Agenda Document Pack - Audit and Scrutiny Committee - 29/05/2025
North Ayrshire Council · 29 May 2025
Back to Audit and Scrutiny Committee — 29 May 2025 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
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North Ayrshire Council, Cunninghame House, Irvine KA12 8EE Audit and Scrutiny Committee A Meeting of the Audit and Scrutiny Committee of North Ayrshire Council will be held in the Council Chambers, Ground Floor, Cunninghame House, Irvine, KA12 8EE on Thursday, 29 May 2025 at 10:00 to consider the undernoted business. Meeting Arrangements - Hybrid Meetings This meeting will be held on a predominantly physical basis but with provision, by prior notification, for remote attendance by Elected Members in accordance with the provisions of the Local Government (Scotland) Act 2003. Where possible, the meeting will be live-streamed and available to view at https://north-ayrshire.public- i.tv/core/portal/home. 1 Declarations of Interest Members are requested to give notice of any declarations of interest in respect of items of business on the Agenda. 2 Minutes The accuracy of the Minutes of the Meeting of the Audit and Scrutiny Committee held on 13 March 2025 will be confirmed and the Minutes signed in accordance with Paragraph 7 (1) of Schedule 7 of the Local Government (Scotland) Act 1973 (copy enclosed). 3 Update on purple bin lids Submit report by the Executive Director (Place) providing an update on the actions taken to resolve the issues experienced with purple bin lid defects (copy enclosed). 4 Code of Corporate Governance Statement 2025/26 Submit report by the Head of Service (Democratic) seeking approval of Code of Corporate Governance Statement 2025/26 (copy enclosed). 1
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North Ayrshire Council, Cunninghame House, Irvine KA12 8EE 5 Audit Scotland: North Ayrshire Council Best Value Thematic Management Report: Transformation Submit report by the Head of Service (Finance) on the findings of the recent Audit Scotland report on how councils are redesigning and delivering more efficient services to achieve planned outcomes (copy enclosed). 6 2023/24 External Audit Action Plan Update Submit report by the Head of Service (Finance) on the updated actions identified in the 2023/24 External Audit Action Plan (copy enclosed). 7 Annual Governance Statement 2024/25 Submit report by the Head of Service (Finance) on the Council’s Annual Governance Statement for 2024/25 which will be included within the draft Annual Accounts (copy enclosed). 8 Accounting Policies 2024/25 Submit report by the Head of Service (Finance) seeking approval of the accounting policies which will be adopted in the preparation of the Council’s Annual Accounts for the year to 31 March 2025 (copy enclosed). 9 Strategic Risk Register 2025/26 Submit report by the Head of Service (Finance) on the Council’s agreed Strategic Risk Register for 2025/26 (copy enclosed). 10 Internal Audit Annual Report 2024/25 Submit report by the Head of Service (Finance) on the work of Internal Audit during 2024/25 and providing an opinion on the governance, risk management and internal control environment of the Council (copy enclosed). 11 Corporate Fraud Team Annual Report 2024/25 Submit report by the Head of Service (Finance) on the work of the Corporate Fraud Team during 2024/25 (copy enclosed). 12 Internal Audit and Corporate Fraud Action Plans: Quarter 4 Update Submit report by Head of Service (Finance) on the progress made by Council Services in implementing the agreed actions from Internal Audit and Corporate Fraud reports as at 31 March 2025 (copy enclosed). 13 Internal Audit Reports Issued Submit report by the Head of Service (Finance) on the findings of Internal Audit work completed since March 2025 (copy enclosed). 14 Standing Item of Business: Consideration of future business for scrutiny 2
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North Ayrshire Council, Cunninghame House, Irvine KA12 8EE 15 Urgent Items Any other items which the Chair considers to be urgent. Webcasting Please note: this meeting may be filmed/recorded/live-streamed to the Council's internet site and available to view at https://north-ayrshire.public- i.tv/core/portal/home, where it will be capable of repeated viewing. At the start of the meeting, the Provost/Chair will confirm if all or part of the meeting is being filmed/recorded/live-streamed. You should be aware that the Council is a Data Controller under the Data Protection Act 2018. Data collected during the webcast will be retained in accordance with the Council’s published policy, including, but not limited to, for the purpose of keeping historical records and making those records available via the Council’s internet site. Generally, the press and public will not be filmed. However, by entering the Council Chambers and using the press or public seating area, you acknowledge that you may be filmed and that any information pertaining to you contained in the video and oral recording of the meeting will be used for webcasting or training purposes and for the purpose of keeping historical records and making those records available to the public. In making this use of your information the Council is processing data which is necessary for the performance of a task carried out in the public interest. If you have any queries regarding this and, in particular, if you believe that use and/or storage of any particular information would cause, or be likely to cause, substantial damage or distress to any individual, please contact dataprotectionofficer@north-ayrshire.gov.uk 3
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North Ayrshire Council, Cunninghame House, Irvine KA12 8EE Audit and Scrutiny Committee Sederunt John Bell (Chair) Donald Reid (Vice Chair) Eleanor Collier Cameron Inglis Tom Marshall Matthew McLean Davina McTiernan Donald L. Reid John Sweeney Chair: Apologies: Attending: 4
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Audit and Scrutiny Committee 13 March 2025 At a Meeting of the Audit and Scrutiny Committee of North Ayrshire Council at 10.00 a.m. involving participation by remote electronic means and physical attendance within the Council Chambers, Irvine. Present (Physical Participation) John Bell, Eleanor Collier, Cameron Inglis, Davina McTiernan, Donald L. Reid and John Sweeney. Present (Remote Participation) Donald Reid In Attendance (Physical Participation) D. Hammond, Executive Director (Communities and Housing); Kerry Logan, Head of Service, (Health and Community Care) (Health and Social Care Partnership); R. McCutcheon, Executive Director, M. McNeil, Senior Manager (Waste Resources) (Place); A. McClelland, Head of Service, C. Hope, Senior Manager (Facilities Management) (Education); M. Boyd, Head of Service, D. Forbes, Senior Manager (Strategic Business Partner), J. McCallum, Senior Manager (Audit, Fraud, Safety and Risk) (Finance); F. Walker, Head of Service , J. Smillie, Senior Manager (People Services), F. Carlyle, Team Manager (HR), E. Nixon, Senior Manager (Customer Services) (People and ICT); R. Lynch, Senior Manager (Legal Services) and H. Young, Senior Committee Services Officer (Democratic Services) (Corporate Services). Also in Attendance (Physical Participation) D. Jamieson and F. Mitchell-Knight Audit Scotland. Chair Councillor Bell in the Chair. Apologies Tom Marshall 1. Declarations of Interest There were no declarations of interest by Members in terms of Standing Order 11 and Section 5 of the Code of Conduct for Councillors. 2. Minutes The Minutes of (i) the Ordinary Meeting of the Audit and Scrutiny Committee held on 23 January; and (ii) the Special Meeting held on 6 February 2025 were confirmed and the Minutes signed in accordance with Paragraph 7 (1) of Schedule 7 of the Local Government (Scotland) Act 1973. Agenda Item 2 5
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3. Sickness Absence Management Submitted report by the Head of Service (People & ICT) on the Council’s Sickness Absence policies and how these are managed, monitored and reported. The Wellbeing@Work Supporting Attendance Policy was set out at Appendix A, Maximising Attendance Policy (Teachers) set out at Appendix B, Wellbeing@Work Supporting Attendance Policy Management Prompts set out at Appendix C, Maximising Attendance Policy (Teachers) Triggers set out at Append D, Absence Targets set out at Appendix E, Directorate Summary – Absence at 2024/25 set out at Append F and the Local Government Benchmarking Framework set out at Appendix G to the report. Officers were heard in response to Members’ questions. The Committee agreed to a further report detailing the impact of sickness absence levels on the overtime budget of services and loss of service. Noted. 4. Accounts Commission’s Report: Local Government in Scotland: Financial Bulletin 2023/24 Submitted report by the Head of Service (Finance) informing the Committee on the findings of the recently published report with the feedback on each of the key messages identified set out at Appendix 1 to the report. Noted. 5. Internal Audit Plan 2024/25: Progress Update Submitted report by the Head of Service (Finance) requesting approval for an amendment to the 2024/25 Internal Audit Plan set out at Appendix A to the report. The Committee agreed to (a) note the factors affecting the completion of the Internal Audit Plan; and (b) approve the deferral of one audit set out at Appendix A to the report. 6. Internal Audit Reports Issued Submitted report by the Head of Service (Finance) informing on the findings of Internal Audit work completed since January 2025 Officers were heard in response to Members’ questions. Noted. 7. Internal Audit and Corporate Fraud Action Plans: Quarter 3 update Submitted report by the Head of Service (Finance) on the progress made by Council Services in implementing the agreed actions from Internal Audit and Corporate Fraud reports as at 31 December 2024. Appendix 1 to this report provides the 6
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Committee with full details of the three actions that were not completed within the agreed timescales. Officers were heard in response to Members’ questions. The Committee agreed to (a) note the current position with the implementation of Internal Audit and Corporate Fraud actions; and (b) challenge Services that have not implemented actions within the previously agreed timescales. 8. Internal Audit Charter 2025 Submitted report by the Head of Service (Finance) on the updated Internal Audit Charter set out at Appendix A to the report. Officers were heard in response to Members’ questions. The Committee agreed to (a) note the changes in Internal Audit standards and that the requirements have been incorporated into the Internal Audit Charter where necessary, (b) note the inclusion of the Integrated Joint Board within the scope of the Internal Audit Charter, (c) approve the Internal Audit Charter set out at Appendix A to the report, and (d) future amendments to the Charter will be made where a need is identified. 9. Internal Audit Plan 2025/26 Submitted report by the Head of Service (Finance) on the proposed internal audit plan for 2025/26 with the internal audit plan for quarter one and two of 2025/26 set out at Appendix A and a list of potential audit areas set out at Appendix B of the report. The Committee agreed to approve the internal audit plan for 2025/26. 10. External Audit Plan 2024/25 Submitted report by the Head of Service (Finance) on the External Audit Plan for 2024/25 with Audit Scotland’s Annual Audit Plan for the 2024/25 audit set out at Appendix 1 to the report. Officers were heard in response to Members’ questions. Noted. 11. Standing Item of Business: Consideration of Future Business for Scrutiny Members were invited to consider potential items of scrutiny business for future meetings. The Committee noted the request from Councillor Donald Reid for a report on supplier and quality issues of purple bin lids and the replacement process to be brought to Audit & Scrutiny. 7
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12. Urgent Items There were no urgent items. The meeting ended at 11.30 a.m. The full meeting proceedings can be viewed at https://north-ayrshire.public-i.tv/core/portal/home 8
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NORTH AYRSHIRE COUNCIL 29 May 2025 Audit & Scrutiny Committee Title: Update on purple bin lid issues Purpose: To update the Audit & Scrutiny Committee on the actions taken to resolve the issues experienced with purple bin lid defects. Recommendation: Audit and Scrutiny Committee notes the progress made. 1. Executive Summary 1.1 As part of the Council’s implementation of a three weekly collection scheme for kerbside domestic waste collections, an additional bin was provided to residents to recycle their cans, glass and plastic containers. This involved the provision of some 61,750 purple bins to every household on the mainland and Cumbrae. A few months into implementation, quality issues were identified by residents with repairs and replacement lids required for their purple bins. This only affected certain batches. 1.2 Arrangements were made with the supplier for replacement, non faulty lids to be received. 1.3 A significant number of service requests have been received from residents which have required the Waste Operations team to respond to by delivering and fitting replacement lids. 2. Background 2.1 In April 2019, North Ayrshire Council implemented a three weekly collection cycle for kerbside domestic waste collections. As part of this a new purple bin was provided to residents for their cans, glass and plastic. A few months into implementation, quality issues were identified by residents with repairs and replacement lids required for the purple bin lid only. This only affected certain batches. 2.2 Meetings were held with the supplier of the bin lids and the contract administrator, Scotland Excel, to try and resolve this issue. The issue related to a tooling design fault which was rectified by the supplier. 2.3 Agreement was reached with the supplier, including the supplier fixing faulty bin lids and the supplier providing free bin lids and bins to the Council as compensation for the disruption caused. A tooling design fault was rectified by the supplier during the manufacturing process to prevent the issue recurring. 2.4 This matter was raised at full Council on 15 May 2024 and at that time 5,400 purple bins lids had been repaired with 1,529 repairs outstanding. Waste Services provided a Agenda Item 3 9
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commitment to resolve the outstanding repairs as soon as possible. 2.5 Following a request from the Audit and Scrutiny Committee on 21 March 2024, during a debate on the mid-year complaints report, an online facility for residents to report purple bin lid faults was developed and launched in June 2024. 2.6 The online reporting facility has proven to be effective, however, has resulted in a significant number of duplicate requests of already reported faults. This necessitated a data cleanse to remove duplicate requests. 2.7 A significant number of new cases were reported following Storm Eowyn in late January 2025. This extraordinary high level of cases increased pressure on the team to repair or replace the bin lids. However, despite this, significant progress has been made in clearing the backlog and dealing with new cases. 2.8 A recent review was carried out at the start of this year into processes and arrangements in place to respond to the ongoing issue with the provision of replacement purple bin lids, which resulted in operational tweaks to improve service response times. These have now been in operation for a number of weeks with significant progress made in responding to outstanding and new service requests. 2.9 An update on the number of purple bin lids repaired and outstanding, at the time of writing the report, is as follows: Number of cases reported: 11,336 Number of repairs carried out: 10,561 Number of outstanding repairs: 775 2.10 Continued good progress is anticipated and will be reported verbally during the meeting. 3. Proposals 3.1 It is proposed the Committee notes the update provided on the number of purple bin lid repairs that have been attended to and that arrangements are in place to address the outstanding and newly received repair requests. 4. Implications/Socio-economic Duty Financial 4.1 None. Human Resources 4.2 None. Legal 4.3 None. 10
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Equality/Socio-economic 4.4 None. Climate Change and Carbon 4.5 None. Key Priorities 4.6 None. Community Wealth Building 4.7 None. 5. Consultation 5.1 None. RUSSELL McCUTCHEON Executive Director (Place) For further information please contact Thomas Reaney, Head of Service (Neighbourhood Services), 01294 310000. Background Papers 0 11
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NORTH AYRSHIRE COUNCIL 29th May 2025 Audit and Scrutiny Committee Title: Code of Corporate Governance Statement 2025/26 Purpose: To seek approval of Code of Corporate Governance Statement for the Financial Year 25/26 Recommendation: That the Audit and Scrutiny Committee agrees to: (a) Review and approve the Code of Corporate Governance Statement 2025/26. 1. Executive Summary 1.1 This report provides details of how we ensure good governance, including clear accountability for delivering the desired outcomes for service users and communities. Appendix 1 provides our Code of Corporate Governance Statement 2025/26. 2. Background 2.1 All local authorities have a statutory requirement to report publicly on the extent to which they comply with their own Code of Governance on an annual basis, including how they have monitored and evaluated the effectiveness of their governance arrangements in the year and considered planned changes in the coming period. 2.2. The ‘Delivering Good Governance in Local Government Framework’ (CIPFA/Solace 2016) applies to annual governance statements. It helps local government take responsibility for developing and shaping an informed approach to governance and aims to achieve the highest standards in a measured and proportionate way. The Framework is intended to assist authorities individually in reviewing and accounting for their own unique approach. 2.3. The overall aim is to ensure that: • Resources are directed in accordance with agreed policy and according to priorities. • There is sound and inclusive decision making. • There is clear accountability for the use of those resources in order to achieve desired outcomes for service users and communities. Agenda Item 4 13
