there is clear accountability for the use of those resources in order to achieve desired outcomes for service users and communities. 3.3 In order to demonstrate a commitment to sound governance, local authorities are encouraged to publish a governance statement on an annual basis. 3.4 The annual governance statement is the formal statement that recognises, records and publishes a Council’s governance arrangements as defined in the CIPFA/SOLACE Framework. The statement requires to be signed off by the most senior officer (Chief Executive) and the most senior member (Council Leader). 3.5 The draft Annual Governance Statement details the key elements of the Council’s governance framework, annual review process, improvement areas and overall opinion. 3.6 Following the review of the Audit Committee in 2018, as part of the action plan it was agreed that the draft Annual Governance Statement would be submitted to the Audit Committee as a stand-alone document for consideration. 4. Main Issues 4.1 A revised local code was developed for the Council and agreed at the Audit and Performance Review Committee on 8 March 2017. 4.2 The annual self-evaluation review for 2024/25 has been carried out and has identified that current practice is mainly compliant with the Code of Governance, whilst identifying some areas for improvement. There were no significant governance issues identified and areas for improvement are detailed within the draft Annual Governance Statement at Appendix 1. 4.3 In terms of the Council’s overall corporate governance arrangements, it is considered that, although there are some areas of work to be completed to ensure full compliance with the Local Code of Good Governance, the overall governance arrangements of the Council are considered to be satisfactory. The Annual Governance Statement 2024/25 is informed by the self- assessment of compliance against the Local Code of Good Governance and related Certificates of Assurance from Chief Officers, the work of Internal Audit, External Audit and external inspection agencies. 4.5 The Council’s Annual Governance Statement will be published within the Annual Accounts for the year ended 31 March 2025. Page 104
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5. People Implications 5.1 There are no personnel issues. 6. Financial and Procurement Implications 6.1 There are no direct financial or procurement implications arising from this report as all improvement actions will be managed from within existing resources. 7. Risk Analysis 7.1 There is a risk that a failure to maintain a local code and develop a framework to support the gathering and updating of the necessary evidence will leave the Council unable to produce a Governance Statement. The current approach to ongoing annual assessment of compliance and reporting to this Committee ensures that the Council can produce a meaningful Governance Statement. 8. Equalities Impact Assessment (EIA) 8.1 There are no issues identified. 9. Consultation 9.1 This report has been subject to consultation with appropriate Chief Officers. 10. Strategic Assessment 10.1 This report helps ensure strong governance and will help support delivery of the Council Plan, and in particular priority 4: Inclusive and Adaptable, with the Council seeking to provide high quality and adaptable services that deliver value for money. .................................... Laurence Slavin Chief Officer - Resources Date: 11 June 2025 ______________________________________________________________ Person to Contact: Andi Priestman, Shared Service Manager – Audit & Fraud E-mail: andi.priestman@west-dunbarton.gov.uk Appendices: 1 – Draft Annual Governance Statement Background Papers: Report to Audit and Performance Review Committee (8 March 2017) – Revised Local Code of Good Governance Wards Affected: All Wards Page 105
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Item 12 Appendix 1 Annual Governance Statement The Annual Governance Statement explains the Council’s governance arrangements as it meets the requirements of the “Code of Practice for Local Authority Accounting in the UK” (the Code) and reports on the effectiveness of its system of internal control, including the reliance placed on the governance frameworks of our partners. It is included within the Council’s Financial Statements to assure stakeholders on how the Council directs and controls its functions and how it relates to communities in order to enhance transparency and scrutiny of the Council’s activities. Scope of Responsibility The Council is responsible for ensuring its business is conducted in accordance with the law and proper standards, and public money is safeguarded and properly accounted for, and used economically, efficiently and effectively. It also has a statutory duty to make arrangements to secure best value under the Local Government in Scotland Act 2003. In discharging this responsibility, the Council's Elected Members and Corporate Management Team (CMT) are responsible for putting in place proper arrangements for the governance of its affairs and facilitating the effective exercise of its functions, which includes arrangements for the management of risk. The Council has established an arms-length external organisation: West Dunbartonshire Leisure Trust – to deliver leisure services more effectively on the Council’s behalf, which reports regularly to Elected Members. From 1 July 2015 the West Dunbartonshire Health and Social Care Partnership was established to continue the development of the integration of social care and health services between the Council and NHS Greater Glasgow and Clyde. The Council has approved and adopted a Local Code of Corporate Governance (the Local Code), which is consistent with the principles of the Chartered Institute of Public Finance and Accountancy (CIPFA) and the Society of Local Authority Chief Executives (SOLACE) Framework: “Delivering Good Governance in Local Government”. The Local Code evidences the Council's commitment to achieving good governance and demonstrates how it complies with the governance standards recommended by CIPFA. A copy of this Code is available from the Council website at: http://www.west-dunbarton.gov.uk/media/4312582/wdc-local-code.pdf This statement explains how the Council expects to comply with the Local Code and also meets the Code of Practice on Local Authority Accounting in the UK, which details the requirements for the Annual Governance Statement. The Purpose of the Governance Framework The governance framework comprises the systems, processes, and culture and values by which the Council is directed and controlled and through which it accounts to and engages with communities. It enables the Council to monitor the achievement of the strategic objectives set out in the Strategic Plan and whether they have led to the delivery of appropriate and value for money services. The Council has a system of internal control to manage risk to a reasonable level. Internal controls cannot fully eliminate risk of failure to achieve policies, aims and objectives and can therefore only provide reasonable assurance of effectiveness. The system of internal control is based on an ongoing process designed to: • identify and prioritise the risks to the achievement of the Council's policies, aims and objectives • evaluate the likelihood of those risks being realised and the impact should they be realised • manage the risks efficiently, effectively and economically. The governance framework has been in place at the Council for the year ended 31 March 2025 and up to the date of the approval of the Statement of Accounts. Page 107
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Appendix 1 The Governance Framework The main features of our governance arrangements are described in the Local Code but are summarised below: • The overarching strategic vision and objectives of the Council are detailed in the Strategic Plan 2022/27, which sets out the Council’s key priorities and key outcomes the Council is committed to delivering with its partners, as set out in the Local Outcome Improvement Plan. • Services are able to demonstrate how their activities link to the Council's vision and priorities through their Delivery Plans. Performance management and monitoring of service delivery is reported through service committees and monitored by the CMT. The Council regularly publishes information about its performance. • The West Dunbartonshire Community Alliance, which supports Community Planning West Dunbartonshire, represents the views of community organisations, communities of interest and geographical communities. Furthermore the Council has an Engaging Communities Framework setting out its approach to engaging with citizens, community organisations and stakeholders. Consultation on the future vision and activities of the partnership is undertaken in a range of ways, including seeking the views of the Alliance and through specific service consultations. The Council actively engages with its partners through community planning arrangements. • The Council has adopted a Code of Conduct and employment policies for its employees. Elected members adhere to the nationally prescribed Code of Conduct for Members in a localised format. The Council also has a protocol on member/officer relations and an inter-party protocol. • The Council has an established procedural framework which incorporates a Scheme of Delegation, Standing Orders and Financial Regulations. These describe the roles and responsibilities of Elected Members and officers and are subject to regular review. The Council facilitates policy and decision making through the agreed committee structure. • Responsibility for maintaining and operating an effective system of internal financial control rests with the Council’s Chief Officer Resources as Section 95 Officer. The system of internal financial control is based on a framework of regular management information, the Financial Regulations, administrative procedures (including separation of duties), management and supervision, and a system of delegation and accountability. Development and maintenance of the system is undertaken by managers within the Council. • The functions of the Audit Committee are undertaken as identified in CIPFA Guidance - Audit Committees: Practical Guidance for Local Authorities. • The Council’s approach to risk management is set out in the Risk Management Framework. A strategic risk register is in place and an update report on this is regularly submitted to the Corporate Services Committee and Audit Committee. The approach is embedded within the Council’s strategic planning and performance management framework with regular reporting of risk management arrangements to service committees. • Comprehensive arrangements are in place to ensure Elected Members and officers are supported by appropriate training and development. • The Council has adopted a response that is appropriate for its fraud and corruption risks and commits to maintain its vigilance to tackle fraud in accordance with the Code of Practice on Managing the Risk of Fraud and Corruption. • The Council continues to assess and monitor ongoing compliance with the CIPFA Financial Management Code. Review of Effectiveness The Council has a responsibility to review, at least annually, the effectiveness of its governance framework including the system of internal financial control. The review of effectiveness of the framework is informed by the work of the CMT which has responsibility for the development, implementation and maintenance of the governance environment, the Shared Service Manager – Audit & Fraud’s (the Council’s Chief Internal Auditor) annual report; and reports from the external auditors and other review agencies and inspectorates. The Council’s current Code of Good Governance was approved at the Audit & Performance Review Committee on 8 March 2017. An assessment of the Council’s compliance with the Code of Good Governance is supported by a process of self-assessment and assurance certification by Chief Officers and the outcome of this assessment was reported to the Audit Committee on 11 June 2025. Page 108