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2.4. Appendix 1 contains our Code of Corporate Governance Statement 2025/26 which aligns to the Framework and demonstrates how we are ensuring good governance and transparent accountability. 3. Proposals 3.1 The Audit and Scrutiny Committee is requested to (a) Review and approve the Code of Corporate Governance Statement 2025/26. 4. Implications/Socio-economic Duty Financial 4.1 None. Human Resources 4.2 None. Legal 4.3 None. Equality/Socio-economic 4.4 None. Environmental and Sustainability 4.5 None. Key Priorities 4.6 Effective governance is key to delivering our priorities outlined within our Council Plan 2023-28, specifically the Sustainable Council priority. Community Wealth Building 4.7 None. 5. Consultation 5.1 The Executive Leadership Team were involved in the creation of the Code of Corporate Governance. Aileen Craig Head of Service (Democratic) For further information please contact Isla Hardy, Senior Manager (Policy, Performance and Democracy) on 01294 324035. Background Papers None. 14
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Code of Corporate Governance 2025 to 2026 15
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Code of Corporate Governance 2025 to 2026 Page 1 of 14 Delivering Good Governance in Local Government 2025 to 2026 This document details how North Ayrshire Council complies with the Delivering Good Governance in Local Government: Framework (CIPFA/Solace, 2016). The Framework supports local government to take responsibility for developing and shaping an informed approach to governance, aimed at achieving the highest standards in a measured and proportionate way. It assists authorities individually in reviewing and accounting for their own unique approach. The overall aims ensure: • Resources are directed in accordance with agreed policy and according to priorities. • There is sound and inclusive decision making. • There is clear accountability for the use of those resources in order to achieve desired outcomes for our service users and communities. The Framework applies to annual governance statements prepared for the financial year 2016/17 onwards. For further information please contact: The Corporate Policy and Performance Team North Ayrshire Council Tel: 01294 310000 Email: NorthAyrshirePerforms@north-ayrshire.gov.uk 16
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Code of Corporate Governance 2025 to 2026 Page 2 of 14 A. Behaving with integrity, demonstrating strong commitment to ethical values and respecting the rule of law Demonstrating strong commitment to ethical values • New Elected Members are provided with a full Induction Programme which includes all aspects of conduct. There is an extensive programme of inductions at the outset of the new Council Administration. Thereafter, sessions are provided on a regular basis. • All Elected Members have access to Continuing Professional Development discussions and the opportunity to participate in self/360 assessments to review and support their ongoing development. In addition to this, a series of development events is provided to further support Elected Members’ Development. A calendar of events on a variety of topics is arranged and promoted to Elected Members. Online guides and e-learning are also available. • All employees including Chief Officers participate in ‘Our Time to Talk’ discussions which provide the opportunity to discuss the focus of work, how this will be done (behaviours linked to our Staff Values) and what development is required to support this. This is an annual discussion which can be supported throughout the year by one-to-one supervision discussions and a mid-year review as required. • The Council invests in leadership and management development by hosting a Leadership Academy. This provides aspiring, first, middle and strategic leaders, including Chief Officers and Elected Members, with a variety of development interventions which enhance, refresh and develop their skills, knowledge and behaviour. • There is a Code of Conduct for Employees. • The Code of Conduct for Councillors sets out the minimum standards of conduct that are expected from Elected Members and provides advice and guidance on registerable interests and on the declaration of interests. The Code also sets out the sanctions that can be applied by the Standards Commission where a breach of the Code occurs. Elected Members are provided with quarterly updates from the Standards Commission and Advice Notes issued by the Commission to assist in compliance with the Code of Conduct are communicated. • The Local Government Act 2000 and the Code of Conduct for Councillors set out the categories of interests, financial or otherwise, that Councillors of Scottish Local Authorities must register. This register is available for inspection by members of the public. In compliance with the Act and relevant Regulations, the 33 Elected Members of North Ayrshire Council have registered interests with the Proper Officer of the Council. The Register of Interests and notifications of Declarations of Interest are available for inspection. Reports on Elected Member Training are submitted to the Executive Leadership Team (ELT) and to the Audit and Scrutiny Committee on an annual basis. • The Council has approved Guidelines for Member/Officer Relations (incorporating the Protocol on Member/Officer Relations from the Councillors’ Code of Conduct). This is subject to annual review as part of the Council’s review of governance documents. • Declaration of Interest is a set item on all Council and Committee Meeting Agendas. There is a requirement for all Elected Members, to declare any financial or non-financial interests in accordance with the Code of Conduct. • There is a Whistle Blowing policy in place for employees, which was reviewed in 2020, again in 2022 in line with accessibility requirements and a minor accuracy update in 2023. • A Media Protocol is in place. 17
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Code of Corporate Governance 2025 to 2026 Page 3 of 14 • The People Strategy, “Our People Connect”, was designed by our employees for our employees. This outlines priorities that will engage and support the transformation of the Council to be a leaner, more efficient and higher performing organisation where people can develop and thrive. • Our Staff Values of Focus, Passion and Inspiration are key to our People Strategy “Our People Connect”. They are now fully embedded in everything we do each day and visible when logging onto a laptop or desktop, poster or wall displays, lanyards etc. In addition to this they are embedded in our recruitment process, onboarding process and throughout our development interventions (such as courses and “Our Time To Talk” discussions). Respecting the rule of law • Strategic decision-making is governed by the Council’s key constitutional documents which are subject to regular review. The governance documents were approved by Council in May 2022 and reviewed in May 2023, September and December 2024 and are scheduled for review in September 2025. The key documents are the Scheme of Administration, The Standing Orders for Meetings and Proceedings of the Council, the Standing Orders relating to Contracts and Contract Procedure Rules and the Scheme of Delegation to Officers. • The Council’s Cabinet is the key strategic decision-making committee, comprising the Leader of the Council, the Depute Leader and four Members of the Administration. • The roles and responsibilities of the Council’s Audit and Scrutiny and Appeals Committees are set out in the approved Scheme of Administration. • The Head of Service (Finance) is appointed as the Section 95 Officer and is responsible to the authority for the proper administration of financial affairs as stated within the Local Government (Scotland) Act 1973. • The Head of Service (Democratic Services) is appointed as the Monitoring Officer. • The Head of Service (Democratic Services) is appointed as RIPSA Senior Responsible Officer (SRO). The SRO ensures compliance with the terms of The Regulation of Investigatory Powers (Scotland) Act 2000 (RIPSA) and associated legislation. • The Chief Social Work Officer is appointed in accordance with Section 3 of the Social Work (Scotland) Act 1968. • The Council has appointed a Chief Planning Officer. • The Head of Service (Education) is appointed as Chief Education Officer in anticipation of the commencement of Section 25 of the Education (Scotland) Act 2016. • The Revised Remuneration Policy Guidance is in place. • The Counter Fraud and Corruption Strategy is in place. • A Data Protection Officer (DPO) is appointed. The DPO ensures compliance with the General Data Protection Regulation (2018) and the Data Protection Act (2018) legislation. 18
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Code of Corporate Governance 2025 to 2026 Page 4 of 14 B. Ensuring openness and comprehensive stakeholder engagement Openness • Our Council Plan 2023 to 2028 was approved by Council on 21st June 2023 and sets out our strategic approach to making North Ayrshire a fairer and more equal society. This sets out our vision, mission and four priorities up to 2028. • We have 26 Council Plan Performance Indicators to ensure that progress on the Council Plan is managed and scrutinised. Targets have been set where appropriate for each of the indicators to ensure we can monitor progress of our priorities. Progress on the Council Plan is also scrutinised through the half yearly Council Plan Progress Reports sent to the ELT, Cabinet and the Audit and Scrutiny Committee. These are published on the performance pages of our website. In addition, summary reports are scrutinised by the ELT at Quarter 1 and Quarter 3. • Council Plan actions are high-level five-year actions as listed within the Council Plan 2023 to 2028 and are supported by relevant strategies. • The Council’s Annual Performance Report provides a summary of our performance during the year and is available on our website. • Financial information including annual accounts is published on our website. • Our Annual Governance Statement is approved annually by the Audit and Scrutiny Committee and published on our website. • Our Performance Management Strategy 2023 to 2028 aligns to our Council Plan and is published on our website. It outlines current procedures and planned activities to drive continuous improvement for the people of North Ayrshire. • Links to My Local Council website are published which provide our residents with Local Government Benchmarking Framework (LGBF) performance information and comparisons to other local authorities. Information on our performance within the LGBF is integrated within our suite of public performance reporting as part of our six-monthly Council Plan Mid-Year and Year-End Progress Reports. • There is a presumption that all committee business is open to the public except where required by law to be in private. Council/Committee meetings which are open to the public are also live streamed to the internet and/or available to view as a recording following the meeting. Since 2020 both Council and Committee meetings have been streamed live with recordings available for viewing thereafter. The Council meeting in September 2022 agreed that “hybrid meetings” should be the default position for meetings whereby some Members attend the meeting in person and others may join remotely. This improves accessibility and participation. A hybrid meetings protocol is in place and subject to regular review. • Through our commitment to the Community Empowerment (Scotland) Act 2015, the Council’s Community Planning website has been developed to share information and research about the work of the Community Planning Partnership, Locality Planning, our key aims and objectives and align with the requirements of the Act. • The Council has separate schemes for reporting complaints and compliments, as well as customer feedback for the Health and Social Care Partnership. • Two complaint reports are submitted to the Audit and Scrutiny Committee each year and trends or issues fed back to services to identify improvements. Complaint handling performance is also recorded 19
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Code of Corporate Governance 2025 to 2026 Page 5 of 14 regularly in Pentana. The Council has a dedicated Complaints Manager who supports Chief Officers, Senior Managers, Elected Members as well as complaint handlers and acts as liaison with the Scottish Public Services Ombudsman. • All inspection reports are reviewed by Cabinet and the Audit and Scrutiny Committee. • The Council’s Publication Scheme and guidance on submitting Freedom of Information and Environmental Information requests are available on the Council’s website. • Guidance on submitting Subject Access Requests is available on the Council’s website. • Open Data is published on the Council’s Open Data Portal, allowing members of the public to access information on various council services ranging from information such as location of libraries to performance related matters such as contact centre call performance. • Elected Members have access to data on Pentana on request allowing them to view progress of the Council Plan indicators. Engaging comprehensively with institutional stakeholders • The Council is committed to engaging in a meaningful way with its communities so that it can understand and respond effectively to local needs and is committed to the principles of the National Standards on Community Engagement. • The Community Planning Partnership hosts the Council’s Participation Strategy, developed jointly with partners, and showcasing the range of opportunities for communities to engage in various mechanisms to support Council decision making. • The Council is committed to supporting the establishment and work of Community Councils and their role in Locality Partnerships as well as supporting Locality Planning in its own right as the Council’s scheme of decentralisation. The Scheme of Establishment for Community Councils will be reviewed during 2025/26. • The Community Planning Partnership website contains The Engagement Hub and a consultation calendar which brings all partner consultations together in a searchable format and gives feedback on consultations. • The Community Engagement Network of the Community Planning Partnership has been refocused and aims to ensure partners meet the revised National Standards for Community Engagement. • The North Ayrshire Health and Social Care Partnership Integration Joint Board (IJB) is the governing body of the North Ayrshire Health and Social Care Partnership. It has delegated responsibilities from North Ayrshire Council and NHS Ayrshire and Arran. Engaging with individual citizens and service users effectively • Engagement and consultation are at the heart of the Community Planning Partnership and is driven through the Engagement Centre of Excellence Programme which includes training, digital resources, and links to key strategies and approaches. For example, the Youth Participation and Citizenship Strategy, Older People’s Forum and Community Engagement Network are all key examples of this work. There is now an online ‘Engagement Hub’ on the Community Planning website, comprising of an online engagement list, events calendar, community and partner resources and information about the CPP’s Participation Approach. • The Council routinely engages with our residents on our services and proposals. The Council recently undertook a large budget consultation exercise which elicited some 4,461 responses to help inform 20
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Code of Corporate Governance 2025 to 2026 Page 6 of 14 budget setting proposals. The views of our communities are also gathered through consultation with a range of groups such as Parent Councils, Youth Forums, Tenants Associations, Community Associations and networks and the Access Panel. • The ongoing development of Locality Partnerships has made Community Planning more accessible to local people. • Increased use of social media through Locality Facebook pages, the Community Planning Partnership X account and partner use of Community Planning hashtag supports communication with a wider audience. • Participatory Budgeting is an approach to deepening engagement with residents which delivers real influence for individuals and communities and the Council has made significant commitment and investment in this work. • The North Ayrshire Community and Locality Planning Model extends and deepens engagement with individuals and participation by communities by: co-defining the issues; co-producing the responses; and co-delivering the solutions. • We currently use the Consul application to run Shaping North Ayrshire, our online participation forum enabling residents to provide feedback on current topics. • Application of the Place Standard enables individuals and communities to express how it feels to live in local communities and to shape the development of community and spatial planning in their area. 21
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Code of Corporate Governance 2025 to 2026 Page 7 of 14 C. Defining outcomes in terms of sustainable economic, social, and environmental benefits Defining outcomes • The Council’s vision and mission outlined in Our Council Plan 2023-28 links strongly to the North Ayrshire Community Planning Partnership’s (CPP’s) shared vision of ‘North Ayrshire – A Better Life’. • Our Council Plan 2023 to 2028 was approved by Council in June 2023. Our vision and mission in Our Council Plan are: o Vision: ‘A North Ayrshire that is fair for all’ o Mission: ‘Working together to improve the lives of our people in North Ayrshire’ • Our Council Plan has four interlinked and interdependent priorities: o Wellbeing – to transition to a wellbeing economy, delivering prosperity, wellbeing and resilience for local people. o Communities and Local Democracy – we will have active, inclusive and resilient communities. o Climate Change – to achieve net zero by 2030. o A Sustainable Council – a Community Wealth Building Council that is efficient and accessible, maximising investment and focusing resources towards our priorities. • The role of the Audit and Scrutiny Committee and ELT/ Chief Officers Leadership Team is to scrutinise the findings from the various performance reports. We regularly report on the following to ensure effective scrutiny: o Locality Outcome Improvement Plan (LOIP) Progress Reports. o Locality Partnership progress reports. o Council Plan Progress Reports - six monthly reports to Cabinet and the Audit and Scrutiny Committee. o Council Plan Annual Performance Report. o Local Government Benchmarking Framework. • As part of the recent self-evaluation work undertaken by the Audit and Scrutiny Committee, a standing agenda item to cover areas which the Committee would like to have addressed has been added to the committee agendas. • We utilise the Pentana online performance management system to track and manage Council priorities and measures. • The Council Plan Performance Management Framework (PIs) is reviewed regularly. The Council Plan actions are as published within the Council Plan 2023 to 2028 and are high level actions over five years. They are supported by strategies within the Council. • Operational Plans are prepared and reviewed on an annual basis. • Strategic risks and control factors are reported to Cabinet. 22
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Code of Corporate Governance 2025 to 2026 Page 8 of 14 Sustainable economic, social and environmental benefits • Our Local Outcomes Improvement Plan’s clear focus has been agreed by Community Planning partners across themes of Wellbeing, Work and World with an overarching focus on reducing inequalities and working in partnership. • Our Council Plan priorities ‘Wellbeing’ and ‘Climate Change’ link to a range of actions supporting a wellbeing economy, as well as performance indicators such as carbon emissions and amount of energy generated from low carbon sources. • The Climate Change Steering Group is established to drive activity in delivering the Climate Change Council Plan priority. Comprising senior management representatives from each Council Directorate, Community Planning Partners, private sector and other agencies, with meetings taking place every four months. • The Community Wealth Building Strategy has been refreshed for 2024 to 2027 and is available on our website. Community Wealth Building is central to our Council Plan 2023 to 2028. • The Sustainable North Ayrshire Strategy 2024 to 2027 is established. • The North Ayrshire Nature Network Strategy is in place, as is the Local Biodiversity Action Plan (2019 to 2031). • Our Economic Development, Growth and Regeneration priorities are identified and delivered through a range of strategies including our Regeneration Delivery Plan 2021 to 2026, Vacant and Derelict Land Strategy 2023 to 2027 and Local Transport and Active Travel Strategy 2023 to 2028. • The Annual Climate Change Reporting Duty is submitted to Scottish Government. • Our Children’s Services Planning includes our Children’s Rights Report and our Child Poverty Action Plan 2023 to 2026. Our Children’s Services Plan outlines our aims and priorities to safeguard, support and promote the well-being of children and to make North Ayrshire the best place in Scotland to grow up. Our Children’s Rights Report emphasises our commitment to promote and protect children and young people’s rights in line with the UN Convention on the Rights of the Child (UNCRC). Our Child Poverty Action Plan takes account of the actions we are taking with partners to address child poverty in North Ayrshire. Progress is reported to the Community Planning Partnership Board. • Our Education Service Improvement Plan 2023 to 2026 aims to improve the educational outcomes for all learners, particularly those who are most disadvantaged. • Our committee report template includes a requirement to evaluate equality, socio-economic and climate change impacts to ensure these are embedded within our decision-making processes. • The Council is committed to using the Local Government Benchmarking Framework (LGBF) Performance Indicators to scrutinise performance on our priorities against all local authorities within Scotland. • The Housing and Public Protection Service complies with the Scottish Regulators Strategic Code of Practice. The integrated regulatory functions within the service (Building Standards, Environmental Health and Trading Standards) can demonstrate an effective contribution towards the Council’s approach to sustainable economic growth as well as maintaining and promoting a prosperous, fair and safe society. 23
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Code of Corporate Governance 2025 to 2026 Page 9 of 14 D. Determining the interventions necessary to optimise the achievement of the intended outcomes Determining interventions • The information submitted to Committees is discussed in detail at ELT to ensure management oversight and thereafter at pre-Agenda meetings (except in the case of regulatory committees) that are held one week prior to the formal meetings. This enables any additional information to be sought to allow a fully informed decision to be taken at the Committee. • Each report should indicate the justification for each action proposed and consultations undertaken in its development, together with feedback from consultees. Reports also contain separate sections on a range of implications (financial, human resources, legal, socio-economic duty including the consumer duty and island impacts, equality including children and young people’s rights, Community Wealth Building and the Council’s key priorities). Guidance for report authors provides information on the completion of these elements within the required fields in a committee report. Planning interventions • Council Plan six monthly progress reports. • Operational Plan reports to Heads of Service and Executive Directors. • Use of Pentana online performance management system allows us to ensure we are achieving acceptable levels of performance, identify opportunities for continuous improvement and ensure we have plans in place to improve underperforming areas. • Council and Operational Plan performance reports contain trend information on Performance Indicators. • Strategic risks and control factors are reported to Cabinet. • The Risk Management Strategy is in place and available on our website. • The Community Planning Partnership Risk Register has been reviewed to reflect the refreshed Local Outcomes Improvement Plan 2022 to 2030. • The Workforce Strategy (2024 to 2028) has been refreshed in 2024, this explains how our workforce will support the delivery of the Council’s ambitions within the available financial resources and builds on the workforce planning approach carried out at a service level. • ‘Our approach to Workforce planning’ HR guide is published on our intranet to support managers and Heads of Service in shaping their current and future workforce to ensure delivery of efficient and effective services and is a significant factor in how we transform our Council to deliver our financial challenges. In order to be successful, it is key for workforce planning to flow from the Council Plan and link to both people management and operational processes. • Long Term Financial Outlook – The Council’s Long-Term Financial Outlook outlines the financial challenges facing the Council over the next 10 years and is reported to Cabinet. • Medium Term Financial Plan – The Council’s Medium-Term Financial Plan provides an overview of the Council’s anticipated financial position for the next three financial years. This is approved by Council annually. A copy of the budget book is published on our website each year. 24
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Code of Corporate Governance 2025 to 2026 Page 10 of 14 • Capital Investment Programme – The Council’s Capital Investment programme provides an overview of the capital projects the Council is investing in over the 10-year period and associated funding sources. The 10-year Capital Investment Programme is reviewed and approved by Council annually. • Capital Investment Strategy – The Council’s Capital Investment Strategy provides an overview of how capital investment plans, financing and treasury management activity contribute to the infrastructure and provision of services for the benefit of North Ayrshire communities and citizens. • Asset Management Plans are in place. Optimising achievement of intended outcomes • Regular reporting of financial performance to Cabinet. • Production of annual accounts and publication on our website. • Local Financial Returns. 25
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Code of Corporate Governance 2025 to 2026 Page 11 of 14 E. Developing the entity’s capacity, including the capability of its leadership and the individuals within it Developing the entity’s capacity • The Leadership Academy provides skills, knowledge and behavioural development for leaders at all levels. Managers regardless of grade can, if committed to their continuous learning and supported by their manager, progress through the levels of the Leadership Academy from First to Strategic utilising development opportunities and accessing tailored interventions for career progression. This provides an opportunity to build leadership capacity and grow our own talent. • The Connected Leadership Network is an active Teams channel which provides an opportunity for senior managers to gain support from others as well as sharing knowledge, ideas and suggestions. This has been a successful addition to the Leadership Academy and supports the digital agenda. • The Chief Officer Leadership Team (COLT) meet on a quarterly basis to provide an opportunity to collaborate on key priorities aligned to the Council Plan. • The Chief Executive hosts a Connected Leadership Conference three times per year. This provides an opportunity for sharing of information and increased engagement and collaboration opportunities with other managers to deliver our Council Plan priorities. Themes are then continued through Chief Officer Leadership Team sessions and Connected Leadership information sessions to enrich the knowledge gained and give further opportunities to work together and drive improvements. Developing the capability of the entity’s leadership and other individuals • Each employee has a Role Profile which provides information on the expectations of the job. This supports the development of skills, knowledge and behaviours of our employees. • All governance documents including the Scheme of Delegation to Officers and the Financial Regulations documents are reviewed annually and published on our website. • All employees throughout the Council participate in “Our Time To Talk” discussions which provide the opportunity to discuss the focus of work. It ensures managers and employees take time, at least once per year, to reflect and most importantly ’TALK’ about how the employee is getting on at work. This is an annual discussion which can be supported throughout the year by one-to-one/supervision discussions and a mid-year review as required. • New Elected Members are provided with a full Induction programme which includes all aspects of Council business, such as overview of Council meetings, introduction to the ELT and the role of the councillor. • A series of development events are provided to further support Elected Members’ Development. A calendar of events on a variety of topics is arranged and promoted to Elected Members, in addition to online guides and e-learning. • Elected Members are invited to participate in an annual development discussion in addition to an opportunity to participate in self/360 assessment. This allows identification of development activity to support their role and provides feedback on their individual performance utilising the 360 tool. • The Community Planning Partnership’s Community Learning and Development Plan contains leadership development. 26
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Code of Corporate Governance 2025 to 2026 Page 12 of 14 F. Managing risks and performance through robust internal control and strong public financial management Managing risk • The Strategic Risk Register is refreshed annually, approved by Cabinet and subject to a six-month progress update. A Corporate Risk Register is refreshed annually, approved by the ELT and also subject to a six-month progress update. Operational Risk Registers are updated by services six-monthly. There are escalation and de-escalation processes in place between the registers. • The Corporate Risk Management Group, with senior representation from all Directorates, meets six- monthly to review and update risks and their associated risk management action plans. Other related business will also be considered where this could enhance the organisational risk posture. • The Community Planning Partnership Risk Register was revised in 2022 to align with the Local Outcomes Improvement Plan 2022-30. Managing performance • Council Plan Progress Reports are scrutinised by the ELT, Cabinet and the Audit and Scrutiny Committee. The reports are produced in a ‘magazine style’ format to make the information as engaging and accessible as possible. • Performance indicators (including targets where appropriate) and actions are included within the Council Plan Performance Framework and Council Plan. All updates to the framework are detailed within the six-monthly Progress Reports and reported to ELT, Cabinet and Audit and Scrutiny for full transparency. • The six-monthly Council Plan Progress Reports focus on outcomes as well as ongoing activity and outputs. Case studies alongside information on audits, inspections and accreditations are included to show how we are performing. Benchmarking activity takes place via the Local Government Benchmarking Framework (LGBF) indicators included in the Performance Management Framework and those that link directly to our priorities are scrutinised quarterly by ELT and through our six- monthly reporting for Cabinet and the Audit and Scrutiny Committee. This ensures we learn from others and continually improve. Links are provided within the reports to additional information where appropriate. This holistic approach provides a well-rounded view of performance within our Council that includes valuable context. • The six-monthly Council Plan Progress Reports (Quarters 2 and 4) which include LGBF comparisons, as well as the Annual Performance Report are published on our website. Scrutiny is invited from residents and contact information is contained in the reports. • Operational Plans within services align directly to the Council Plan and are scrutinised by relevant Senior Managers and Heads of Service. 27
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Code of Corporate Governance 2025 to 2026 Page 13 of 14 • Benchmarking activity is undertaken based on the Local Government Benchmarking Framework (LGBF) as well as through specific groups. In addition to quantitative comparisons, outcome-based benchmarking also takes place. • Our Performance Management Strategy 2023-28 is published on our website and aligns to Our Council Plan 2023-28. Robust internal control • The Council has a framework of Internal Controls embedded within services, underpinned by Financial Regulations and Codes of Financial Practice which are approved by the Council. • Internal Audit establishes an annual risk-based plan of work to review controls across the Council. This is approved by the Audit and Scrutiny Committee and is subject to a mid-year review process. • All audit findings are reported to the Council’s Audit and Scrutiny Committee. • The Council has a Corporate Fraud Team which investigates all allegations of fraud and error against the Council. Six-monthly update reports are provided to the Audit and Scrutiny Committee. Regular review of the Counter Fraud and Corruption Strategy is undertaken, with the most recent review taking place in September 2022. • An annual report and assurance statement is provided by the Chief Internal Auditor to the Audit and Scrutiny Committee. • An annual report on RIPSA is provided to ELT and Cabinet and we provide an annual statistical return on use of investigatory powers to the Investigatory Powers Commissioner’s Office (IPCO). • A governance structure was implemented by the three Ayrshire Councils in 2018 to oversee the delivery of the Ayrshire Growth Deal (AGD) and promote the objectives of the Ayrshire Regional Economic Partnership. This comprises the Ayrshire Growth Deal Project Management Office (PMO) which reports directly to the Chief Executives Group, Ayrshire Economic Partnership Group and Joint Committee, with the Ayrshire Economic Partnership Board sitting below the Joint Committee and having responsibility for the day-to-day business of the partnership and AGD. Managing data • The Council’s Records Management Plan (RMP) was approved by the Keeper of the Records of Scotland in 2015. As defined by the Public Records (Scotland) Act 2011, the Council undertake Progress Update Reviews and submit to the Keeper to monitor compliance. • The Council maintains an Information Asset Register (IAR) which is kept under regular review. • The Council has a process for undertaking Data Protection Impact Assessments (DPIA) with approval required from DPO and annual reviews embedded to ensure compliance with Article 35 of the UK GDPR. 28