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Appendix 1 Each Chief Officer was presented with a self-assessment checklist to complete and return as evidence of review of the seven key areas of the Council’s governance framework which provided assurance for their service areas. The Audit Committee performs a scrutiny role in relation to the application of the Code of Good Governance and regularly monitors the performance of the Council's Internal Audit service. In relation to the effectiveness of governance arrangements and systems of internal control for the Council’s group entities, the Council places reliance upon the individual bodies’ management assurances in relation to the soundness of their systems of internal control. The Internal Audit service operates in accordance with the Public Sector Internal Audit Standards (PSIAS) 2017 and reports to the Audit Committee. An annual programme of work is determined and undertaken by Internal Audit, approved by the Audit Committee, based upon an established risk- based methodology. The Shared Service Manager – Audit & Fraud provides an independent opinion on the adequacy and effectiveness of the Council’s System of Internal Control. The Audit Committee performs a scrutiny role in relation to the application of PSIAS and regularly monitors the performance of the Internal Audit service. The Council's Shared Service Manager – Audit & Fraud has responsibility for reviewing independently and reporting to the Audit Committee annually, to provide assurance on the adequacy and effectiveness of the Standards and the extent of compliance. From 1 April 2025 the new Global Internal Audit Standards came into effect for the UK Public Sector and a transition plan is in place to ensure the Internal Audit service is compliant with the requirements by 31 March 2026. It is our view that the Council has in place a sound system of internal control and that appropriate mechanisms are in place to identify areas of weakness. This is corroborated by an annual assurance statement prepared by the Shared Service Manager – Audit & Fraud stating that the overall control environment opinion was “Generally Satisfactory with some improvements needed” such that reasonable assurance can be placed upon the adequacy and effectiveness of the Council's internal control systems. There was one audit which received an overall opinion of “Requires Improvement”, namely Housing Repairs and Maintenance. An action plan is in place to address all issues identified in relation to the audit which will be monitored and reported to CMT and Audit Committee. Due to vacancies arising in the team, some audits from 2023/24 were completed in the first 6 months of 2024/25 which has impacted on the completion of the fieldwork for the 2024/25 audit plan. However, the overall audit plan is set within the context of a multi-year approach to audit planning such that key risk areas are reviewed over a 5-year cycle. The system of governance (including the system of internal control) can provide only reasonable and not absolute assurance that the assets are safeguarded, that transactions are authorised and properly recorded, that material errors or irregularities are either prevented or would be detected within a timely period and that significant risks impacting on the achievement of the Council's objectives have been mitigated. Governance Issues and Planned Actions The following main issues and areas for improvement during 2024/25 have been identified through the self-assessment exercise carried out by Chief Officers against key aspects of the Code of Good Governance. These will be monitored as part of the next annual review in 2025/26. Improvement Area identified by 2024/25 Exercise Responsible Officer Embedding Be the Best Conversations within all service teams. Chief Officer Citizen, Communities and Facilities Management Business Classification Scheme will be rolled out to relevant service areas in relation to electronic records. Chief Officer, Resources Work is ongoing to implement the Council’s information classification policy and procedure as part of the Microsoft Office 365 project. Data Protection/Information Governance Officer Process for reporting on the status of external audit actions regularly to Audit Committee will be developed and implemented. Chief Officer, Resources Page 109
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Appendix 1 Guidance for keeping school funds has been updated, following audit. Work with establishments this session to ensure compliance with guidance Chief Officer, Education, Learning and Attainment Improvements have been recognised in terms of how global share is organised in relation to how we structure our data on the shared drive and comply with document retention timescales. Preparation for move to Microsoft 365 in session 2025/26. Chief Officer, Education, Learning and Attainment There are different induction and performance appraisal processes across HSCP services reflecting the differences in organisations. Work is ongoing to review and improve the induction process. Chief Officer, HSCP Weekly, monthly and quarterly management information is supplied to all HSCP managers and relevant governance forums however it is recognised trhese reports could be further developed to improve the quality of the data and ensure the provision of robust management information across the HSCP. Chief Officer, HSCP In relation to self-evaluation, it is recognised that the HSCP would benefit from a more structured approach to self-evaluation. Chief Officer, HSCP In relation to staff training and development, it is recognised this is an area for improvement with clarity of input from partners to be achieved. Chief Officer, HSCP Succession planning is recognised as an area of improvement for the HSCP and positive steps have been taken to address this across the HSCP. Chief Officer, HSCP Key business continuity plans are in place. Work is ongoing to develop business impact analysis documentation across the HSCP. Chief Officer, HSCP Levels of procurement compliance remain consistent but it is recognised that further work is required to strengthen procurement and commissioning arrangements within the HSCP to ensure costs and risks are managed appropriately. Chief Officer, HSCP Improvement actions arising from external inspection are monitored by the HSCP Board however further work is required in this area. Chief Officer, HSCP Financial procedures are being developed for Area Resource Group to ensure risk focused decision-making underpins all agreed packages of care/placements to care homes and an escalation pathway to ensure Chief Officer sign off where there is potential for emergency care packages to breach regulations. Chief Officer, HSCP The 2023/24 Annual Governance Statement highlighted a range of areas for improvement during 2024/25. The following table provides an update on progress with these with a number having been completed or are areas which continue to have an ongoing focus: Improvement Area identified by 2023/24 Exercise Status Embedding Be the Best Conversations within all service teams. Ongoing Work is required in some services to review and update business continuity planning documentation. Complete Business Classification Scheme will be rolled out to relevant service areas. Ongoing Work is ongoing to implement the Council’s information classification policy and procedure as part of the Microsoft Office 365 project. Ongoing Page 110
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Appendix 1 The refreshed engagement policy and procedure is being reviewed and will be presented for approval in September 2024. Complete Process for reporting on the status of external audit actions regularly to Audit Committee will be developed and implemented. Ongoing A review of Guidance for Administration of School Funds is underway following an Internal Audit review. Ongoing Action plans arising from reviews and inspections from Statutory Bodies including HMIE and the Care Inspectorate will be published online. Complete A review of workforce and succession plans is underway to ensure the plans take cognisance of future needs. Complete Best Value Assurance Report A new approach to auditing Best Value has been introduced by the Accounts Commission. This work is now integrated into annual audit reporting from 2023/24 to build local audit knowledge and reduce the scrutiny burden on councils. External audit also conduct thematic reviews as directed by the Accounts Commission. For 2023/24 this work focused on Workforce Innovation. The Council’s appointed external auditors completed their work in this during 2023/24 with a report presented to Audit Committee in September 2024. The overall conclusion was that “the council’s workforce planning strategy is aligned with its strategic plan and supports the “our council is inclusive and adaptable” strategic priority. The council could make better use of data available at organisation and service level, and through the workforce planning console, to identify future resource needs and improve succession planning.” Health and Social Care Integration The Council, as the funder of the Social Care services within the West Dunbartonshire Health and Social Care Partnership (HSCP) has an interest in the governance arrangements within the HSCP Board. Internal Audit arrangements for the HSCP is provided jointly by the Council’s Internal Audit service and the Health Board’s Internal Audit Service, with the Council’s Internal Audit service providing audit arrangements for social care services and the general oversight of the HSCP Board’s governance arrangements. The HSCP Board has arrangements in place to review its own ongoing compliance with the revised Code of Governance. Due to the Council’s role as social care service provider Internal Audit’s process outcomes on such services are reported to the Council’s Audit Committee as well as that of the HSCP Board. The Chief Social Worker provides the Council with an annual report on the performance of the HSCP. The financial arrangements for the Council’s funding to the HSCP Board are aligned and budget processes run parallel to ensure that appropriate budgets for the HSCP Board are aligned with Council policy and budgeting approaches. On an ongoing basis the Council continues to receive budgetary control information in relation to HSCP Board services funded by the Council. Compliance with Best Practice Statement on the role of the Chief Financial Officer in local government The Council complies with the requirements of the CIPFA Statement on “The Role of the Chief Financial Officer in Local Government 2010”. The Council’s Chief Financial Officer (Section 95 Officer) has overall responsibility for the Council’s financial arrangements and is professionally qualified and suitably experienced to lead the Council’s finance function and to direct finance staff. Statement on the role of the Head of Internal Audit in Public Service Organisations The Council complies with the requirements of the CIPFA Statement on “The Role of the Head of Internal Audit in Public Service Organisations 2019”. The Council’s Chief Internal Auditor has responsibility for the Council’s Internal Audit function and is professionally qualified and suitably experienced to lead and direct the Council’s Internal Audit staff. The Internal Audit service generally operates in accordance with the CIPFA “Public Sector Internal Audit Standards 2017”. Page 111
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Appendix 1 Assurance Subject to the above, and on the basis of the assurances provided, we consider the governance and internal control environment operating during 2024/25 provides reasonable and objective assurance that any significant risks impacting on the achievement of our principle objectives will be identified and actions taken to avoid or mitigate their impact. Systems are in place to continually review and improve the governance and internal control environment with plans in place to address improvement areas. Martin Rooney Peter Hessett Laurence Slavin Leader of the Council Chief Executive Chief Officer – Resources Date: Date: Date: Page 112
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WEST DUNBARTONSHIRE COUNCIL Report by the Chief Officer - Resources Audit Committee: 11 June 2025 ___________________________________________________________________ Subject: Treasury Management Strategy and Annual Investment Strategy 1. Purpose 1.1 Following approval at Council on 26 March 2025, the purpose of this report is to provide Members with the opportunity to further scrutinise the Treasury Management Strategy Statement and Annual Investment Strategy and the indicators contained within. 2. Recommendations 2.1 Members are requested to consider the report and note that on the 26 March 2025 Council agreed: (a) to approve the proposed Treasury Management Strategy Statement and Annual Investment Strategy and the indicators contained within; (b) to approve the continued use of the Asset Life Method (using either annuity or equal instalment) for the repayment of loan fund advances with the exception of spend to save schemes where the funding/income profile method could be used; (c) to approve the ability to continue to use countries with a sovereign rating of AA- and above; (d) to note the removal of Lender Option Borrowing Option as an approved source of borrowing; and (e) to note the report will be referred to Audit Committee for further scrutiny. 3. Background 3.1 The Council has adopted the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice on Treasury Management in Local Authorities. The Code requires an annual Treasury Management Strategy Statement and Investment Strategy to be approved by Council for the forthcoming financial year. This report seeks Member’s approval of the proposed Treasury Management Strategy Statement and Annual Investment Strategy. The report also sets out the policy for the repayment of loans fund advances for 2025/26. 3.2 The Council uses MUFG Corporate Markets Treasury Limited, formerly Link Treasury Services, as its external treasury management advisors. The Council recognises there is value in employing external providers of treasury management services in order to acquire access to specialist skills and resources. The Council will ensure that the terms of their appointment and the Item 13 Page 113