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Code of Corporate Governance 2025 to 2026 Page 14 of 14 G. Implementing good practices in transparency, reporting and audit to deliver effective accountability Implementing good practice in transparency • We publish our public facing reports on our website. • Committee Reports and webcast recordings are on our website. • There is a presumption that all committee business is open to public except where required by law to be in private. • We publish open datasets. Implementing good practices in reporting • Annual Governance Statement. • Six monthly Council Plan Progress reports and Annual Performance Reports produced, with updates to accompanying Performance Management Framework reported in detail to the ELT, Cabinet and the Audit and Scrutiny Committee. • Community Planning Partnership Annual Performance Report. • Health and Social Care Partnership Annual Performance Report. • Annual Accounts demonstrates best practice according to external auditors. Assurance and effective accountability • The Annual Governance Statement is approved by the Audit and Scrutiny Committee prior to inclusion within the annual accounts. • Any recommendations by External Audit are reported to the Audit and Scrutiny Committee and progress with implementation is monitored by Internal Audit and also reported to the Committee on a bi-annual basis. • Internal Audit work is reported to the Audit and Scrutiny Committee on a quarterly basis. • The Council’s Internal Audit Team received an independent External Quality Assessment in July 2022 which demonstrates conformance with the Public Sector Internal Audit Standards. This needs to be carried out at least every five years, with period self-assessments also carried out by the Chief Internal Auditor. • The Chief Auditor has rights of access to the Chief Executive and the Chair of the Audit and Scrutiny Committee in relation to any audit matter. • The Data Protection Officer has direct rights of access to the Chief Executive and Chief Officers in relation to any personal/sensitive data protection matters. 29
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NORTH AYRSHIRE COUNCIL 29 May 2025 Audit and Scrutiny Committee Title: Audit Scotland: North Ayrshire Council Best Value Thematic Management Report : Transformation Purpose: To present the findings of the recent Audit Scotland report on how councils are redesigning and delivering more efficient services to achieve planned outcomes Recommendation: Note the report findings and the recommended improvement actions 1. Executive Summary 1.1 The Accounts Commission’s “Local government in Scotland Financial bulletin 2023/24” notes that councils need to intensify transformation activity, progressing at scale and pace to ensure their financial sustainability. 1.2 Audit Scotland carried out the Best Value Audit earlier in the year. This report covers the thematic aspect of the Best Value audit requirements. The Accounts Commission has directed auditors to report on transformation and how councils are redesigning and delivering more efficient services to achieve planned outcomes. 1.3 The full report findings are attached in the appendix of the report. This includes recommended areas of improvement actions which have been agreed by senior council officers. Audit Scotland representatives will be in attendance at the committee to present the findings. 2. Background 2.1 The Accounts Commission’s “Transformation in councils” report recognises that, while work has been ongoing in relation to local government transformation for decades, a step change is required and the pace and scale of transformation must increase significantly. Transformation, through greater collaboration with partners, will be key for councils to deliver more sustainable service models in challenging financial climates. 2.2 Audit Scotland carried out the Best Value Audit earlier in the year. The audit covers the thematic aspect of the Best Value audit requirements. The Accounts Commission has directed auditors to report on transformation and how councils are redesigning and delivering more efficient services to achieve planned outcomes. In carrying out the work, auditors have considered the following questions: Agenda Item 5 31
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• To what extent does the council have clear plans for transformation that link to its priorities and support long-term financial sustainability? • To what extent do the council’s programme management arrangements facilitate effective oversight of its transformation plans? • To what extent are partners and communities involved in the development and delivery of the council’s plans for transformation? 2.3 The report findings are attached within the appendix of the report, including recommended areas of improvement actions. Representatives from Audit Scotland will be in attendance to present the findings. 3. Proposals 3.1 Members are asked to note the report findings and the recommended improvement actions. 4. Implications/Socio-economic Duty Financial 4.1 None. Human Resources 4.2 None Legal 4.3 None Equality/Socio-economic 4.4 None Climate Change and Carbon 4.5 None Key Priorities 4.6 The Best Value Thematic Audit aligns to the Council’s Key priority of a Sustainable Council Community Wealth Building 4.7 None 32
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5. Consultation 5.1 Audit Scotland engaged with various council officers throughout the course of the audit. Mark Boyd Head of Service (Finance) For further information please contact Mark Boyd, Head of Finance, on 01294 324560. Background Papers 0 33
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North Ayrshire Council Best Value thematic management report Transformation: how councils are redesigning and delivering more efficient services to achieve planned outcomes Prepared by Audit Scotland May 2025 34
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Best Value thematic work: | 2 Contents Key messages 3 Introduction 5 Transformation planning 8 Programme management 13 Partnership working and community engagement 15 Impact of transformation 19 Appendix 22 Accessibility You can find out more and read this report using assistive technology on our website www.audit.scot/accessibility. 35
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Key messages | 3 Key messages 1 The Accounts Commission’s Local government in Scotland Financial bulletin 2023/24 notes that councils need to intensify transformation activity, progressing at scale and pace to ensure their financial sustainability. 2 In 2024 we reported that North Ayrshire Council’s underlying service cost base is not sustainable and reserves will be depleted over the longer term unless future recurring savings are made through the transformation of its services and other measures. 3 The council’s current transformation programme, known as its Sustainable Change Programme, was approved in 2023 and clearly sets out how it intends to transform its services, in line with its priorities, through five workstreams and six service reviews. Between 2021/22 and 2024/25 the council achieved financial efficiencies from its Sustainable Change Programme of £3.136m. It plans to make further efficiencies of £8.5m over the next three years. 4 The council’s latest Medium Term Financial Outlook has identified a structural funding gap of £46.7m in the three-year period to 2027/28 (including HSCP pressures). Projected savings from transformation fall significantly short of the savings required. Officers are clear that future recurring savings also need to be made through workforce changes, cuts in services, and council tax and fees and charges increases. However, the transformation programme needs to be sufficiently ambitious to respond to the scale of the financial challenges. 5 The council has robust officer-led governance arrangements in place to monitor its Sustainable Change Programme through its Transformation Board. The Executive Leadership Team are all members of the Transformation Board and so are well-sighted on the council’s transformation projects. However, there is scope for the council to improve its public reporting on transformation to provide assurance about how the council plans to change, to sustain services in the future. 6 The council has a well-established and well-resourced transformation team. It has a Change and Service Redesign Fund - an investment fund created by 36
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Key messages | 4 the council more than eight years ago to help drive transformation. Nearly £0.8m has been drawn down from the Fund in the last two years although not all of this has been spent on transformation. 7 The council has shared examples of where it is working well with partners to deliver transformation with the aim of generating savings and improving outcomes, but its current transformation programme is primarily internally focused. There is scope for the council to consider opportunities for more radical transformational change with partners. 8 There are discussions ongoing across the senior leadership of North Ayrshire, East Ayrshire and South Ayrshire Councils to explore further opportunities for public sector reform and collaboration including the Ayrshire Economic Strategy. These developments will be subject to scrutiny by elected members as they progress. Elected members will need to make difficult decisions on how the use of limited resources is prioritised going forward. Plans need to be innovative and ambitious. 9 The council has provided good examples of consulting with its communities in relation to transformation projects and using the results to influence how services are delivered. The recent extensive budget engagement process included consultation with residents on many activities overseen by the Transformation Board. 10 The council provides regular and detailed information on the financial and non-financial benefits of individual transformation workstreams and service reviews to the Transformation Board. The benefits of individual projects are also reported in individual council reports. 11 The council has provided evidence of using Equality and Children’s Rights Impact Assessments in relation to its transformation projects, where appropriate, and has provided examples of engagement with user groups leading to changes being made in how services are delivered. 37
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Introduction | 5 Introduction 1. Transformation is about radically changing how councils operate and deliver services to achieve planned outcomes in a financially sustainable way (Transformation in councils, Accounts Commission, October 2024). The 2023 Local Government Overview (LGO) notes that councils have never faced such a challenging situation. Service demands have increased after the Covid-19 pandemic and funding is forecast to reduce in real terms. 2. The Accounts Commission’s Transformation in councils report recognises that, while work has been ongoing in relation to local government transformation for decades, a step change is required and the pace and scale of transformation must increase significantly. Transformation, through greater collaboration with partners, will be key for councils to deliver more sustainable service models in challenging financial climates. 3. This report sets out how the council is redesigning and delivering more efficient services to achieve planned outcomes. It builds on what we have reported previously in this area in our 2023/24 Annual Audit Report. 4. The Accounts Commission’s Strategy (2021-26) sets out its priorities to focus on inequalities, funding, communities and recovery. The Code of Audit Practice sets out the Best Value work required to report on these priorities. 5. This report covers the thematic aspect of the Best Value audit requirements. The Commission has directed auditors to report on transformation and how councils are redesigning and delivering more efficient services to achieve planned outcomes. In carrying out the work, auditors have considered the following questions: • To what extent does the council have clear plans for transformation that link to its priorities and support long-term financial sustainability? • To what extent do the council’s programme management arrangements facilitate effective oversight of its transformation plans? • To what extent are partners and communities involved in the development and delivery of the council’s plans for transformation? 38
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Introduction | 6 • To what extent has the council considered the impact of its transformation activity, including on vulnerable or protected groups? 6. An improvement action plan is included at Appendix 1 of this report. This sets out audit recommendations in key areas, and the council’s planned response including responsible officers and dates for implementation. 7. The coverage of the work is in line with the expectations for council’s arrangements for the seven Best Value themes in the Local Government in Scotland Act 2003, Best Value Statutory Guidance 2020 and we have considered the Accounts Commission’s transformation principles set out in Transformation in councils (Exhibit 1). 39
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Introduction | 7 Exhibit 1 Transformation principles Transformation is about radically changing how councils operate and deliver services to achieve planned outcomes in a financially sustainable way. Principle Vision Have a clear vision that sets out the intended end state of any transformation activity, focused on: • delivering large-scale recurring savings or generating income for the council, contributing to its longer-term financial sustainability • improving outcomes for citizens in line with council priorities • taking a whole-system approach to see and realise opportunities both within councils and more widely • meeting the needs of the people who use services and reduce inequalities • focusing on preventative activity, where applicable, to reduce the demand for services and to make them sustainable in the longer term. Planning • Be clear on the scale of the change required and ensure transformation plans are sufficiently ambitious to credibly respond to the scale of the challenge. • Commit staff with appropriate skills, time, and resources to ensure transformation occurs at the scale and pace required and that there is enough capacity for the changes to be embedded. • Be clear about the timescales, costs, outcomes, and anticipated impacts of transformation projects. • Show urgency and progress projects at pace without compromising appropriate governance on projects. Governance • Have a clear process for monitoring, evaluating, and reporting progress. • Put in place effective governance and escalation processes so that the transformation activities are well managed in their own right, but also able to be given priority alongside other business-as-usual activities. Collaboration • Develop better working relationships with communities and/or partners to achieve a sustainable model of service delivery. • Actively consider the opportunities offered by regional or national sectoral collaboration, or by integrating services locally with partners, or by supporting individuals and communities to achieve desired outcomes in place of an existing service. • Learn from good practice across Scotland and beyond. Innovation • Implement new ways of thinking, including innovation, creativity and a desire, willingness, and action to change and do things in new and different ways that achieve the outcomes needed. • Embed the right culture and behaviours to manage change and help maximise the contribution of all the team. Source: Accounts Commission, Transformation in councils, October 2024 40
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Transformation planning | 8 Transformation planning 8. The council needs to ensure it can deliver sustainable services now and in the future, and difficult decisions will need to be made to achieve this. The Accounts Commission’s Local government budgets 2024/25 briefing noted that councils’ cumulative funding gap between 2025/26 and 2026/27 is £780 million. This means that, cumulatively, councils need to identify and deliver recurring measures such as savings or increased income of five per cent of their overall revenue budget to be financially sustainable in the short term. 9. In January 2025, the Accounts Commission advised in its Local government in Scotland Financial bulletin 2023/24 that councils need to intensify transformation activity, progressing at scale and pace to ensure their financial sustainability and how councils plan to use their reserves, make savings and transform their services needs to become more transparent. 10. The council’s latest Medium Term Financial Outlook (MTFO) for the period 2025/26 to 2027/28 was presented to the council in October 2024. It identified a number of specific financial challenges in relation to the availability of Scottish Government funding for local authorities, the impact that anticipated demographic profile and other demand and cost pressures will have on the council’s cost base, and the strategies available to address the resultant funding gap. 11. The MTFO identifies a structural funding gap of £46.7m (including HSCP pressures) which must be addressed as part of the council’s Medium-Term Financial Plan. 12. In February 2025, the council agreed a balanced budget for 2025/26 but only after approving a council tax increase of seven per cent (£5.0m) and using: • a further £4.0m of reserves; • further savings across Directorates of £4.809m, including new approved savings of £2.547m, operational budget adjustments of £2.254m and previously approved savings of £0.008m; • non-recurring savings of £9.5m relating to the reduction in employer pension fund contributions; • a previously approved 100 per cent council tax premium in respect of second homes (£1.3m); and 41
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Transformation planning | 9 • a revised policy for non-domestic rates empty property relief (£0.253m). 13. The council’s latest Medium-Term Financial Plan indicates budget shortfalls of £3.6m in 2026/27 and £7.4m in 2027/28 (excluding HSCP pressures) after the planned use of reserves totalling £3.5m in 2026/7 and £1.8m in 2027/28. This is after assuming the council will fund a maximum three per cent increase in staff pay and council tax increases of five per cent for the next two years. The current planning assumption by the council for years 2026/27 and 2027/28 is that financial pressures facing the HSCP will be met by savings and recovery actions. However, the IJB’s total estimated budget gap for 2026/27 and 2027/28 ranges from a best- case scenario of a £11.6m deficit to a worst-case scenario of a £27.6m deficit. This position represents a material risk to the financial sustainability of the council. 14. Financial efficiencies from the Sustainable Change Programme of up to £8.5m are planned from 2025/26 to 2027/28. However, these fall significantly short of the savings required to achieve financial balance and will only be part of the council’s solution to closing its funding gap. The underlying service cost base is not sustainable and reserves will be depleted over the longer term unless further recurring savings are made through transformation of services, service reduction, service withdrawal and income generation. 42
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Transformation planning | 10 Findings Evidence The council’s transformation programme, known as its Sustainable Change Programme, clearly sets out how it intends to transform its services in line with its priorities through five workstreams and six service reviews. The council is clear that the primary driver behind its transformation programme is the need to deliver financial savings to address the council’s financial challenges and protect frontline services. There are strong links between transformation and the council’s financial plans and transformation is included in the council’s risk register. • The council’s current transformation programme, known as its Sustainable Change Programme, was approved in 2023 and consists of five workstreams and six service reviews. • The council is clear that the primary driver behind its transformation programme is the need to deliver financial savings to address the council’s financial challenges. • The current workstreams in the Sustainable Change Programme are sustainability, non-commercial property, commercial property, digital, developing data assets and the tourist visitor levy. Each of these workstreams contain multiple transformation projects. • All five workstreams and six service reviews have clear links with the council’s priorities. For example, its digital programme is linked to its Wellbeing, Communities and local democracy and A Sustainable Council priorities. • There is a dedicated section in the council’s annual budget documents on the Sustainable Change Programme. As well as setting out the savings generated to date, it notes that the more progress made through delivery of the Sustainable Change Programme, the less impact there could be on delivery of the council’s core services. • There are many mentions of transformation in the council’s December 2023 Long-term Financial Outlook and Medium- Term Financial Outlook. Reference is made to the fact that the scale and pace of transformation needs to increase if the council is to respond effectively to the challenges it faces. • The council classifies transformation as a high risk in its risk register reflecting the risk that transformation and change activities fail to deliver at the level of scale and pace required. The council describes risks associated with delivering the current transformation programme and developing a pipeline of future initiatives. Risk control measures put in place by the council include oversight from the Transformation Board and workforce planning. • The council’s risk score in relation to transformation reduced slightly in 2024 to reflect a more mature programme with a greater level of governance, accountability and confidence around delivery. 43
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Transformation planning | 11 Findings Evidence The council’s Sustainable Change Programme consists of five workstreams and six service reviews. Regular, detailed updates are compiled for each workstream and service review. These outline clear aims, costs and desired outcomes for users of services for the majority of activities. • Each of the council’s five transformation workstreams contain multiple transformation projects. For example, the sustainability workstream includes two Solar PV Projects, fleet decarbonisation and expansion of EV structure whilst the Digital Programme workstream includes website development and online improvements in accessing the council. Thirty-three projects and activities are listed in total across the five workstreams. • The council has provided the audit team with the detail of projects under each workstream including status. As at March 2025, 19 transformation projects were in progress, two were on hold and two were complete. • The six service reviews are: early learning and childcare (now complete), learning resource, waste services, financial inclusion, housing services and external residential placements (through the Brighter Pathways programme). • Regular, detailed, internal updates are submitted to the Transformation Board for each workstream and service review. These outline clear aims, costs and desired outcomes for users of services for the majority of activities. Detailed updates are provided on savings and projected savings, where these have been identified. 44
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Transformation planning | 12 Findings Evidence The council’s projected savings from transformation fall significantly short of the savings required to achieve financial balance and are only part of the council’s solution to closing its funding gap. • The council’s latest Medium Term Financial Outlook (MTFO) has identified a structural funding gap of £46.7m in the three-year period to 2027/28 (including HSCP pressures) Financial efficiencies from the Sustainable Change Programme amount to £3.136m from 2021/22 to 2023/24, with further efficiencies of up to £8.5m planned from 2025/26 to 2027/28. • The council reported in its Long-term financial outlook that transformation alone will not offer the full solution to the financial gap identified in the plan. • The council’s structural funding gaps are currently being met with a combination of recurring and non-recurring solutions. Officers recognise that future recurring savings need to be made through transformation of services, workforce changes, cuts in services, and council tax and fees and charges increases. Elected members will need to make difficult decisions on how the use of limited resources is prioritised going forward. Plans will need to be sufficiently ambitious to respond to the scale of its financial challenges. • The council also stated in its long-term financial outlook that it needed to deliver change and transformation at scale and pace over the medium and longer term to address its financial challenges. • The council is also exploring areas of wider reform to address its financial challenges. These include national initiatives through the Improvement Service and Digital Office that will provide further opportunities for councils to take a collective approach to areas of service delivery and opportunities for sharing services on a regional basis. Recommendation The council should ensure its plans are sufficiently ambitious to respond to its financial challenges. It should clearly set out the extent to which savings from transformation will help address the budget shortfalls set out in its Medium-Term Financial Plan. 45
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Programme management | 13 Programme management 15. It is essential that the council has good programme management arrangements in place to ensure it is making sufficient progress against its transformation plans. It is important that the council has the structures and the staffing resource in place to deliver its transformation ambitions. In addition, the council must ensure that both senior officers and elected members have appropriate oversight of progress. Findings and evidence relating to the council’s programme management arrangements Findings Evidence The Transformation Board provides effective oversight of the council’s transformation programme. The council has a well- established and well- resourced transformation team. • The Chief Executive chairs the council’s bi-monthly Transformation Board. All Chief Officers are members of the Board. • The Board considers and agrees work to be progressed under the Sustainable Change programme. It receives updates on the progress of all projects within the programme and provides strategic oversight of the programme. • Each of the five workstreams has its own project board in place which feeds into the Transformation Board. • The transformation team is well-resourced with 11 members of staff. Members provides project management and business analysis support to transformation projects. • Internal audit recently carried out work on transformation and change management. It found there was substantial assurance regarding the governance and management of transformation projects within the council. It highlighted that the programme is reviewed regularly at a senior level and proportionate governance arrangements for individual workstreams sit underneath. 46
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Programme management | 14 Findings Evidence Members of the Executive Leadership Team are well- sighted on the council’s transformation projects. They are also responsible for approving applications to an investment fund to help drive transformation. Nearly £0.800m has been drawn down from the Fund in the last two years although not all of this has been spent on transformation. • The Executive Leadership team are all members of the Transformation Board so are well-sighted on the projects within the workstreams and the service reviews. • The Change and Service Redesign Fund is an investment fund created by the council more than eight years ago to provide upfront investment to help drive transformation activity. It is also used to help address temporary resource challenges. £0.460m was drawn down from the Fund in 2023/24 and £0.330m in 2024/25. Although the balance at the end of 2024/25 was £2.1m the total uncommitted balance was £0.189m. • Examples of projects that have been supported by funding from the Change and Service Redesign Fund over the last few years include Development Analysts to support the council’s Digital Workstream, resource to support Fleet Decarbonisation and APSE specialist resource as part of the Waste Services Review. Elected Members receive updates on transformation projects through the annual budget process, the council’s performance reporting framework and reports to individual committees. • Officers engage with elected members from September to work towards agreeing the budget for the next year. Member engagement sessions are held if deemed appropriate. A detailed session on the transformation programme was held with the Administration in December 2024 and as part of the Elected Member Development Programme in February 2025. • As discussed in Part 4, since January 2025 the council’s six-monthly progress report on its Council Plan has included a section on its transformation programme. • In addition elected members will consider standalone reports on certain transformation projects, for example the early learning and childcare review, that was reported to Cabinet. • In January 2025, the council took a report to its Audit and Scrutiny Committee assessing itself against the Accounts Commission’s October 2024 Transformation in councils report. 47
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Partnership working and community engagement | 15 Partnership working and community engagement 16. The Best Value in Scotland report noted that councils must now rethink how they work together, and with local partners and communities, to provide financially sustainable services. Few councils provide services jointly or share support services across different councils to a great extent. The scale and nature of the challenge, as set out in the Transformation in councils report, means that it is only by working more collaboratively that councils and their local partners, communities and the third sector will be able to provide sustainable local services. 17. In January 2025, the Accounts Commission advised in its Local government in Scotland Financial bulletin 2023/24 that how councils plan to use their reserves, make savings and transform their services needs to become more transparent. The need to consult local communities and clearly communicate the implications for local services of the budget decisions taken has never been more important. Findings and evidence relating to the council’s partnership working and community engagement arrangements Findings Evidence There are discussions ongoing across the senior leadership of North Ayrshire, East Ayrshire and South Ayrshire Councils to explore further opportunities for public sector reform and collaboration including the Ayrshire Economic Strategy. These developments will be subject to scrutiny by elected members as they progress. • The council recognises that as financial and demographic challenges increase there is a greater need to work with partners to share services and increase collaboration. • Initial discussions are underway around potential opportunities for further shared services on a regional basis. The council is involved in exploring a Pan-Ayrshire approach with East Ayrshire Council and South Ayrshire Council, with a view to potentially sharing services. There are some barriers to this level of joint working including the siloed approach to funding, governance, and reporting arrangements. Also, the three Ayrshire councils have different political make-ups. The council refers to the vital role of national government in enabling more transformational partnership working between different bodies. 48
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Partnership working and community engagement | 16 Findings Evidence The council’s transformation programme is primarily internally focused. However, the council has shared examples of where it is working well with its partners and listening to its communities in relation to transformation. The recent extensive budget engagement process involved consulting with residents on many activities overseen by the Transformation Board. • The council notes that although much of its current transformation programme is internally focused, eg fleet decarbonisation and maximising rental income across its estate, it will work with partners and its communities when opportunities arise. • It provided the audit team with examples of transformation projects involving collaboration with local partners, communities and the third sector. For example, in 2023, an engagement programme was undertaken as part of its cost of living and child poverty initiatives. Its No Wrong Door mini public enquiry workshops were undertaken with third sector partners and voluntary organisations. The focus of these sessions was to identify where the council could improve, what it was doing well and any gaps. The output from these sessions helped to influence the development and delivery of the projects within the council’s Accessing our Council transformation workstream. • The Accessing our Council transformation workstream also used the results of a public engagement survey conducted in 2022 to gain an understanding of customers’ perceptions on how they were accessing council services alongside a Peoples Panel survey asking customers about how they access council services. The results of both surveys were used to develop the projects within the Accessing our Council programme such as the introduction of the council’s new Contact Us process. • A wider programme of community engagement took place in winter 2024 on the council’s budget (Exhibit 3). This included several areas where progress is managed by the Transformation Board such as: Review of Economic Development, Growth and Regeneration Services, Review of waste charges, Realigning the level of teaching resource and pupil support assistants across schools, charging a tourist visitor levy and sharing services on a regional basis. Consulting on specific budget options rather than generic areas of priority gained a higher level of engagement from communities. There is evidence of the council drawing on the good practice of other organisations when developing transformation projects. • There is evidence of the council drawing on other councils’ good practice in transformation projects. For its Solar PV Farms Project (Exhibit 2), it made positive links with councils in England embarking on similar projects and reflected their learning in its plans. Also, a regular item on the agenda of the Transformation Board is horizon scanning, supported by evidence of what transformation projects are being undertaken by other councils. 49