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methods by which their value will be assessed are properly agreed and documented, and subject to regular review. 3.3 Appendix 1 and 2 to this report outline the Council’s Capital Prudential and Treasury Indicators. Members are asked to approve these as required by the Local Government (Scotland) Act 1973 (extended via the Code on the Investments of Money by Scottish Local Authorities under section 40 of the Local Government in Scotland Act 2003. 3.4 In 2016 regulations were enacted by the Scottish Parliament, the Local Authority (Capital Finance and Accounting) (Scotland) Regulations 2016, They require the Council to set out its policy for the statutory repayment of loans fund advances prior to the start of the financial year. This is detailed in section 3 of Appendix 1 to this report. The policy on repayment of loans fund advances in respect of capital expenditure by the Council is to ensure the Council makes an annual prudent provision to pay off an element of the accumulated loans fund advances made in previous financial years. . 3.7 The CIPFA Treasury Management Code of Practice requires greater Member scrutiny of the treasury polices, increased Member training and awareness and greater frequency of information. It also required the Council to ensure effective scrutiny of its treasury management strategy and polices. Within the Council the body identified to fulfil this role is the Audit Committee. Therefore, the proposed Treasury Management Strategy Statement and Annual Investment Strategy and the indicators contained within should be referred to the Audit Committee once approved by Council to ensure further scrutiny takes place. 4. Main Issues 4.1 The Local Government in Scotland Act 2003 requires Council to adopt the CIPFA Prudential Code and produce prudential indicators. Appendix 6 of this report details the Council’s expected year end indicators for 2025/26, revises the indicators for 2026/27 to 2028/29 and projects the indicators to 2033/34, with those for the period 2028/29 to 2033/34 being indicative at this time. 4.2 Within this overall prudential framework there is a clear impact on the Council’s treasury management activity, either through borrowing or investment activity. As a consequence, the treasury management strategy (which includes details of debt and investment) for 2025/26 to 2033/34 is included in Appendix 6 (with the period 2028/29 to 2033/34 being indicative at this time) to complement the prudential indicators relating to the treasury activity. 4.3 Other appendices to this report are Appendix 3 - Details of the risks, mitigating controls and limits associated with each of the permitted investment categories Appendix 4 - Credit rating type and definitions Appendix 5 - List of approved sovereign countries for investments . Changes to Financial Regulations – Leasing Page 114
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4.4 The Treasury Management Strategy report to Council in March 2021 reported a change to financial regulations regarding leasing. The change was postponed and will be reflected in the accounts effective 1 April 2024 (financial year 2024/25). 4.5 This change brings the assets and future liabilities for all leases onto the Council’s Balance Sheet from 1 April 2024, which will bring leased assets onto the balance sheet in the 2024/25 accounts. The effect of this change will increase the ‘level of debt’ identified by the Council; the Capital Financing Requirement; Operational Boundary; and Authorised Limit, by the future liability of the leased assets. Forecast and estimates of the ratio of financing costs to Net Revenue Stream may also be affected in future years. This change affects all councils, though this Council has a low number of leased assets. Capital Strategy 4.6 In December 2017, CIPFA issued a revised Prudential Code. As a result, from 2019/20, all local authorities were required to prepare a Capital Strategy report, and a revision to the Prudential Code 2021 confirmed that local authorities must produce an Annual Capital Strategy which is intended to provide: • a high-level overview of how capital expenditure, capital financing and treasury management activity contribute to the provision of services • an overview of how the associated risk is managed • the implications for future financial sustainability. 4.6.1 The aim of the Capital Strategy is to ensure all elected members understand the overall strategy, governance procedures and risk appetite entailed by the Strategy. 4.6.2 The 2025/26 Capital Strategy (approved by Council on 5 March 2025) includes detail on capital expenditure, investments and liabilities and treasury management to allow Members to understand how stewardship, value for money, prudence, sustainability and affordability will be secured. 5. Option Appraisal 5.1 No option appraisal was required for this report. 6. People Implications 6.1 There are no people implications arising from this report. Page 115
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7. Financial and Procurement Implications 7.1 The prudential indicators in Appendix 6 show the Council’s likely and indicative capital financing for the period 2025/26 to 2033/34 while the treasury management indicators in Appendix 6 show the likely borrowing requirement for the same period. 7.2 Table E in Appendix 6 indicates that in each year the gross borrowing requirement (which includes short-term borrowing for cashflow purposes) is below the capital financing requirement (CFR) and does not exceed the total of the CFR in the preceding year plus the estimates of any additional CFR for 2025/26 and following two financial years (Appendix 2 – section 2.1 and 2.2). 7.3 As a key indicator of prudence this illustrates the Council only undertakes long-term borrowing for capital purposes 7.4 There are no procurement issues arising from this report. 8. Risk Analysis 8.1 There are four main risks associated with the formulation of prudential indicators and the treasury management strategy as detailed in Appendix 1 and 2: (a) Capital receipts which affect the capital financing and borrowing requirement may not materialise and if this occurs then additional borrowing will be required in order to fund the financing requirement. (b) The risk of Counterparties default (i.e. loss of principal sum invested) must also be taken into account; however the robust controls included within the investment strategy (Appendix 2 – section 6) will assist in mitigating this risk. (c) Capital inflation may increase capital expenditure levels, which in turn may affect the capital financing and borrowing requirement leading to an increase in borrowing, assuming no additional capital receipts are available. (d) Interest rates have increased significantly over the past 18 months and are subject to further uncertainty. It was highlighted to Council on the 5 March that while the plan is affordable in 2025/26 assuming a balanced revenue budget is agreed, it does create significant pressures on the revenue budget due to the cost of borrowing and that it will have revenue implications for future years which will require to be planned for in the normal manner through long-term financial strategies and budget planning processes. This may require the capital programme to be subject to further review in future years if it is deemed to be placing an excessive pressure on the revenue budget and the sustainability of the Housing Revenue Account (HRA). Page 116
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9. Equalities Impact Assessment 9.1 No equalities impact assessment was required in relation to this report. 10. Environmental Sustainability 10.1 No assessment of environmental sustainability was required in relation to this report. 11. Consultation 11.1 Legal and Resources have been consulted in relation to this report and appendices. 12. Strategic Assessment 12.1 Proper budgetary control and sound financial practice are cornerstones of good governance and support Council and officers to pursue the 5 strategic priorities of the Council’s Strategic Plan. This report forms part of the financial governance of the Council. Laurence Slavin Chief Officer - Resources Date: 13 May 2025 Person to Contact: Karen Shannon Church Street, Dumbarton Email: Karen.Shannon@west-dunbarton.gov.uk Appendices: 1 Prudential Indicators 2025/26 to 2033/34 2 Treasury Management Strategy 2025/26 to 2033/34 3 West Dunbartonshire Council and Common Good Funds Permitted Investments, Associated Controls and Limits 4 Counterparty Rating Explanations 5 Approved Countries for Investment 6 Prudential and Treasury Indicators Background Papers: Treasury Management Strategy and Annual Investment Strategy Report-Council 26 March 2025 2025/26 Budget Report – Council 5 March 2025 Treasury Management Strategy – Council 27 March 2024 Treasury Mid-year update – Council 18 December 2024 Wards Affected: All wards affected. Page 117
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Capital Prudential Indicators 2024/25 to 2033/34 1. Capital Expenditure and Financing 1.1 This prudential indicator is a summary of the Council’s capital expenditure plans, both those agreed previously, and those forming part of the 2025/26 budget setting. The Council’s gross capital expenditure plans are summarised in Table A within Appendix 6. This forms the first of the prudential indicators. Total expenditure is partially funded by resources such as capital receipts, capital grants, etc. Any remaining expenditure which cannot be immediately funded from other resources will form a borrowing need. 1.2 A certain level of capital expenditure will be supported by the general capital grant provided by the Scottish Government, and also specific capital grants from the Scottish and UK Governments. Anything above this level will be funded from the Council’s own resources (e.g. other grants, capital receipts, prudential borrowing). 1.3 There are two main limiting factors which may impact on the Council’s ability to undertake unsupported capital expenditure: • Whether the revenue resource is available to support the implications of capital expenditure (borrowing costs and running costs). • The Government may use a control to limit either the total of all councils’ plans nationally, or in the event of an assessment by central government that local plans are unaffordable at a specific council, it may implement a local control. No such control has been implemented since the inception of the prudential code, however, HM Treasury keep this under review. 1.4 The summary of capital expenditure, as per the capital plan reported to Council on 5 March 2025 for both HRA and General Services, is shown in table A in Appendix 6. The HRA capital plan refresh extends to 2029/30 with the period from 2029/30 to 2033/34 extracted from the HRA Business Plan for the purposes of Prudential Indicator calculations. 1.5 Under section 22 of Schedule 3 of the Local Government (Scotland) Act 1975 a local authority may establish a capital fund to be used for “defraying any expenditure of the authority to which capital is properly applicable, or in providing money for repayment of the principal of loans (but not any payment of interest on loans)”. Furthermore Finance Circular 7/2018 confirms that capital receipts may also be used to “fund the cost of premiums, either as they are incurred, or as they are recharged back to the General Fund/HRA” 1.6 The budget update for General Services reported to Council assumes an element of capital receipts is used to fund the principal element of loan charges and annual premium costs between 2024/25 and 2027/28. This has been adjusted for within these indicators, where appropriate. A review will be undertaken during 2025/26 to ensure that it remains sustainable to utilise capital receipts to fund the principal element of loan charges 2. The Council’s Borrowing Need (the Capital Financing Requirement) 2.1 The second prudential indicator is the Council’s Capital Financing Requirement (CFR). The CFR is simply the total outstanding capital expenditure which has not yet been paid for from either revenue or capital resources. It is a measure of the Council’s underlying borrowing Item 13 Appendix 1 Page 119
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need. The net capital financing need (as indicated in Table A in Appendix 6) impacts directly on the CFR. 2.2 Due to accounting requirements, the CFR currently includes any other long-term liabilities (i.e. PPP schemes, PPI schemes, finance leases) brought onto the Balance Sheet. Whilst this increases the CFR, and therefore the Council’s borrowing requirement, these types of scheme include a borrowing facility and so the Council is not required to separately borrow for these schemes. The Council currently has circa £86.0m for PPP schemes and leases within the CFR. From 1 April 2024, further accounting changes see operational leases (where the Council is lessee) also being brought onto Balance Sheet, which will further increase CFR through other long-term liabilities (value to be confirmed, however an estimate has been included within the appendices). 2.3 The CFR projections for both General Services and HRA are shown in table B in Appendix 6 and show that the CFR for the HRA and the CFR for General Services is projected to increase each year from 2023/24 to 2033/34 2.4 The expected impact of the capital expenditure decisions above on the Council’s debt and investment position are shown in the treasury strategy (Appendix 2). 3. Statutory repayment of loans fund advances 3.1 The Council is required to set out its policy for the statutory repayment of loans fund advances prior to the start of the financial year. The repayment of loans fund advances ensures the Council makes a prudent provision each year to pay off an element of the accumulated loans fund advances made in previous financial years. 3.2 A variety of options are provided to councils so long as a prudent provision is made each year as detailed below: Option Method Detail 1 Statutory Loans fund advances will be repaid by the annuity method. The Council was permitted to use this option for a transitional period only, of five years until 31 March 2021, at which time it was required to change its policy to use alternative approaches based on depreciation, asset life periods or a funding/income profile as detailed below. 2 Depreciation Annual repayment of loans fund advances will follow standard depreciation accounting procedures. 3 Asset Life Loans fund advances will be repaid with reference to the life of an asset using either the equal instalment or annuity method. 4 Funding/ Income Profile Loans fund advances will be repaid by reference to an associated income stream 3.3 Council is recommended to approve the following policy for loans fund advances: • For loans fund advances made before 1 April 2016, advances will be repaid by the annuity method, by the appropriate write off period (based upon useful asset lives, following the agreed Council policy). Page 120