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Partnership working and community engagement | 17 Findings Evidence There are limited joint funding arrangements between the council and its local partners for transformation projects. • The council is aware of many opportunities in the Pan- Ayrshire collaboration work that could lead to joint funding. • At present there are limited joint funding arrangements between the council and local partners in relation to its current transformation projects. • The council provided examples of joint funding arrangements for initiatives funded partly by the Scottish Government. Two members of its staff were funded by the Scottish Government’s Child Poverty Accelerator Fund to work on the Single Shared Assessment Project, part of the Developing our Data Assets transformation workstream. Also, the council received a Fairer Futures Partnership Grant to create a Child Poverty Strategy Team. • North Ayrshire Council is part of a 5G Innovation Region project, alongside East Ayrshire and South Ayrshire, that received funding of £3.8m from the UK Government. This project aligns to the council’s Digital transformation workstream. Exhibit 2 Solar PV Farms Project – learning from councils in England North Ayrshire Council formed effective relationships with experienced councils in England to assist in the design and development of its Solar PV Farms Project • In 2021, the council approved the installation of two solar PV farms at former landfill sites at Nethermains and Shewalton. This project contributes to the council’s work on climate change and the farms are key elements of its Sustainable North Ayrshire Strategy. The solar PV farms, due to become operational later this year, will provide clean, renewable energy to supply the local electricity grid and aim to contribute to a reduction in fuel poverty through the availability of affordable energy. • As North Ayrshire was the first council in Scotland to install large-scale solar PV farms, it decided to meet with various councils in England and Wales to learn from their experiences. Due to the positive relationships established, the council still meets regularly with some of the other councils to discuss the future of their solar PV projects. For example, representatives from North Ayrshire Council visited a site operated by Warrington Council in York. In return, Warrington Council visited the council and did a presentation for key partners and stakeholders on the benefits of its solar PV farms. The council also worked with Strathclyde University which provided help and support with the projects. Source: North Ayrshire Council 50
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Partnership working and community engagement | 18 Exhibit 3 Engaging with communities on transformation projects as part of the annual budget engagement process The council conducted an extended, comprehensive budget engagement process during Winter 2024 that included asking for views on several transformation projects Due to the scale of the financial challenges facing the council, it decided to carry out a wider than usual programme of community engagement from October to November 2024 as part of the budget process. Surveys included a range of options across six main themes, including several transformation projects such as the learning review, sharing services on a regional basis and economic development. As the surveys were themed, people were able to select the areas they were most interested in, rather than having to complete all themes. The refreshed approach resulted in an increased response, from 200 in 2024/25 to 4,461 in 2025-26, in addition to community discussions that were held. The outcome of the budget engagement process was communicated to elected members and helped them shape the approach to future service delivery. From the transformation proposals included in the budget consultation, two were agreed as budget savings: the learning review and economic development service review. Source: North Ayrshire Council 51
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Impact of transformation | 19 Impact of transformation 18. It is important that the council has success measures in place to demonstrate the impact of its transformational activity on service quality; outcomes for people who use services, inequalities and/or savings. Findings and evidence relating to the impact of the council’s transformation activity Findings Evidence The council provides regular and detailed information on the financial and non-financial benefits of individual transformation workstreams and service reviews to the Transformation Board. The benefits of individual projects are also reported in individual council reports. • The council provides regular and detailed monitoring on the progress of individual transformation workstreams and service reviews to the Transformation Board. These updates include detail on savings and projected savings as well as intended outcomes. • As individual projects complete, the council reports examples of benefits being realised from individual projects, eg the Accessing our council transformation workstream (Exhibit 4) reports on a reduction in public facing email addresses and phone numbers, a streamlined customer journey that is cost effective. • The council has set out the expected benefits of the solar PV farms project described in Exhibit 2. These include an approximate £0.4m savings each year from 2026/27 and a reduction in carbon emissions that will help the council meet its net-zero targets. 52
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Impact of transformation | 20 Findings Evidence The council reported publicly on its progress with selected transformation projects in its Council Plan update in January 2025. It does not currently report publicly on how it is progressing with delivering transformation as a whole in terms of planned and realised financial and non-financial benefits. • The council provides an overview of its Sustainable Change Programme in its budget documents. • The council produces six-monthly progress reports on its Council Plan. In January 2025, the progress report included a dedicated section on transformation providing a summary of progress on transformation workstreams where key milestones had been reached during the last six months. Realised and expected outcomes are referred to. For example, it notes that the Digital Workstream is expected to deliver £0.2m of savings by the end of 2027 and realised benefits from the Accessing our council work is listed. • This public-facing report, whilst providing a flavour of its transformation work, did not provide an overview of the progress the council is making in delivering transformation as a whole in terms of planned and realised benefits. The council has provided evidence of using Equality and Children’s Rights Impact Assessments in relation to its transformation projects, where appropriate, and has provided examples of engagement with user groups leading to changes being made in how services are delivered. • We reported in 2023 that the council uses its equality impact assessment process effectively to ensure children’s rights, human rights, socio-economic inequalities and the challenges islands face are considered in new policies, procedures, strategies and the budget-setting process • The council uses an Equality and Children’s Rights Impact Assessment (ECRIA) process. Children’s Rights, Human Rights, the Fairer Scotland Duty and Island proofing have all been integrated into this online tool. New or revised policies, procedures and strategies are assessed to ensure the council is meeting the needs of the equality duty. • We asked the council for examples of when it has used the ECRIA process in relation to transformation projects. The examples provided were in relation to Contact Us, the Housing single point of contact project (no full ECRIA was required) and website redesign. These involved testing of a new form and process with the Employee Disability Group and consultation with The Disability Forum, Over 65s’ groups, Trade Unions, Ayrshire Youth Voice, Drop-in visits to libraries, NHS Learning and Disability team, Island groups. • As a result of user testing of the Contact Us form in May 2023, an issue was identified with software used by visually impaired users which was investigated and re-tested and successfully resolved the issues raised. • On the council’s website, ECRIAs carried out for the 2025/26 budget proposals are available. • The council is currently working to make all ECRIAs meet accessibility requirements and so, at present, all other ECRIAs can only be accessed by emailing the council directly. 53
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Impact of transformation | 21 Exhibit 4 North Ayrshire Council’s Accessing our Council project The council has used an array of success measures to capture the impact of its project on improving access to council services • North Ayrshire Council’s Accessing our Council project was approved in March 2022. It focuses on improving customer access to council services through transforming services as well as achieving savings. • The project aimed to streamline how customers access council services digitally and ensure that customers have the information they need at the first point of contact. The project team developed a new contact us form for customers to use which presents a drop-down list of the main council services, which is then linked to relevant pages on the website to provide more information related to the request. The council captured the impact of its new approach using a benefits tracker, which included establishing baseline figures for a number of indicators. • The new form went live in June 2023 and the following impact has been reported: • the introduction of the new Contact Us process has led to the number of contacts coming into services from the website to reduce by 78 per cent since June 2023. This has resulted in a reduction of one FTE no longer being required to manage and direct service requests. • online interactions have increased from 24 per cent in 2021 to 38 per cent in 2023. • the introduction of a web assistant / chat bot in late 2023 has led to over 200 requests every week being answered by the chat bot. • Reduction in phone numbers on the council website of 39 per cent (from 322 to 199) • Reduction in email addresses on council website of 34 per cent (293 to 200) • Shift to online transactions with the council and less reliance on phone calls or visiting customer centres, increased from 63 per cent to 65 per cent. Source: North Ayrshire Council Recommendation To provide assurance to elected members and the public about how the council plans to change to sustain services in the future the council should report publicly on how it is progressing with delivering transformation as a whole in terms of planned and realised financial and non-financial benefits. 54
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Appendix | 22 Appendix Improvement action plan Issue/risk Recommendation Agreed management action/timing 1. Transformation savings fall significantly short of the savings required The council’s latest MTFO identifies a structural funding gap of £46.7m (including HSCP pressures) which must be addressed as part of the council’s Medium-Term Financial Plan. Whilst we recognise that transformation alone will not offer the full solution to the financial gap identified in the MTFO, the level of financial efficiencies from the Sustainable Change Programme should be commensurate with the scale of the financial challenges. The council should ensure its plans are sufficiently ambitious to respond to its financial challenges. It should clearly set out the extent to which savings from transformation will help address the budget shortfalls set out in its Medium-Term Financial Plan. Accepted Management response It is recognised that the level of financial efficiencies should be commensurate with the scale of the financial challenges. Further work will be progressed as part of the council’s medium-term financial planning to set out clearly how the council plans to address budget gaps through further transformation and reform activity and through a broader package of measures, including areas of service review and possible reduction, opportunities for further revenue generation and an ongoing planned use of council reserves. Responsible officer Head of Service (Financial Services) Actioned by 31 March 2029 55
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Appendix | 23 Issue/risk Recommendation Agreed management action/timing 2. Public reporting on progress with transformation The council does not currently report publicly on how it is progressing with delivering transformation as a whole in terms of planned and realised financial and non-financial benefits. To provide assurance to elected members and the public about how the council plans to change to sustain services in the future the council should report publicly on how it is progressing with delivering transformation, as a whole, in terms of planned and realised financial and non-financial benefits. Accepted Management response The development of more public facing material will be produced to demonstrate the council’s progress on the Sustainable Change Programme. This will include use of the council’s new website to further promote activity and the progress being made to address the financial challenges. Responsible officer Head of Service (Financial Services) Actioned by 30 September 2025 56
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North Ayrshire Council Best Value thematic management report Transformation: how councils are redesigning and delivering more efficient services to achieve planned outcomes Audit Scotland, 4th Floor, 102 West Port, Edinburgh EH3 9DN Phone: 0131 625 1500 Email: info@audit.scot www.audit.scot AS.5.0 57
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NORTH AYRSHIRE COUNCIL 29 May 2025 Audit and Scrutiny Committee Title: 2023/24 External Audit Action Plan Update Purpose: To invite Committee to note the updated actions identified in the 2023/24 External Audit Action Plan. Recommendation: That Committee notes the updates to the agreed Action Plans as outlined in Appendix 1. 1. Executive Summary 1.1 Audit Scotland’s Annual Audit Report for 2023/24 was presented to Audit & Scrutiny Committee on 14 November 2024. 1.2 Audit Scotland’s reports included action plans in relation to the recommendations for improvement identified during the course of the audit and full details of the proposed management actions were appended to the reports. 1.3 Appendix 1 provides an update on the management actions taken to date and provides updated target dates for any outstanding items. 2. Background 2.1 The 2023/24 audit of the Council’s accounts was conducted by Audit Scotland and their report on the Annual Audit was presented to Audit & Scrutiny Committee on 14 November 2024. 2.2 The recommended actions identified in the reports related to a range of issues, including: • Asset registers; • Sickness absence; • Workforce planning; • Digital technology improvements; • Digital skills; • Agile working; and • Joint workforce arrangements. Agenda Item 6 59
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2.3 A review of the proposed management actions has now been undertaken and details of the completed actions and their completion dates have been detailed in Appendix 1. Where any actions have not yet been completed, the appendix provides an update on the proposed management action and the target date for completion. 2.4 In summary, the updates note: • 2023/24 Annual Audit Report - All actions completed; and • Best Value Thematic Report – The majority of actions have been completed with the exception of 2 actions with later target dates: The agreed action in relation to joint workforce arrangements is ongoing with an agreed target date of 31 March 2026; and Progress on measuring the impact of workforce planning is on track for completion by the target date of 30 September 2025. 3. Proposals 3.1 It is proposed that Committee notes the updates to the agreed Action Plans as outlined in Appendix 1. 4. Implications/Socio-economic Duty Financial 4.1 None. Human Resources 4.2 None. Legal 4.3 None. Equality/Socio-economic 4.4 None. Environmental and Sustainability 4.5 None. Key Priorities 4.6 This report directly supports the Council Plan 2023 to 2028 by maximising financial flexibility to support the delivery of our priorities. 60
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Community Wealth Building 4.7 None. 5. Consultation 5.1 Responsible Officers identified within the Audit and Best Value reports have been consulted as part of the review. Mark Boyd Head of Service (Finance) For further information please contact David Forbes, Senior Manager (Strategic Business Partner), on 01294 324551. Background Papers External Audit Report on the 2023/24 Audit and Best Value Work – Audit & Scrutiny Committee, 14 November 2024 61
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Appendix 1 2023/24 Annual Audit Report Issue / Risk Recommendation Agreed management action Actions Completed Completion Date 1. Asset register – fully depreciated assets The asset register includes around 840 assets which are fully depreciated with an original cost and accumulated depreciation of £57.226 million. Where assets are no longer in use they should be formally scrapped or sold. Significant assets continuing in use should be revalued and depreciated over the remaining useful economic life. Risk: There is a risk that assets are inaccurately recorded in the council’s asset register and financial statements. Where significant fully depreciated assets are still in use they should be revalued and depreciated over their remaining useful economic life. Other assets should be considered for disposal. The council should obtain evidence at least annually to confirm that assets on the asset register remain in use. A full review of all fully depreciated assets will be carried out during 2024-25 and items will be removed from the asset register, where appropriate. Remaining assets will be reviewed in conjunction with services to update valuations and useful economic lives as required. David Forbes, Senior Manager - Finance and Revenues 31 March 2025 Fully depreciated assets have been reviewed and removed from the asset register as appropriate. Year end procedures have been updated to include this is an ongoing task in future years. 31 March 2025 2. General Ledger – Security Management Plan The system supplier’s Security Management Plan for the general ledger system has not been updated since 2021. The council raised this with the supplier who confirmed that the security plan has not changed, however it does need to be updated to reflect a change in ownership of the business. The supplier advised that this work is currently ongoing. Risk: There is an increased risk to business continuity if the security management plan is not kept up to date. Although the updating of the security management plan is in progress there is a role for the council as customer to monitor the supplier's progress in this area and ensure the security management plan is updated in a timely manner. The Finance Service will liaise with the software supplier to ensure that the security management plan is updated. David Forbes, Senior Manager - Finance and Revenues 31 March 2025 Updated documentation received from the software supplier. 29 October 2024 62
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Appendix 1 Issue / Risk Recommendation Agreed management action Actions Completed Completion Date 3. Sickness absence High absence rates were reported in areas which require cover arrangements, specifically teachers and waste collection. In 2023/24 this resulted in additional costs of £1.980m associated with mandatory cover for teacher absence. There was also a £0.653 million overspend in employee costs for Waste Services. The statutory nature of the service requires additional resources to cover unforeseen absences. Risk - a high sickness absence level will impact on the council’s ability to achieve financial balance and could adversely impact on safe and efficient service delivery. The effectiveness of existing measures to reduce absence levels should be assessed to ensure they are appropriate and can deliver improved attendance at work. Lead Officers for Waste and Education will progress a programme of work to monitor absence and effectively implement the policy with support provided from HR as required. Absence will be monitored corporately and appropriate interventions will be considered and implemented to improve attendance at work. Russell McCutcheon, Executive Director – Place; Sam Anson, Executive Director – Education; Fiona Walker, Head of People & ICT 31 March 2025 Within Education, staff absence management procedures have been updated with regular emails being sent to Heads of Establishments to improve recording. Education is working collaboratively with HR and data analytics colleagues on a range of areas. Within Waste there are a variety of actions being progressed to support the management of absence. In addition to the action being taken within these Directorates, a variety of interventions are in place and will continue to be progressed council wide to support managers in the application and management of the absence policy, support employees’ wellbeing and improve attendance. Full details of the actions being taken across Directorates is detailed below. 31 March 2025 63
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Appendix 1 3. Sickness absence additional – Full details of actions being taken across Directorates Within Education, staff absence management procedures have been updated with regular emails being sent to Heads of Establishments to improve recording. Education is working collaboratively with HR and data analytics colleagues on a range of areas including: • Improving the information we provide directly to Heads and Improving service specific guidance and training to support Heads and school staff recording absence. • Missing or out of date fit notes are being requested directly from Head Teachers from the central team and the email details any other outstanding issues or potential supports such as discretion / OH referrals. • Information from HR is due to be sent to Heads of Establishment w/b 22 April regarding ‘How To’ sessions on absence and this will be supported by the central team. Within Waste there are a variety of actions being progressed to support the management of absence and are summarised below: • Temporary dedicated resource recruited to assist line managers with the implementation of the Wellbeing at Work Policy. • Weekly e mail sent to Head of Service and management team detailing the number of absences and supports in place for each individual. • Fortnightly meeting held between Head of Service, Waste Management Team and HR Advisor to discuss progress, supports, interventions required. • Employees being supported back to work with referrals to Occupational Health. • Alternative duties for employees unable to carry out normal duties. • Health checks being delivered for all employees from a preventative health perspective. • Absence trend is improving – Jan 2024 was 2.8 days Feb 2024 was 3.62 days and March 2024 days was 4.09 days per employee. This compares to Jan 2025 2.29 days Feb 2025 2.8 days and March 2025 2.07 days per employee. In addition to the action being taken within these Directorates, a variety of interventions are in place and will continue to be progressed council wide to support managers in the application and management of the absence policy, support employees’ wellbeing and improve attendance. These interventions, albeit not exhaustive, include: • Targeted awareness sessions and support have taken place with staff involved in absence management within Place and Education ensuring a tailored package of advice and guidance specifically for those areas that require cover arrangements. Targeted support for managers within HSCP is also being provided to ensure a confident approach to managing absence. • Automated absence reports issued to Managers across the Council on a regular basis to ensure assessment of absence levels are monitored, recording of absence is accurate and appropriate wellbeing supports are put in place for individuals. • Absence information reported on a regular basis to ELT in conjunction with Directors to ensure oversight of absence levels and action being taken to improve attendance. • Dedicated temporary HR resource to support council wide absence management. • Regular analysis by HR of absence reports to provide support to managers and ensure they have the right advice and guidance on managing individual absences, accessing wellbeing interventions and utilising other policies where appropriate. • Analysis of absence information conducted to inform new categories of absence which should provide more accurate and robust monitoring and reporting. • Information sessions delivered for managers to ensure a full understanding of absence in relation to the policy, monitoring and wellbeing. • Absence performance measures have been communicated through relevant channels to ensure managers are informed and focused on the importance of absence management. • Case management support being provided by HR to managers on complex cases to ensure appropriate steps are being taken to support employees. • Information sessions delivered in conjunction with our Occupational Health provider, providing managers with guidance on making an effective OH referral. • Variety of Wellbeing initiatives are available through our Livewell programme and Occupational Health provider to support employees, such as our Employee Assistance Programme and sessions for menopause, grief and loss, weight management, Health Check etc, as well as sporting activities such as golf, hiking and indoor climbing. 64
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Appendix 1 BV Thematic Report Issue / Risk Recommendation Agreed management Actions Completed Completion Date 1. Corporate workforce planning priorities and action plan The Workforce Strategy 2023-28 sets out the council’s approach to workforce planning but does not articulate what its strategic workforce priorities are or include a corporate- level action plan. Risk: There is a risk that the council’s approach to workforce planning is not strategic and progress cannot be measured. The council should establish corporate workforce planning priorities and develop a SMART action plan to allow progress in delivering these priorities to be measured. The Workforce Strategy will be updated to include corporate workforce planning priorities and an action plan to allow progress to be measured. Fiona Walker, Head of People and ICT 31 March 2025 The Workforce Strategy has been fully updated to align with internal/external factors, workforce challenges, Council Plan priorities and other key strategies/plans. An Action Plan and Corporate Performance Indicators have also been included to allow progress to be measured. This refreshed Strategy was agreed at the Executive Leadership Team on 29 January 2025 and at Cabinet on 18 March 2025. 18 March 2025 2 Alignment of workforce strategy to key strategies and plans and inclusion of data The Workforce Strategy 2023-28 is not aligned to the council’s other key strategies and plans and does not include an analysis of council-level workforce data. Risk: There is a risk that the council is not clear about the way in which workforce planning can help deliver its strategic priorities and it may not be using the council-level workforce data it has to full effect. The council’s workforce strategy should be updated to align with all four Council Plan 2023-28 priorities and with other key strategies and plans. It should include an analysis of council-wide workforce data and set out what the required skills, learning and development needs of its staff are The Workforce Strategy will be updated to ensure alignment to all Council Plan priorities, other key strategies/plans and include an extract of council-wide workforce data. Fiona Walker, Head of People and ICT 31 March 2025 The Workforce Strategy has been fully updated to align with internal/external factors, workforce challenges, Council Plan priorities and other key strategies/plans. The Strategy has also been updated to include an extract of council wide workforce data. This refreshed Strategy was agreed at the Executive Leadership Team on 29 January 2025 and at Cabinet on 18 March 2025. 18 March 2025 65
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Appendix 1 Issue / Risk Recommendation Agreed management action Actions Completed Completion Date 3 Measuring the impact of digital technology improvements The council has established the workforce benefits and productivity gains of its digital technology improvements but there is scope for more of these to be quantified. Risk: There is a risk that the council does not fully understand the workforce benefits from digital technology improvements to inform future decision-making The council should build on the work it has done to date to demonstrate and quantify what workforce benefits and productivity gains have been made through its use of digital technology. Further work will be undertaken to capture and quantify efficiencies from digital improvements and for this work to be incorporated within the Council’s Medium-Term Financial Planning. Mark Boyd, Head of Finance 31 March 2025 On the back of the Accessing Our Council workstream the Transformation Board recently approved the creation of a new Digital Programme workstream. The intention is that this will allow digital activities to be monitored against the Council’s Digital Strategy. To provide some initial evidence of progress, the Council’s Budget on the 26 February 2025 included savings associated with the Channel shift to digital solutions of £100,000 per year for 25/26 and 26/27. 2 posts were identified in 25/26 (through non-filling of vacant posts) and further posts will be identified for 26/27 as part of the Council’s Purchase to Pay project which aims to centralise the accounts payable process and further advance e-invoicing. Reporting progress through the new digital workstream provides the framework to capture and monitor the workforce benefits. 26 February 2025 66
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Appendix 1 Issue / Risk Recommendation Agreed management action Actions Completed Completion Date 4 Improving digital skills The council is considering how to further enhance the digital skills and knowledge of its workforce. Risk: There is a risk that the council does not focus its digital skills training in the right areas because it does not know what its employees’ digital learning needs are. The council should consider conducting another digital skills survey to inform the support it provides for improving the digital skills and knowledge of its workforce. A digital skills survey will be conducted to inform future development interventions. Fiona Walker, Head of People and ICT 31 March 2025 The Digital Skills survey was conducted during November/December 2024 and was open to all North Ayrshire Councils employees. The survey focused on key themes designed to assess digital confidence and competence across a range of everyday and work-related tasks. Completion of this survey has captured a comprehensive picture of digital skills that are relevant both in the workplace and in personal life and to inform future development intervention. An Action Plan has been created to monitor the progress of interventions. 28 February 2025 5 Gathering feedback on the Impact of agile working The council has gathered feedback on wellbeing and productivity in relation to agile working through various channels during the past few years. A council-wide employee engagement survey has not been conducted since 2019/20 due to resource limitations driven by financial constraints. Risk: There is a risk the council is not aware of the impact of agile working on wellbeing and productivity. The council should consider gathering further feedback from staff on the impact of agile working on wellbeing and productivity. Further feedback will be gathered from those employees who are deemed an agile workstyle to gauge continued benefits on wellbeing and productivity. Fiona Walker, Head of People and ICT 31 March 2025 The Agile working wellbeing survey was conducted during December 2024 and was open to all North Ayrshire Councils employees deemed as an agile workstyle. The survey focused on key themes designed to assess how people viewed agile working, their productivity, work-life balance and wellbeing. An Action Plan has been developed in line with key themes arising from the results. Chief Officers have also received specific results in relation to their directorate/service to allow any local action to be considered/progressed. 28 February 2025 67
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Appendix 1 Issue / Risk Recommendation Agreed management action Actions Completed Completion Date 6. Joint workforce arrangements There is scope for the council to explore further where it can work together with partners to share services and increase collaboration. Risk: There is a risk the council may not be utilising opportunities for shared services and collaboration opportunities across partner organisations. The council should explore further where it can work together with partners to share services and increase collaboration. The Medium-Term Financial Planning process for 2025/26 to 2027/28 will include the exploration of further opportunities for sharing services and collaboration across partner organisations. Mark Boyd, Head of Finance 31 March 2026 Collaborative opportunities continue to be explored with South and East Ayrshire Councils on options around sharing services on a regional basis. The work to date has been led by the 3 Ayrshire Chief Executives. A recent £500,000 bid was submitted to the Scottish Government Public Sector Reform Fund to further develop opportunities on a spend to save basis. It is anticipated that, should the bid be successful, this work will form part of the SOLACE transformation programme. Ongoing 7 Measuring the impact of workforce planning The council could improve how it monitors the effectiveness of its workforce planning practice by regularly reporting progress against workforce planning priorities. Risk: There is a risk that the council’s workforce planning arrangements are not supporting the delivery of the strategic priorities in its Council Plan. In addition to providing general workforce planning updates, the council should regularly report its progress against its workforce planning priorities to elected members through its Council Plan updates or other means Workforce planning updates and progress against priorities will be regularly reported through Council Plan updates and other means Fiona Walker, Head of People and ICT 31 March 2025 The Action Plan aligned to the Workforce Strategy has been agreed and set up on Pentana. Lead officers will provide regular updates which will be included in the regularly reporting of the Council Plan. In addition, an update will be provided on a regular basis to the 1st tier JCC. 31 March 2025 68