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• Recognising that the Council had forward capital expenditure plans and was already committed to that plan and the revenue implications of that plan, the policy for loans fund advances made from 1 April 2016 to 31 March 2021 was to mainly repay loans fund advances by the annuity method (with a write off period based upon useful asset lives) unless an alternative method is more appropriate. • For loans fund advances made after 1 April 2021 (i.e. commencing 2021/22), the policy for the repayment of loans advances is to apply the following options, selecting the most suitable method for each individual advance. o Asset life method – loans fund advances will be repaid with reference to the life of an asset using either the equal instalment or annuity method. It is likely that the equal instalment method will be used. o Funding / Income profile method – loans fund advances will be repaid by reference to an associated income stream. 3.4 The pooled interest rate applied to the loans fund repayments is based on historic interest rates and is currently 4.38%. 3.5 Table C in Appendix 6 details the loans fund repayment profile for 2024/25 onwards based on the balance outstanding at 1 April 2024 and capital expenditure plans 2024/25 to 2032/33 as per Table A. 4. Affordability Prudential Indicators 4.1 The previous sections cover the overall capital and control of borrowing, but within this framework prudential indicators are required to assess the affordability of the capital investment plans. These indicate the impact of the capital investment plans on the overall Council’s finances. The Council is asked to approve the following indicators: 4.2 Actual and estimates of the ratio of financing costs to net revenue stream. This indicator is detailed in Table D in Appendix 6, and identifies the trend in financing cost of capital (loan charges and long-term liability financing) against the net revenue stream (funding sources e.g. Scottish Government revenue support grant, council tax and HRA rental income). 4.3 The estimates of financing costs include current commitments and the impact of capital expenditure as per Table A and this indicator shows the percentage of total council revenue expenditure that is spent on repayment of loan charges and long-term liability capital and interest repayments. 5. Financial reporting changes in relation to leases 5.1 From 1 April 2024 there is a significant change to the Accounting Code of Practice which the Council follows for their Financial Statements, which will impact on debt levels and prudential indicators in the future. This change is in relation to assets the Council leases. 5.2 Currently there are two types of leases which are treated differently through the Financial Statements. From April 2024, all leases (where the Council is lessee and with a few exceptions) will require to be accounted for on the Council Balance Sheet as assets. For illustrative purposes, leases currently held by the Council (but not owned and therefore not currently on the Council’s Balance Sheet) include leases for properties (such as Aurora/ Clydebank Town Centre Office/ Bridge Street), Page 121
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photocopiers, and vehicles. The treatment of these leases will become similar to the current accounting reporting for PPP assets. 5.3 Accounting for these leases on the Balance Sheet will result in increases to assets and long- term liabilities, affecting a number of the prudential and treasury management indicators – increasing: the ‘level of debt’ identified by the Council; the Capital Financing Requirement; Operational Boundary; and Authorised Limit, by the value of the leases. Forecast and estimates of the ratio of financing costs to Net Revenue Stream may also be affected. 5.4 We have carried out an exercise to identify all leases and values for both the assets and the liabilities. When leases are brought on balance sheet in 2024/25 this has resulted in an increase in the CFR of £2.21m. Page 122
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Treasury Management Strategy 2025/26 – 2033/34 1. Background 1.1 The treasury management service is an important part of the overall financial management of the Council’s affairs. Whilst the prudential indicators in Appendix 1 consider the affordability and impact of capital expenditure decisions, the treasury service covers the effective funding of these decisions. There are specific treasury prudential indicators included in this strategy which need approval. 1.2 The Council’s treasury activities are strictly regulated by statutory requirements and a professional code of practice (the CIPFA Code of Practice on Treasury Management). 1.3 As a requirement of the Code the Council is required to adopt a Treasury Management Policy Statement and four Treasury Management clauses. These form part of the Council’s financial regulations and the following documents were adopted on 5 March 2018: • Treasury Management Policy Statement • Treasury Management Clauses • The Treasury Management Role of the Section 95 Officer 1.4 The policy requires an annual strategy to be reported to Council outlining the expected treasury activity for the forthcoming three years, however in line with the longer capital planning process treasury management indicators have been provided (where appropriate) covering the period to 2033/34. A key requirement of this report is to explain both the risks, and the management of the risks, associated with the treasury service. Further reports are issued as follows: • Mid-year monitoring report on actual activity during the year including revised indicators where appropriate. • Year-end report on actual activity for the previous year. • Updates as part of the capital BCR. 1.5 This strategy covers: • The Council’s debt and investment projections • Limits to the Council’s borrowing activity • The economic climate and expected movement in interest rates • The Council’s borrowing, debt and investment strategies • Treasury performance indicators • Specific limits on treasury activities • Policy on ethical investments. 2. The Council’s debt and investment projections 2.1 The Council’s forecast treasury portfolio position at 31 March 2025 with forward projections are summarised in Table E in Appendix 6 and shows the gross debt (the treasury management operations), against the underlying capital borrowing need (the Capital Financing Requirement - CFR), highlighting any under or over borrowing. Page 123 Item 13 Appendix 2
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2.2 Within the prudential indicators there are a number of key indicators to ensure the Council operates its activities within well defined limits. One of these is that the Council needs to ensure that its gross debt does not, except in the short term, exceed the total of the CFR in the preceding year plus the estimates of any additional CFR within the following two financial years. This allows some flexibility for limited early borrowing for future years, but ensures that borrowing is not undertaken for revenue purposes. This is illustrated by comparing the estimated gross debt as at 31 March 2025 with the CFR as at 31 March 2028. 2.3 The Section 95 Officer (Chief Officer - Resources) reports that the Council has complied with this prudential indicator, and no difficulties are envisaged for the current or future years. This view takes into account the capital plan refresh reports for General Services and HRA. 3. Limits to Borrowing Activity 3.1 The Operational Boundary is detailed in Table F in Appendix 6 and is the limit beyond which external debt is not normally expected to exceed. In most cases, this would be a similar figure to the CFR, but may be lower or higher depending on the levels of actual debt. 3.2 The Authorised Limit for External Borrowing – This is a key prudential indicator and represents a control on the maximum level of borrowing. This represents a legal limit beyond which external debt is not allowed to exceed. This needs to be set or revised by Members. It reflects the level of external debt which, while not desired, could be afforded in the short term, but is not sustainable in the longer term. This is the statutory limit (Affordable Capital Expenditure Limit) determined under section 35(1) of the Local Government in Scotland Act 2003. The Government retains an option to control either the total of all councils’ plans, or those of a specific council, although this power has not yet been exercised. The Council is asked to approve the authorised limit detailed in Table G in Appendix 6. 3.3 Policy on borrowing in advance of need - This Council will not borrow more than or earlier than required purely in order to profit from the investment return of the extra sums borrowed. Any decision to borrow in advance will be within forward approved Capital Financing Requirement estimates and will be considered carefully to ensure that value for money can be demonstrated and that the Council can ensure the security of such funds. Risks associated with any borrowing in advance activity will be subject to prior appraisal and subsequent reporting through the mid-year or annual reporting mechanism. 4. UK, World and Scottish Economy Update – Extraction from MUFG Corporate Markets Treasury Limited, formerly Link Treasury Advisor, Reports (January 2025) and the Scottish Fiscal Commission Forecast (December 2024). 4.1 UK In its December meeting the Bank of England left rates steady at 4.75%, given recent upside surprises on inflation and wage growth. Analysts expect inflation to remain between 2-3% in 2025 however the risk of inflation falling too far due to poor growth remains. It is thought that the Bank of England will cut interest rates from 4.75% to 4.25% by midyear – but thereafter rate cuts will become more data dependant. Continued trade frictions could lead to more uneven outlook for global trade with policy uncertainty dampening global investment and bringing higher levels of financial market volatility. Page 124
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4.2 US The latest FOMC (Federal Open Market Committee) meeting suggests the Fed already has it’s eye on President Donald Trumps inflationary policy changes. Analysts have therefore revised up forecasts for the terminal fed funds target range, to between 3.75% and 4.00% with one 25bp cut in March and a final one in June. With the economy continuing to perform well and the labour market normalising, there are still some upside risks to the forecast particularly if Trump were to impose significant tariffs in the near term. 4.3 EU Analysts expect economic growth to remain sluggish. This is partly due to adverse demographics and structural forces hampering the competitiveness of industry, however past monetary tightening will continue to weigh on investment and rate sensitive consumption for some time. With wage growth slowing and energy prices likely to fall, inflation is likely to undershoot the 2% target in 2025. As a result, forecasts suggest that the ECB will cut interest rates a bit further and faster than is discounted in the market. 4.4 China The economy should post decent growth in Q4 off the back of more forceful fiscal support. The leadership signalled that policy will be loosened in 2025, which should continue to prop up activity. Analysts still expect growth to slow over the year as a whole because of a more challenging external environment and because persistent structural imbalances in the economy are not being addressed. 4.5 Japan The Bank of Japan held interest rates steady in its December meeting. In 2025, the economy is expected to continue recovering, driven by domestic demand. Coire inflation is expected to remain robust as steady wage growth should support domestic consumption. Analysts expect Japan’s economy to recover to a growth rate above 1% in 2025. 5 Scotland Specific Over the past year, the Scottish economy and labour market have performed slightly better than we expected in December 2023, but broadly on track with our last forecast. Gross Domestic Product (GDP) has increased marginally after being flat since early 2022, and nominal earnings growth has remained relatively strong in a still tight labour market. Stronger earnings growth, combined with lower inflation than expected a year ago, has resulted in living standards recovering more rapidly from their fall in 2022-23. Disposable income per person has bounced back strongly and returned to its 2021-22 level in 2023-24, three years earlier than we expected in December 2023, and is likely to increase further in 2024-25. Compared to our last forecast, stronger growth in real earnings has been the main driver of this faster recovery in living standards. Overall, while recent performance has been above expectations, our longer-term outlook for living standards is largely unchanged. We now expect weaker growth from 2025-26 onwards, mainly as real earnings growth slows, meaning that by 2027-28 living standards are similar to our last forecast. Page 125
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In common with our recent forecast reports, the paths for inflation and interest rates remain uncertain. A further escalation of the conflict in the Middle East, including disruptions to shipping in the Red Sea, continues to present a risk to energy prices and supply chains. The ongoing conflict in Ukraine adds to the risks around energy prices. More recently, another source of global uncertainty is the potential impact of the outcome of the US presidential election on international trade and tariff policies. Prospects for the North Sea oil and gas sector also remain important to our economic and fiscal outlook. 5. Prospect for Interest Rates 5.1 The Council has appointed MUFG Corporate Markets Treasury Limited, formerly Link Asset Services, as its treasury advisor and part of their service is to assist the Council to formulate a view on interest rates. Table H in Appendix 6 gives the current MUFG Corporate Markets Treasury Limited central view. 6. Borrowing and Debt Strategy 2025/26 – 2033/34 6.1 Table E in Appendix 6 forecasts that the capital borrowing need (the Capital Financing Requirement) will be almost fully funded with external borrowing which is a mixture of short term and long term debt. 6.2 Against this background and the risk within the economic forecast, caution will be adopted with the 2025/26 treasury operations. The Section 95 Officer will monitor interest rates in financial markets and adopt a pragmatic approach to changing circumstances. 6.3 If it was felt that there was a significant risk of fall in long and short term rates, e.g. due to a marked increase of risks around recession or of risks of deflation, then long term borrowing will be postponed, and potential rescheduling from fixed rate funding into short term borrowing will be considered. 6.4 If it was felt that there was a significant risk of a much sharper rise in long and short term rates than that currently forecast, perhaps arising from a greater than expected increase in world economic activity or further increases in inflation risks, then the portfolio position will be re-appraised with the likely action that fixed rate funding will be drawn whilst interest rates were still relatively cheap. 6.5 Any decisions will be reported to Members via the Members Bulletin at the next available opportunity. 6.6 Approved sources of long and short term borrowing include: Fixed Variable PWLB X X Local Authorities X X Banks X X Pension Funds X X Insurance Companies X X Market – long term X X Market – short term X X Overdraft X X Page 126
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Internal (capital receipts / revenue balances) X X Finance Leases X X Following the Council meeting on the 26 March 2024 and further agreement with the Audit Committee of 12 June 2024 the use of Markets (Lender option Borrowing Options (LOBO’s) have been removed as an approved use of short- term and long-term borrowing for the Council 7. Investment Strategy 7.1 The Council’s investment policy has regard to the Local Government Investment (Scotland) Regulations (and accompanying finance circular). Council has also adopted both the Treasury Management Code of Practice and the Prudential Code and is required to adopt revised editions. The day-to-day investment policies and practices are contained in the Council’s Treasury Management Practices, which reflect the requirements of these codes. 7.2 Key Objectives – Following the economic background above, the current investment climate has one over-riding risk consideration - counterparty security risk. As a result of these underlying concerns, officers have implemented an operational investment strategy which prioritises security first, liquidity second and then return. 7.2.1 The Council has adopted a prudent approach to managing risk and defines its risk appetite by the following means: • Minimum acceptable credit criteria are applied in order to generate a list of highly creditworthy counterparties. This also enables diversification and thus avoidance of concentration risk. The key ratings used to monitor counterparties are the short term and long-term ratings. • Other information: ratings will not be the sole determinant of the quality of an institution; it is important to continually assess and monitor the financial sector on both a micro and macro basis and in relation to the economic and political environments in which institutions operate. The assessment will also take account of information that reflects the opinion of the markets. To achieve this consideration the Council will engage with its advisors to maintain a monitor on market pricing such as “credit default swaps” and overlay that information on top of the credit ratings. • Other information sources used will include the financial press, share price and other such information pertaining to the financial sector in order to establish the most robust scrutiny process on the suitability of potential investment counterparties. • The Council has defined the list of types of investment instruments that the treasury management team are authorised to use. • Transaction limits are set for each type of investment. • All investments will be denominated in sterling. 7.2.2 The aim of the strategy is to generate a list of highly creditworthy counterparties which will enable diversification, and thus avoidance of concentration, with the prime intention of providing security of investment and minimisation of risk. Page 127
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7.3 Investment Strategy – The process for investment strategy under the regulations covers a wide range of Council investments and will be broadly managed in the following way: • Short Term Cash – Cash relating to day to day cash flow will be maintained on a shorter term basis in cash type products with consideration to liquidity requirements. • Longer Term Cash – Cash relating to reserves, provisions and balances on the balance sheet may be held for longer periods of time in cash type products or in longer term bonds or funds depending on: ▪ cash flow requirements ▪ the underlying expectation for interest rates ▪ the economic background of these investments may be held longer term. • Service Type Investments – These will predominantly be policy driven and approved by Members. Shareholdings, development opportunities, loans to third parties, equity instruments and investment properties held for rental returns will be regularly reviewed to judge the investment performance. • Non-Service Type Investments – Investments such as Joint venture delivery companies such as Hub West Scotland and investments in regeneration partnerships and development opportunities. 7.4 Benchmarking and Monitoring Security, Liquidity and Yield in the Investment Service A development for Member reporting is the consideration and approval of security, liquidity and discreet benchmarks. Yield benchmarks are currently widely used to assess investment performance. 7.4.1 These benchmarks are targets (not limits) and so may be breached from time to time, depending on movements in interest rates and counterparty criteria. The purpose of the benchmark is that officers will monitor the current and trend position and amend the operational strategy depending on any changes. Any breach of the benchmarks will be reported, with supporting reasons in the Mid-Year or Annual Report. 7.4.2 In the context of benchmarking, assessing security is a very subjective area to assess. Security is currently evidenced by the application of minimum quality criteria to investment counterparties, primarily through the use of credit ratings supplied by the three main credit rating agencies (Fitch/ Moody’s and Standard and Poors). Whilst this approach embodies security considerations, benchmarking levels of risk is more problematic. One method to benchmark security risk is to assess the historic level of default against the minimum criteria used in the Council’s investment strategy. Table I in Appendix 6 shows average defaults for differing periods of investment grade products for each Fitch/ Moody’s Standard and Poors long term rating category. 7.4.3 The Council’s minimum long term rating criteria is currently “A-”, meaning the average expectation of default for a one-year investment in a counterparty with a “A” long term rating would be 0.05% of the total investment (e.g. for a £1m investment the average loss would be £500). This is only an average - any specific counterparty loss is likely to be higher - but these figures do act as a proxy benchmark for risk across the portfolio. 7.4.4 As required by the CIPFA Treasury Management Code of Practice The Council will “ensure that it has adequate, though not excessive, cash resources, borrowing arrangements, overdrafts or standby facilities to enable it at all times to have the level of funds available to it Page 128
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which are necessary for the achievement of its business/service objectives”. In respect to liquidity as defined above the Council seeks to maintain: • Bank overdraft - £1m • Liquid short term deposits of at least £5m available on an overnight basis. 7.4.5 Local measures of yield investment benchmarks that will be used to assess returns are: Benchmark Benchmark Return Average Return Compound 12 month SONIA* 5.16% 4.97% Council’s Instant Access Account 4.65% 4.97% * SONIA is Sterling Overnight Index Average and has replaced LIBOR & LIBID 7.5 Council Permitted Investments – The Investments Regulations (Code on the Investment of Money by Scottish Local Authorities) requires Council approval of all the types of investment to be used and set appropriate limits for the amount that can be held for each investment type. These types of investment are termed permitted investments and any investments used which have not been approved as a permitted investment will be considered ultra vires. 7.5.1 The permitted investments which may be used in the forthcoming year are noted below. Details of the risks, mitigating controls and limits associated with each of these permitted categories are shown in Appendix 3. • Cash Type Instruments ▪ Deposits with the Debt Management Account Facility (UK Government) ▪ Deposits with other local authorities or public bodies ▪ Money Market Funds ▪ Call accounts, deposit accounts with financial institutions (banks and building societies ▪ Term deposits with financial institutions (banks and building societies) ▪ UK Government Gilts and Treasury Bills ▪ Certificates of deposits with financial institutions (banks and building societies) ▪ Structured deposit facilities with banks and building societies (escalating rates, de-escalating rates, etc). • Other Investments ▪ Investment properties ▪ Loans to third parties, including soft loans ▪ Loans to a local authority company ▪ Shareholding in a local authority company ▪ Non-local authority shareholdings ▪ Joint venture delivery companies such as Hub West Scotland ▪ Regeneration partnerships and development opportunities ▪ District Heating Schemes ▪ Local Authority Mortgage Scheme (LAMS). 7.5.2 Permitted investments related to the Common Good are also shown in Appendix 3, and where applicable the same counterparty selection criteria as noted in 6.6 above will be applied. Page 129
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7.6 Investment Counterparty Selection Criteria The primary principle governing the Council’s investment criteria is the security of its investments, although the yield or return on the investment is also a key consideration. After this main principle the Council will ensure: • It maintains a policy covering both the categories of investment types it will invest in, criteria for choosing investment counterparties with adequate security, and monitoring their security. • It has sufficient liquidity in its investments. For this purpose it will set out procedures for determining the maximum periods for which funds may prudently be committed. These procedures also apply to the Council’s prudential indicators covering the maximum principal sums invested. 7.6.1 The Section 95 Officer will maintain a counterparty list in compliance with the following criteria and will revise the criteria and submit them to Council for approval as necessary. This criteria selects which counterparties the Council will choose from, rather than defining what its investments are. 7.6.2 Credit rating type and definitions are attached within Appendices 4 and 6. 7.6.3 Credit rating information is supplied by our treasury consultants on all active counterparties that comply with the criteria below. Any counterparty failing to meet the criteria would be omitted from the counterparty (dealing) list. Any rating changes, rating watches (notification of a likely change), rating outlooks (notification of a possible longer term change) are provided to officers almost immediately after they occur and this information is considered before dealing. For instance, a negative rating watch applying to any counterparty at the minimum Council criteria will be suspended from use, with all others being reviewed in light of market conditions. 7.6.4 The criteria for providing a pool of high quality cash type investment counterparties is: • Category 1 - Good Credit Quality – the Council will only use financial institutions (including certificates of deposit and corporate bonds) which: ▪ Are UK banks; and/or ▪ Are non-UK and domiciled in a country which has a minimum Sovereign long term rating of AA; The UK will be excluded from any Sovereign rating criteria. ▪ And have, as a minimum, the following Fitch, Moody’s and Standard and Poors (S&P) credit ratings (where rated): o Short Term – F1 (or equivalent from Fitch, Moody’s and S&P) o Long Term – A- (or equivalent from Fitch, Moody’s and S&P) The difference between the ratings will be reflected in the money limits as noted in Table K in Appendix 6. • Category 2 - The Council’s own banker for transactional purposes if the bank falls below the above criteria specified in category 1, although in this case balances will be minimised in both monetary size and time. Page 130
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• Category 3 - Bank Subsidiary and Treasury Operations – the Council will use these where the parent bank has the necessary ratings outlined in category 1. • Category 4 - Building Societies – the Council will use all Societies which meet the ratings for banks outlined in category 1. • Category 5 - Money Market Funds – the Council will use either Constant Net Asset Value (CNAV) or Low Volatility Net Asset Value (LVNAV) money market funds that are AAA rated (by at least one of the 3 rating agencies) • Category 6 - UK Government (including gilts, treasury bills and the Debt Management Account Deposit Facility (DMADF/HM Treasury) • Category 7 - Local Authorities, etc 7.6.5 Due to the uncertainty in the financial markets it is recommended that the Investment Strategy is approved which will provide officers with the flexibility to deal with any unexpected occurrences. Officers can restrict the pool of available counterparties from these criteria to safer instruments and institutions. 7.6.6 The time limits for institutions on the Council’s cash type counterparty list are as noted in Table J in Appendix 6. 7.6.7 The Council’s bankers are currently Virgin Money (previously known as the Clydesdale Bank Plc) which falls within Category 3. It is recognised that the money limit of £5million may be breached for purely operational purposes on a temporary overnight basis only. The Chief Officer - Resources will endeavour to avoid this scenario but this allows for circumstances that are outwith the Council’s control where funds may be deposited unexpectedly or at short notice into the Council’s accounts after the dealing deadline for the day has passed. In such a circumstance the funds will require to be kept on an overnight basis in the Council’s bank account until appropriate arrangements can be made for investment. 7.6.8 Table J does not include a monetary limit for category 7 which are funds deposited with the UK Government namely the DMADF. This facility allows local authorities to deposit surplus cash on flexible terms and receive a market related rate of interest. Funds are held by the Bank of England and the scheme carried the Government’s own sovereign credit rating offering the highest available security and therefore no maximum monetary limit has been set. 7.6.9 Country and sector considerations - Due care will be taken to consider the country, group and sector exposure of the Council’s investments. In part the country selection will be chosen by the credit rating of the Sovereign state in Banks 1 above and the list of approved countries for investments are detailed in Appendix 5. In addition: • No more than 25% will be placed with any country outside of the UK at any time • Limits in place above will apply to Group companies • Sector limits will be monitored regularly for appropriateness. 7.6.10 Use of additional information other than credit ratings – Additional requirements under the Code of Practice now requires the Council to supplement credit rating information. Whilst the above criteria rely primarily on the application of credit ratings to provide a pool of appropriate counterparties for officers to use, additional operational market information will be applied before making any specific investment decision from the agreed pool of counterparties. This additional market information (for example Credit Default Swaps, Page 131
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negative rating watches/outlooks) will be applied to compare the relative security of differing investment counterparties. 7.6.11 Economic Investment Considerations – Current forecasts on shorter-term interest rates, on which investment decisions are based, show a potential for the current 4.65% Bank Rate to continue to slowly decrease. The Council’s investment decisions are based on comparisons between the rises priced into market rates against the Council’s and advisers own forecasts. 7.6.12 There is an operational difficulty arising from the current economic situation. There is currently little value investing longer term unless credit quality is reduced. Whilst some selective options do provide additional yield uncertainty over counterparty creditworthiness suggests shorter dated investments would provide better security. 7.6.13 The criteria for choosing counterparties set out above provide a sound approach to investment in “normal” market circumstances. Whilst Members are asked to approve this base criteria above, under the exceptional current market conditions the Section 95 Officer (Chief Officer - Resources) may temporarily restrict further investment activity to those counterparties considered of higher credit quality than the minimum criteria set out for approval. These restrictions will remain in place until the banking system returns to “normal” conditions. Similarly, the time periods for investments will be restricted. 7.7 Sensitivity to Interest Rate Movements - Whilst most of the risks facing the treasury management service are addressed elsewhere in this report (credit risk, liquidity risk, market risk, maturity profile risk), the impact of interest rate risk is discussed but not quantified. Table K in Appendix 6 highlights the estimated impact of a 1% increase/decrease in all interest rates to the estimated treasury management costs/income for next year. That element of the debt and investment portfolios which are of a longer term, fixed interest rate nature will not be affected by interest rate changes. 7.8 Ethical Investments - This is the placing of funds and selecting investments in a manner that reflects an authority’s ethical values. Generally, two sets of criteria are drawn up – negative and positive values whereby investments are to be avoided or encouraged. 7.8.1 The following policy statement was approved on 25 October 2017: 7.8.2 The Council will not knowingly invest directly in organisations (including financial institutions and money market funds) whose activities and practices pose a risk of serious harm to individuals and/or groups, or whose activities are inconsistent with the Council’s vision, values and priorities. This could include avoiding direct investment in organisations with material links to: • Human rights abuse (e.g. child labour) • Environmentally harmful activities (e.g. destruction of habitat) • Socially harmful activities (e.g. gambling). 7.8.3 In order to give effect to its commitment to this policy the Chief Officer - Resources contacted all investment counterparties on 9 January 2018 advising of our policy. 7.8.4 In accordance with the further commitments that were given in October 2017 it is considered that this policy statement remains relevant and does not require to be amended at this time. Page 132
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8. Treasury Management Limits on Activity 8.1 There are four further treasury activity limits, which were previously prudential indicators. The purpose of these prudential indicators is to contain the activity of the treasury function within certain limits, thereby managing risk and reducing the impact of an adverse movement in interest rates. However, if these are set to be too restrictive they will impair the opportunities to reduce costs. • Upper limits on variable interest rate exposure – This indicator identifies a maximum limit for variable interest rates based upon the debt position net of investments • Upper limits on fixed interest rate exposure – Similar to the previous indicator this covers a maximum limit on fixed interest rates. • Maturity structures of borrowing – These limits are set to reduce the Council’s exposure to large fixed rate sums falling due for refinancing, and are required for upper and lower limits. • Total principal funds invested for greater than 364 & 365 days - These limits are set with regard to the Council’s liquidity requirements and to reduce the need for early sale of an investment, and are based on the availability of funds after each year-end. The proposed indicators are shown within Table L in Appendix 6. 9. Performance Indicators 9.1 The Code of Practice on Treasury Management requires the Council to set performance indicators to assess the adequacy of the treasury function over the year. These are distinct historic indicators, as opposed to the prudential indicators, which are predominantly forward looking. Examples of performance indicators often used for the treasury function are: • Debt – Borrowing - Average rate of borrowing for the year compared to average available • Debt – Average rate movement year on year • Investments – Internal returns above the 7 day SONIA (SONIA is Sterling Overnight Index Average)rate. 9.2 The results of these indicators will be reported in the Treasury Annual Report for 2023/24. 10. Treasury Management Advisors 10.1 The Council uses MUFG Corporate Markets Treasury Limited, formerly Link Asset Services, as its treasury management advisors. The company provides a range of services which include: • Technical support on treasury matters, capital finance issues and the drafting of Member reports • Economic and interest rate analysis • Debt services which includes advice on the timing of borrowing • Debt rescheduling advice surrounding the existing portfolio • Generic investment advice on interest rates, timing and investment instruments • Credit ratings/market information service comprising the three main credit rating agencies. Page 133
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10.2 The current treasury advisor contract was awarded to Link Asset Services, now MUFG Corporate Markets Treasury Limited, following the process/guidance of a quick quote by utilising a framework. This commenced on 1 May 2024 until 30 April 2026, with an option to extend for one year. 10.3 The Council recognises that responsibility for treasury management decisions remains with the Council at all times and will ensure that undue reliance is not place upon external service providers. 10.4 The Council also recognises there is value in employing external providers of treasury management services in order to acquire access to specialist skills and resources. The Council will ensure the terms of their appointment and the methods by which their value is assessed are properly agreed and documented, and subjected to regular review. 10.5 Whilst the advisers provide support to the internal treasury function the final decision on treasury matters remains with the Council. 11. The Monitoring of Investment Counterparties 11.1 The credit rating of counterparties will be monitored regularly. The Council receives credit rating information (changes, rating watches and rating outlooks) from MUFG Corporate Markets Treasury Limited as and when ratings change, and counterparties are checked promptly. On occasion ratings may be downgraded when an investment has already been made. The criteria used are such that a minor downgrading should not affect the full receipt of the principal and interest. Any counterparty failing to meet the criteria will be removed from the list immediately by the Chief Officer - Resources and, if required, new counterparties which meet the criteria will be added to the list. Page 134
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West Dunbartonshire Council and Common Good Funds Permitted Investments, Associated Controls and Limits Type of Investment Treasury Risks Mitigating Controls Council and Common Good Limits Cash Type Instruments Deposits with the Debt Management Account Facility (UK Government) (Very low risk) This is a deposit with the UK Government and as such counterparty and liquidity risk is very low, and there is no risk to value. Deposits can be between overnight and 6 months. Little mitigating controls required. As this is a UK Government investment the monetary limit is unlimited to allow for a safe haven for investments. As shown in Table J. Deposits with other local authorities or public bodies (Very low risk) These are considered quasi UK Government debt and as such counterparty risk is very low, and there is no risk to value. Liquidity may present a problem as deposits can only be broken with the agreement of the counterparty, and penalties can apply. Deposits with other non- local authority bodies will be restricted to the overall credit rating criteria. Little mitigating controls required for local authority deposits, as this is a quasi UK Government investment. Non- local authority deposits will follow the approved credit rating criteria. As shown in Table J. Money Market Funds (MMFs) (Very low risk) Pooled cash investment vehicle which provides very low counterparty, liquidity and market risk. These will primarily be used as liquidity instruments. Funds will only be used where the MMFs has an “AAA” rated status from either Fitch, Moody’s or Standard and Poor’s. As shown in Table J. Call account deposit accounts with financial institutions (banks and building societies) (Low risk depending on credit rating) These tend to be low risk investments, but will exhibit higher risks than the first three categories above. Whilst there is no risk to value with these types of investments, liquidity is high and investments can be returned at short notice. The counterparty selection criteria approved above restricts lending only to high quality counterparties, measured primarily by credit ratings from Fitch, Moody’s and Standard and Poors. On day to day investment dealing with this criteria will be further strengthened by the use of additional market intelligence. As shown in Table J. Page 135 Item 13 Appendix 3
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Type of Investment Treasury Risks Mitigating Controls Council and Common Good Limits Term deposits with financial institutions (banks and building societies) (Low to medium risk depending on period & credit rating) These tend to be low risk investments, but will exhibit higher risks than the first three categories above. Whilst there is no risk to value with these types of investments, liquidity is low and term deposits can only be broken with the agreement of the counterparty, and penalties may apply. The counterparty selection criteria approved above restricts lending only to high quality counterparties, measured primarily by credit ratings from Fitch, Moody’s and Standard and Poors. On day to day investment dealing with this criteria will be further strengthened by the use of additional market intelligence. As shown in Table J. Government Gilts and Treasury Bills (Very low risk) These are marketable securities issued by the UK Government and as such counterparty and liquidity risk is very low, although there is potential risk to value arising from an adverse movement in interest rates (no loss if these are held to maturity. Little counterparty mitigating controls are required, as this is a UK Government investment. The potential for capital loss will be reduced by limiting the maximum monetary and time exposures. As shown in Table J. Certificates of deposits with financial institutions (Low risk) These are short dated marketable securities issued by financial institutions and as such counterparty risk is low, but will exhibit higher risks than the first three categories above. There is risk to value of capital loss arising from selling ahead of maturity if combined with an adverse movement in interest rates. Liquidity risk will normally be low. The counterparty selection criteria approved above restricts lending only to high quality counterparties, measured primarily by credit ratings from Fitch, Moody’s and Standard and Poors. On day to day investment dealing with this criteria will be further strengthened by the use of additional market intelligence. As shown in Table J. Page 136
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Type of Investment Treasury Risks Mitigating Controls Council and Common Good Limits Structured deposit facilities with banks and building societies (escalating / de- escalating rates, etc.) (Low to medium risk depending on period & credit rating) These tend to be medium to low risk investments, but will exhibit higher risks than the first three categories above. Whilst there is no risk to value with these types of investments, liquidity is very low and investments can only be broken with the agreement of the counterparty (penalties may apply). The counterparty selection criteria approved above restricts lending only to high quality counterparties, measured primarily by credit ratings from Fitch, Moody’s and Standard and Poors. On day to day investment dealing with this criteria will be further strengthened by the use of additional market intelligence. As shown in Table J. Corporate Bonds (Medium to high risk depending on period & credit rating) These are marketable securities issued by financial and corporate institutions. Counterparty risk will vary and there is risk to value of capital loss arising from selling ahead of maturity if combined with an adverse movement in interest rates. Liquidity risk will be low The counterparty selection criteria approved above restricts lending only to high quality counterparties, measured primarily by credit ratings from Fitch, Moody’s and Standard and Poors. Corporate bonds will be restricted to those meeting the base criteria. On day to day investment dealing with this criteria will be further strengthened by the use of additional market intelligence. As shown in Table J. Other Types of Investments Investment properties These are properties that are not used to facilitate service delivery but are held solely to earn rentals or for capital appreciation or both. These are highly illiquid assets with high risk to value (the potential for property prices to fall or for rental voids). In larger investment portfolios some small allocation of property based investment may counterbalance/compliment the wider cash portfolio. Property holding will be re- valued regularly and reported annually with gross and net rental streams. The Section 95 Officer will determine monetary and time limits managing risk accordingly, to the maximum total as noted in Table L of £7m. Page 137
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Type of Investment Treasury Risks Mitigating Controls Council and Common Good Limits Loans to third parties, including soft loans These are service investments either at market rates of interest or below market rates (soft loans). These types of investments may exhibit credit risk and are likely to be highly illiquid. Each third party loan requires Member approval and each application is supported by the service rational behind the loan and the likelihood of partial or full default. The Section 95 Officer will determine monetary and time limits managing risk accordingly, to the maximum total as noted in Table L of £7m. Loans to a local authority company These are service investments either at market rates of interest or below market rates (soft loans). These types of investments may exhibit credit risk and are likely to be highly illiquid. Each loan to a local authority company requires Member approval and each application is supported by the service rational behind the loan and the likelihood of partial or full default. The Section 95 Officer will determine monetary and time limits managing risk accordingly, to the maximum total as noted in Table L of £7m. Shareholdings in a local authority company These are service investments which may exhibit market risk and are likely to be highly illiquid. Each equity investment in a local authority company requires Member approval and each application will be supported by the service rational behind the investment and the likelihood of loss. The Section 95 Officer will determine monetary and time limits managing risk accordingly, to the maximum total as noted in Table L of £7m. Non-local authority shareholdings These are non-service investments which may exhibit market risk, be only considered for longer term investments, likely to be liquid. Any non-service equity investment will require separate Member approval and each application will be supported by rational behind the service the investment and the likelihood of loss. The Section 95 Officer will determine monetary and time limits managing risk accordingly, to the maximum total as noted in Table L of £7m. Page 138
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Type of Investment Treasury Risks Mitigating Controls Council and Common Good Limits Joint venture delivery companies such as hub West Scotland Public sector organisations across a hub territory will work in partnership with each other, and a private sector delivery partner, in a joint venture delivery company called hub West Scotland. . Any investment in hub West Scotland requires approval from the Section 95 Officer (Chief Officer - Resources) and the Chief Executive in consultation with the Leader of the Council and the Leader of the Opposition and each application will be supported by the service rational behind the investment and the likelihood of loss. The Section 95 Officer will determine monetary and time limits managing risk accordingly, to the maximum total as noted in Table L of £7m. Regeneration partnerships and development opportunities Investments undertaken with the prime intention of local area regeneration. Any investment in a regeneration partnership / development opportunity requires Member approval with each application supported by rational behind the investment and the likelihood of loss. The Section 95 Officer will determine monetary and time limits managing risk accordingly, to the maximum total as noted in Table L of £7m. Investment in Projects procured and managed by third parties e.g. District Heating Schemes Investments undertaken to assist in facilitating third party projects where the Council has an interest in the successful outcome of the project. Expectation of a financial return for the Council. Any investment in such projects requires Member approval and each application will be supported by a business case for the investment and the expectation of a financial benefit to the Council. The Section 95 Officer will determine monetary and time limits managing risk accordingly, to the maximum total as noted in Table L of £7m. Local Authority Mortgage Scheme (LAMS) These are service investments at market rates of interest. Under this scheme the Council is required to place funds for a number of years with the bank which is participating in this scheme Any investment in the LAMS requires Member approval and each application will be supported by the service rational behind the investment and the likelihood of loss. The Section 95 Officer will determine monetary and time limits managing risk accordingly, to the maximum total as noted in Table L of £7m. Page 139
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Type of Rating Rating Explanation Fitch -Short Term F1+ Indicates exceptionally strong capacity for timely payment of financial commitments F1 Indicates the strongest capacity for timely payment of financial commitments Fitch - Long Term AA- Denote expectations of a very low level of default risk relative to other issuers or obligations in the same country or monetary union. The default risk inherent differs only slightly from that of the country's highest rated issuers or obligations. A- Indicates strong capacity for timely payment of financial commitments. This capacity may, nevertheless, be more vulnerable to changes in circumstances or in economic conditions than is the case for higher ratings Moody’s - Short Term P-1 Banks based Prime-1 for deposits offer superior credit quality and a very strong capacity for timely payment of short term deposit obligations Moody’s - Long Term Aa Offer excellent credit quality, with susceptibility to long term risks with a vulnerability to greater fluctuations within protective elements A Offer excellent credit quality, but elements suggest a Susceptibility to impairment over the long term Standard & Poors - Short Term A-1 Indicates a strong capacity to meet institutions financial commitments. Within this category, certain obligors are designated with a plus sign (+). This indicates that the obligor’s capacity to meet its financial commitments is EXTREMELY STRONG Standard & Poors - Long Term AA- Indicates strong capacity for timely payment of financial commitments A- Indicates strong capacity for timely payment of financial commitments. This capacity may, nevertheless, be more susceptible to the adverse effects of changes in circumstances or in economic conditions than is the case for higher rated category Page 141 Item 13 Appendix 4
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West Dunbartonshire Council and Common Good Funds Permitted Investments, Approved Countries for Investments Based on lowest available rating AAA • Australia • Denmark • Germany • Netherlands • Norway • Singapore • Sweden • Switzerland • Luxembourg AA+ • Canada • Finland • U.S.A. AA • Abu Dhabi (UAE) • Qatar AA- • U.K. Please note that this is the list will be updated as required on an ongoing basis Page 143 Item 13 Appendix 5
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West Dunbartonshire Council Prudential and Treasury Indicators General Services 58,257 73,780 47,193 26,267 11,037 11,030 10,866 10,865 10,624 10,880 Capital receipts 0 0 0 0 0 0 0 0 0 0 Capital grants 17,332 40,422 11,752 5,706 3,407 3,407 3,407 3,407 3,407 3,407 Revenue 250 0 0 0 0 0 0 0 0 0 Other funding 2,258 2,956 0 0 0 0 0 0 0 0 Net financing need for the year 38,417 30,402 35,441 20,561 7,630 7,623 7,459 7,458 7,217 7,473 HRA 66,014 70,338 70,296 53,083 45,561 54,196 0 0 0 0 Capital receipts 0 0 0 0 0 0 0 0 0 0 Capital grants 9,217 15,323 11,900 4,800 5,800 12,600 0 0 0 0 Revenue 0 0 0 0 0 0 0 0 0 0 Other funding 1 1 1 1 1 1 0 0 0 0 Net financing need for the year 56,796 55,014 58,395 48,282 39,760 41,595 0 0 0 0 General Services 58,257 73,780 47,193 26,267 11,037 11,030 10,866 10,865 10,624 10,880 HRA 66,014 70,338 70,296 53,083 45,561 54,196 0 0 0 0 Capital Expenditure 124,271 144,117 117,489 79,350 56,598 65,226 10,866 10,865 10,624 10,880 Capital receipts 0 0 0 0 0 0 0 0 0 0 Capital grants 26,549 55,745 23,652 10,506 9,207 16,007 3,407 3,407 3,407 3,407 Revenue 250 0 0 0 0 0 0 0 0 0 Other funding 2,259 2,957 1 1 1 1 0 0 0 0 Net financing need for the year 95,213 85,415 93,836 68,843 47,390 49,218 7,459 7,458 7,217 7,473 Capital Financing Requirement CFR – General Services 471,897 483,178 532,254 557,263 557,181 579,463 574,552 569,626 564,562 559,609 CFR – HRA 401,987 464,230 491,312 514,397 557,181 579,463 574,552 569,626 564,562 559,609 Total CFR 873,884 947,408 1,023,566 1,071,661 1,114,362 1,158,927 1,149,105 1,139,252 1,129,125 1,119,218 Movement in CFR 73,524 76,158 48,094 42,701 44,565 (9,822) (9,853) (10,127) (9,907) Movement in CFR represented by Net financing need for the year (above) 95,213 85,415 93,836 68,843 47,390 49,218 7,459 7,458 7,217 7,473 Loans Fund Review - - - - - - - - - - Less scheduled debt amortisation and other financing movements (95,213) (11,891) (17,678) (20,749) (4,688) (4,653) (17,281) (17,311) (17,344) (17,380) Movement in CFR - 73,524 76,158 48,094 42,701 44,565 (9,822) (9,853) (10,127) (9,907) Forecast 2033/34 Forecast 2033/34 Forecast 2033/34 Table B - Capital Financing Requirement Forecast 2032/33 Forecast 2032/33 Forecast 2032/33 Forecast 2032/33 Forecast 2033/34 General Services and HRA Combined £000 Forecast 2024/25 Forecast 2025/26 Forecast 2026/27 Forecast 2031/32 Forecast 2028/29 Forecast 2029/30 Forecast 2030/31 Financed by: Forecast 2027/28 Forecast 2028/29 Forecast 2029/30 Forecast 2030/31 Forecast 2024/25 Forecast 2025/26 Forecast 2026/27 Forecast 2027/28 Forecast 2031/32 £000 Table A - Net Capital Financing Need General Services and HRA Shown Separately £000 Forecast 2024/25 Forecast 2025/26 Forecast 2026/27 Forecast 2027/28 Forecast 2031/32£000 Forecast 2028/29 Forecast 2029/30 Forecast 2030/31 Forecast 2031/32 Financed by: Forecast 2024/25 Forecast 2025/26 Forecast 2026/27 Forecast 2027/28 Forecast 2028/29 Forecast 2029/30 Forecast 2030/31 Item 13 Appendix 6 Page 145
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West Dunbartonshire Council Prudential and Treasury Indicators Table C - Internal Loan Fund Repayment Profile (excluding PPP repayments) £M £M £M Under 12 months 4.551 9.502 14.053 2 years to 5 years 13.800 28.363 42.163 6 years to 10 years 25.637 49.888 75.525 11 years to 15 years 29.292 44.056 73.347 16 years to 20 years 25.043 50.144 75.187 21 years to 25 years 17.621 48.454 66.075 26 years to 30 years 12.166 28.263 40.429 31 years to 35 years 10.438 7.010 17.448 36 years to 40 years 12.097 5.568 17.665 41 years to 45 years 12.840 4.553 17.393 46 years to 50 years 15.130 6.178 21.308 51 years to 55 years 20.586 8.705 29.291 56 years to 60 years 25.425 7.739 33.164 60 years plus 136.094 39.744 175.838 Total 360.720 338.166 698.886 General Services (Exc PPP) 12.37% 12.96% 14.12% 14.32% 13.35% 13.27% 13.71% 13.80% 14.01% 14.20% General Services 17.63% 18.12% 19.15% 19.19% 18.07% 17.86% 18.16% 18.06% 18.06% 18.01% HRA 49.89% 53.00% 57.60% 61.21% 49.61% 47.39% 44.96% 41.92% 38.89% 36.49% External Debt Debt at 1 April 460,841 549,000 635,303 709,632 783,929 832,821 876,343 921,695 912,686 903,676 New Borrowing - CFR 88,159 86,303 74,329 74,297 48,891 43,523 45,351 (9,009) (9,010) (9,251) Debt at 31 March 549,000 635,303 709,632 783,929 832,821 876,343 921,695 912,686 903,676 894,426 Long Term Liabilities at 1 April 84,560 84,041 85,702 84,897 84,122 83,325 82,503 81,717 80,904 80,060 Change in Long Term Liabilities (519) 1,661 (805) (776) (797) (821) (786) (813) (843) (877) Long Term Liabilities at 31 March 84,041 85,702 84,897 84,122 83,325 82,503 81,717 80,904 80,060 79,184 Gross Debt at 31 March 633,041 721,005 794,529 868,051 916,145 958,847 1,003,412 993,590 983,737 973,609 Capital Financing Requirement 873,884 947,408 1,023,566 1,071,661 1,114,362 1,158,927 1,149,105 1,139,252 1,129,125 1,119,218 Under / (Over) Borrowing 240,843 226,403 229,037 203,610 198,217 200,080 145,693 145,662 145,388 145,608 Forecast 2031/32 Table E - Gross External Debt compared to the Underlying Need to Borrow (CFR) £000 Forecast 2024/25 Forecast 2025/26 Forecast 2026/27 Forecast 2032/33 Forecast 2032/33 Forecast 2027/28 Forecast 2028/29 Forecast 2029/30 Forecast 2030/31 Forecast 2033/34 Forecast 2024/25 Forecast 2025/26 Forecast 2026/27 Forecast 2027/28 Forecast 2028/29 Forecast 2029/30 Forecast 2030/31 Forecast 2033/34 Forecast 2031/32 Table D - Ratio of Financing Costs to Net Revenue Stream General Services HRA Total Page 146
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West Dunbartonshire Council Prudential and Treasury Indicators External Debt 603,900 698,833 780,595 862,322 916,103 963,978 1,013,864 1,003,955 994,044 983,868 Long Term Liability 92,445 94,272 93,387 92,534 91,657 90,754 89,889 88,994 88,066 87,102 Total 696,345 793,106 873,982 954,856 1,007,760 1,054,731 1,103,753 1,092,949 1,082,110 1,070,970 External Debt 658,800 762,364 851,558 940,715 999,385 1,051,612 1,106,034 1,095,223 1,084,412 1,073,311 Long Term Liability 100,849 102,842 101,877 100,946 99,990 99,004 98,060 97,084 96,072 95,020 Total 759,649 865,206 953,435 1,041,661 1,099,374 1,150,616 1,204,094 1,192,308 1,180,484 1,168,331 Bank Rate 4.50% 4.25% 4.25% 4.00% 3.75% 3.75% 3.75% 3.50% 5yr PWLB Rate 5.00% 4.90% 4.80% 4.70% 4.60% 4.50% 4.40% 4.40% 10yr PWLB Rate 5.30% 5.20% 5.10% 5.00% 4.90% 4.80% 4.70% 4.70% 25yr PWLB Rate 5.80% 5.70% 5.60% 5.50% 5.40% 5.30% 5.20% 5.10% 50yr PWLB Rate 5.50% 5.40% 5.30% 5.20% 5.10% 5.00% 4.90% 4.80% Long term rating 1 year 2 years 3 years 4 years 5 years AAA 0.04% 0.09% 0.16% 0.24% 0.33% AA 0.02% 0.04% 0.09% 0.15% 0.21% A 0.05% 0.13% 0.23% 0.35% 0.49% BBB 0.14% 0.37% 0.64% 0.95% 1.25% BB 0.64% 1.80% 3.13% 4.43% 5.62% B 2.64% 6.48% 10.04% 13.16% 15.68% CCC 18.74% 26.75% 32.17% 35.74% 38.35% Note - The AAA default risk is actually higher than the AA default risk due the number of AAA rated institutions left Forecast 2031/32 Forecast 2027/28 Forecast 2028/29 Forecast 2029/30 Forecast 2030/31 Forecast 2031/32 Table F - Operational Boundary £000 Forecast 2024/25 Forecast 2025/26 Forecast 2026/27 Forecast 2026/27 Forecast 2027/28 Forecast 2028/29 Forecast 2029/30 Forecast 2030/31£000 Forecast 2024/25 Forecast 2032/33 Forecast 2032/33 Mar-26 Jun-26 Sep-26 Dec-26Link Asset Services Interest Rate View Mar-25 Jun-25 Table H - Interest Rate Forecast Table G - Authorised Limit Table I - Historic Risk of Default Sep-25 Dec-25 Forecast 2025/26 Forecast 2033/34 Forecast 2033/34 Page 147
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West Dunbartonshire Council Prudential and Treasury Indicators Investment Fitch Category (or equivalent) Money Limit F1+ / AA- £10million F1 / A- £5 million 2 £5 million 3 £5 million 4 As in 1 above £10million and £5million Sector Limit £25 million Fund Limit £5 million 6 No limit Sector Limit £25 million Fund Limit £5 million £000 1% -1% Variable Rate Debt Payments N/A N/A N/A Variable Rate Investment income 21,000 210 -210 364 days Very liquid no time limit applies 6 months 5 Table J - Counterparty Limits Overnight 364 days Table K - Sensitivity to Interest Rate Movements 1 7 Time Limit 364 days 364 days Page 148
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West Dunbartonshire Council Prudential and Treasury Indicators 2024/25 Upper Limits on fixed interest rates Limits on variable interest rates Lower Upper Lower Upper Lower Upper Under 12 months 0% 50% 0% 50% 0% 50% 12 months to 2 years 0% 50% 0% 50% 0% 50% 2 years to 5 years 0% 50% 0% 50% 0% 50% 5 years to 10 years 0% 50% 0% 50% 0% 50% 10 years to 20 years 0% 50% 0% 50% 0% 50% 20 years to 30 years 0% 50% 0% 50% 0% 50% 30 years to 40 years 0% 50% 0% 50% 0% 50% 40 years to 50 years 0% 100% 0% 100% 0% 100% 50 years to 60 years 0% 100% 0% 100% 0% 100% 60 years to 70 years 0% 100% 0% 100% 0% 100% Principal sums invested > 364 & 365 days Table L- Treasury Management Limits on Activity £nil £7m £nil £7m 100% 100% 100% 50% 50% 50% Maturity Structure of fixed interest rate borrowing 2025/26 2026/27 Upper Upper £7m£nil Page 149
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WEST DUNBARTONSHIRE COUNCIL Report by Chief Officer - Resources Audit Committee: 11 June 2025 ___________________________________________________________________ Subject: Global Internal Audit Standards 1. Purpose 1.1 The purpose of this report is to inform Members of the new Global Internal Audit Standards (UK public sector) that came into effect from 1 April 2025 and internal audit teams in the public sector will be working to implement these new internal audit standards by 31 March 2026. 2. Recommendations 2.1 It is recommended that Audit Committee considers and notes the contents of this report and that further update reports will be provided during 2025/26 in relation to the new Global Internal Audit Standards (UK public sector). 3. Background 3.1 Local government bodies have a requirement for internal audit as set out in national regulations. As the relevant internal audit standard setter (RIASS) for UK local government, CIPFA works with other RIASS through the Internal Audit Standards Advisory Board (IASAB) to mandate the appropriate internal audit standards. Since 2013, the RIASS have jointly mandated the Public Sector Internal Audit Standards (PSIAS) based on the International Professional Practices Framework of the Institute of Internal Auditors (IIA). New standards, Global Internal Audit Standards (UK public sector), are mandated from 1 April 2025 consisting of the Global Internal Audit Standards (GIAS) of the IIA and the RIASS Application Note: Global Internal Audit Standards in the UK public sector. 3.2 Internal Audit teams will not be required to demonstrate full compliance on this date but must work in accordance with the new standards from 1 April in order to transition to the new requirements by 31 March 2026. 3.3 The Standards are arranged into five domains: I Purpose of Internal Auditing II Ethics and Professionalism III Governing the Internal Audit Function IV Managing the Internal Audit Function V Performing Internal Audit Services Item 14 Page 151
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3.4 Across the domains are 15 Principles and 52 Standards. These include requirements, considerations for implementation, and examples of evidence of conformance. 3.5 CIPFA has developed the Code of Practice for the Governance of Internal Audit in UK Local Government (the Code) to support local authorities in establishing their internal audit arrangements and providing oversight and support for internal audit. The Code is designed to work alongside new internal audit standards and replaces the organisational responsibilities set out in the Statement on the Role of the Head of Internal Audit (CIPFA, 2019). 4. Main Issues 4.1 As an audit committee, members play a vital role in ensuring that the internal audit function adheres to the Standards and fulfils its mandate effectively and efficiently. Audit Committee members and senior management should be familiar with the new Standards and their implications. 4.2 Having reviewed the requirements of the new Standards, it is considered that the Council’s internal audit services aligns with the intent of the Standards. During 2025/26, processes and templates will be refreshed as part of the ongoing quality assurance and improvement programme to ensure alignment with requirements of the new Global Internal Audit Standards. 4.3 The Chief Officer - Resources will provide further reports in relation to the new Standards during 2025/26 and a transition plan will be developed and implemented to ensure that Internal Audit service’s practices and templates are aligned with expectations. 5. Personnel Implications 5.1 There are no personnel issues with this report. 6. Financial and Procurement Implications 6.1 There are no direct financial implications arising from this report. 7. Risk Analysis 7.1 There are no significant risks arising from the proposed recommendations in this report. The report should provide a key source of assurance over the Council’s internal audit arrangements. 8. Equalities Impact Assessment (EIA) 8.1 There are no issues. Page 152
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9. Consultation 9.1 The GIAS will require close engagement with Council management. The Chief Officer – Resources will therefore discuss the changes in more detail with senior management. 10. Strategic Assessment 10.1 This report helps ensure strong governance and will help support delivery of the Council Plan, and in particular priority 4: Inclusive and Adaptable, with the Council seeking to provide high quality and adaptable services that deliver value for money. Laurence Slavin Chief Officer - Resources Date: 11 June 2025 Person to contact Andi Priestman, Shared Service Manager – Audit & Fraud Email: andi.priestman@west-dunbarton.gov.uk Background Papers: Institute of Internal Auditors Global Internal Audit Standards; CIPFA Application Note and the Code of Practice on the Governance of Internal Audit. Wards Affected: All wards Page 153
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