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Appendix 1 Issue / Risk Recommendation Agreed management action Actions Completed Completion Date 8 . Measuring the impact of workforce planning There is scope for the council to draw upon the information it already collects to develop a performance dashboard to monitor and inform future workforce planning practice. Risk: There is a risk that the workforce planning information the council already collects is not being used to full effect. The council should develop a performance dashboard to provide a user-friendly overview of the impact of its workforce planning. This could help to inform future workforce planning. A performance dashboard will be developed to monitor and inform future workforce planning. Fiona Walker, Head of People and ICT 30 September 2025 A performance dashboard has been scoped in line with the Performance Indicators agreed as part of the Workforce Strategy. This dashboard is currently in design stage and on track for completion by the end of September 2025. In Progress – on track 69
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NORTH AYRSHIRE COUNCIL 29 May 2025 Audit and Scrutiny Committee Title: Annual Governance Statement 2024/25 Purpose: To seek approval of the Council’s Annual Governance Statement for 2024/25 which will be included within the draft Annual Accounts. Recommendation: That the Committee approves the draft Annual Governance Statement which is attached at Appendix 1. 1. Executive Summary 1.1 The Council’s Annual Governance Statement outlines the governance framework which is in place and changes which have been made to strengthen the framework during 2024/25. 1.2 Approval of the Annual Governance Statement will ensure that the Council complies with the requirements of the Local Authority Accounts (Scotland) Regulations 2014. 2. Background 2.1 North Ayrshire Council is responsible for ensuring that its business is conducted in accordance with the law and proper standards, and that public money is safeguarded and properly accounted for and used economically, efficiently, and effectively to achieve Best Value. 2.2 The Council is also 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. 2.3 The Council has approved and adopted a Code of Corporate Governance, which is consistent with the principles of the CIPFA/SOLACE framework ‘Delivering Good Governance in Local Government’. 2.4 The Local Authority Accounts (Scotland) Regulations 2014 require that local authorities prepare an Annual Governance Statement, in accordance with proper practices in relation to internal control, and that the Statement should be approved by the Audit Committee or equivalent. Agenda Item 7 71
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2.5 Following approval of the Annual Governance Statement, it requires to be signed by the Leader of the Council and the Chief Executive prior to its inclusion within the Council’s draft annual accounts. 2.6 The Annual Governance Statement, which is attached in full at Appendix 1 to this report, explains how the Council complies with the Code of Corporate Governance. It identifies the main components of the Corporate Governance Framework which are in place, including the system of internal control, and details the changes which have taken place to the framework during 2024/25. 2.7 The Annual Governance Statement also identifies improvement actions which are planned to the governance framework during 2025/26. It concludes with an assurance statement by the Leader of the Council and the Chief Executive. 3. Proposals 3.1 It is proposed that the Committee approves the draft Annual Governance Statement which is attached at Appendix 1. 4. Implications/Socio-economic Duty Financial 4.1 None. Human Resources 4.2 None. Legal 4.3 Approval of the Annual Governance Statement will ensure that the Council complies with the requirements of the Local Authority Accounts (Scotland) Regulations 2014. Equality/Socio-economic 4.4 None. Climate Change and Carbon 4.5 None. Key Priorities 4.6 Good governance arrangements help to underpin the delivery of the Council’s key priorities. 72
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Community Wealth Building 4.7 None. 5. Consultation 5.1 No consultation has been required during the preparation of the Annual Governance Statement. Mark Boyd Head of Service (Finance) For further information please contact John McCallum, Senior Manager (Audit, Fraud, Safety, Risk & Insurance), on 01294 324607. Background Papers None. 73
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Appendix 1 PUBLIC INFORMATION PUBLIC INFORMATION Annual Governance Statement – 2024/25 Scope of Responsibility North Ayrshire Council is responsible for ensuring that its business is conducted in accordance with the law and proper standards, and that public money is safeguarded and properly accounted for and used economically, efficiently and effectively to achieve Best Value. The Council is also 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 approved and adopted a Local Code of Corporate Governance, which is consistent with the principles of the CIPFA/SOLACE Framework ‘Delivering Good Governance in Local Government’ (2016). A copy of the local code is available here. This statement explains how North Ayrshire Council complies with the Code of Corporate Governance and meets the requirements of the ‘Code of Practice for Local Authority Accounting in the UK: A Statement of Recommended Practice’, in relation to the Statement on the System of Internal Financial Control. The Purpose of the Governance Framework The governance framework comprises the systems and processes, and culture and values by which the authority is directed and controlled. It enables the authority to monitor the achievement of its strategic objectives and to consider whether those objectives have led to the delivery of appropriate, cost-effective services and the achievement of key outcomes. The system of internal control is a significant part of that framework and is designed to manage risk to a reasonable level. 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 objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them effectively. The Governance Framework The Council’s Framework is built around the seven core principles and 21 sub-principles that set out the key building blocks of good governance. 74
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Appendix 1 PUBLIC INFORMATION PUBLIC INFORMATION The key features of the governance framework that were in place during 2024/25 are included below: • The Cabinet was the key decision-making Committee, comprising the Leader of the Council, the Depute Leader and four members of the Administration, each with a specific portfolio of duties. An Education Cabinet comprised the same members and included church and teaching profession representatives. • The Audit and Scrutiny Committee, which is chaired by the Leader of an Opposition party, was in place to consider all matters in relation to Internal and External Audit, Risk Management, Scrutiny and Performance, as well as receiving reports on the findings of external scrutiny bodies. A cross- party Policy Advisory Panel assists in the development of policy proposals for consideration and approval by Cabinet. • A publicised Whistleblowing Policy is in place (last updated in July 2024) and is publicised throughout the Council and community. Effective counter fraud and anti-corruption arrangements are in place and are consistent with the main principles set out in the CIPFA Code of Practice on Managing the Risk of Fraud and Corruption. • Strategic decision-making is governed by the Council’s key constitutional documents including standing orders, scheme of administration, scheme of delegation to officers and financial regulations and associated codes of financial practice. These were refreshed and approved by the Council in September 2024. • The Council has six Locality Partnerships, covering Irvine, Kilwinning, the Three Towns, Arran, the North Coast and the Garnock Valley. Chaired by a local Elected Member, the Partnerships provide the opportunity for Elected Members, Community Planning Partners and local community representatives to consider the priorities for each area. • The Health and Social Care Partnership (HSCP) has an established governance framework through the Integration Joint Board and an integrated senior management structure to support delivery of its key objectives. • The Council’s mission, vision and key priorities are outlined in the Council Plan 2023-2028 which is underpinned by a delivery plan and a range of performance indicators. Regular interim reports are provided to both Cabinet and the Audit and Scrutiny Committee on progress towards meeting the Council Plan priorities. • Progress with the Council’s Transformation programme continues to be governed and monitored through the Transformation Board which is chaired by the Chief Executive. • The Performance Management Strategy 2023-28 demonstrates how the Council supports a culture of continuous improvement and how the work of every employee is crucial to the achievement of the overall vision of a North Ayrshire that is Fair For All. Regular reporting to Elected Members takes place, and a wide range of performance information is available on the North Ayrshire Performance Dashboard. • The Council has adopted a ‘Code of Conduct’ for all its employees. Elected Members adhere to the national ‘Code of Conduct for Councillors’ and a register of interests is in place. • The approach to risk management is set out in the Risk Management Policy and Strategy: “Risk Focus”. The Council’s strategic risk register is refreshed annually and for 2024/25 was approved by Cabinet in March 2024. Monitoring of progress against action points is reported to the Audit and Scrutiny Committee at the mid-year point. • Each Head of Service has a Workforce Plan in place for their portfolio of services which considers challenges and issues, the transformation agenda and to support career development and succession planning. These plans are aligned to the Council’s Corporate Workforce Planning strategy. • The Council has in place a development programme for all Elected Members. Leadership and Development programmes are also established for leaders and first line and middle managers across the Council, through the Leadership Academy approach. • The ‘Our Time to Talk’ approach is in place to ensure that managers and employees take time to discuss how each employee is getting on at work; this focusses on the employee’s contribution to their team and the Council, their wellbeing, and any development needs that contribute towards meeting the team’s objectives or the employee’s career aspirations. 75
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Appendix 1 PUBLIC INFORMATION PUBLIC INFORMATION • The Council’s approach to asset management planning is based on CIPFA guidance which covers six core classes of assets: property, open space, housing, roads, fleet, and ICT. Asset management plans continue to be maintained across each of these areas. • A Capital Programme and Assets Group (CPAG), consisting of senior officers from across Council services and chaired by the Head of Finance, is in place. This group monitors the delivery of the Council’s capital programme, helping to ensure that projects are delivered on time and within budget. The work of this group is supported by Service Project Boards. • The Council has a long-term financial outlook, which covers the period 2024/25 to 2033/34. This sets out the scale of the potential financial challenge and the approach to pro-actively address it, ensuring financial sustainability of the Council over the long-term. • The Council has Internal Audit and Corporate Fraud teams to carry out independent and objective reviews of governance and internal control arrangements and investigate allegations of fraud and error both within and against the authority. • An Information Governance framework is in place which complies with the General Data Protection Regulation (GDPR), supported by a central team of staff within Democratic Services. This is further supported through an Information Governance Procurement Framework. A corporate training module is in place to support ongoing training, development and awareness which is completed on an annual basis. • The Council has a robust Corporate Health, Safety and Wellbeing Policy to help ensure it complies with health and safety legislation. • An annual report is prepared for Cabinet by the Council’s statutory Chief Social Work Officer. • The Council has a two-stage Complaints Procedure, which provides a transparent and standardised process for customers who wish to complain and enables the Council to manage complaints more effectively and to identify any service improvements which may be required. The governance framework has been in place at North Ayrshire Council throughout the year ended 31st March 2025. The System of Internal Financial Control The system of internal financial control is based on a framework of regular management information, financial regulations, administrative procedures (including segregation of duties), management supervision, and a system of delegation and accountability. Development and maintenance of the system is undertaken by Chief Officers within the Council. In particular, the system includes: • Financial regulations and codes of financial practice. • Comprehensive budgeting systems. • Regular reviews of periodic and annual financial reports that indicate financial performance against the forecasts. • Setting targets to measure financial and other performance. • Clearly defined capital expenditure guidelines. • Formal project management disciplines. The Council’s financial management arrangements conform to the governance requirements of the CIPFA statement on ‘The Role of the Chief Financial Officer in Local Government (2016)’. Regarding the entities incorporated into the Group Accounts, the Council is not aware of any weaknesses within their internal control systems and has placed reliance on the individual Statements of Internal Financial Control where appropriate. Review of Effectiveness of the Governance Framework North Ayrshire Council has responsibility for conducting, at least annually, a review of the effectiveness of its governance framework including the system of internal control. The review of the effectiveness of the framework is informed by the work of the Executive Leadership Team who have responsibility for development and maintenance of the governance environment, the annual report by 76
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Appendix 1 PUBLIC INFORMATION PUBLIC INFORMATION the Senior Manager (Audit, Fraud, Safety, Risk & Insurance) and reports from the Council’s external auditors, Audit Scotland, and other review agencies. The Head of Finance has overall responsibility for Internal Audit in North Ayrshire Council. The Senior Manager (Audit, Fraud, Safety, Risk & Insurance) is responsible for the management of the section and reports directly to the Head of Finance on all audit matters, with the independent right of access to the Chief Executive and Chair of the Audit and Scrutiny Committee. The Internal Audit section is fully resourced to deliver its planned activity and complies with the Public Sector Internal Audit Standards (PSIAS) in conducting its audit work. Regular reports were made to the Council’s Audit and Scrutiny Committee throughout 2024/25. As detailed in the Internal Audit Charter, most recently approved by the Audit and Scrutiny Committee in March 2025, the Internal Audit function has independent responsibility for examining, evaluating, and reporting on the adequacy of internal control. The Senior Manager (Audit, Fraud, Safety, Risk & Insurance) prepares an annual report, including an assurance statement containing a view on the adequacy and effectiveness of the governance, risk management and internal control frameworks. This was reported to the Audit and Scrutiny Committee on 30 May 2024 and will be updated for 29 May 2025 Committee. The Internal Audit Annual Report 2024/25 highlights a number of findings by the Council’s Internal Audit section. Action plans are put in place to address control weaknesses on conclusion of each audit and implementation of audit actions is tracked on a quarterly basis by the Council’s Audit and Scrutiny Committee. None of these are considered material enough to have a significant impact on the overall control environment and it is the opinion of the Senior Manager (Audit, Fraud, Safety, Risk & Insurance) that the Council’s systems of internal control continue to provide reasonable assurance against loss. The Council’s internal audit arrangements conform to the governance requirements of the CIPFA statement on ‘The Role of the Head of Internal Audit (2019)’. Significant Governance Developments during 2024/25 A number of significant governance related development occurred during 2024/25. They include:- The Audit and Scrutiny Committee requested the inclusion of a new standing item of business to consider areas of future business for scrutiny. During 2024/25 this included a request for further scrutiny of the Council’s absence management policy and performance. The annual review of the Council’s key governance documents was completed, including Standing Orders relating to Meetings and Proceedings of the Council and Committees, Scheme of Administration, Scheme of Delegation to Officers, Guidelines on Member / Officer Relations, Standing Orders for Contracts, Financial Regulations and Codes of Financial Practice 2024. The Kilwinning and Arran By-Elections were held during 2024. The election results changed the political composition of the Council, with the Labour Group forming the main opposition. However, there was no change in the administration. North Ayrshire Council Unaudited Annual Accounts for 2023/24 were approved at Council in June 2024 and the Audited Accounts approved in November 2024 through the Audit and Scrutiny Committee. Following Cabinet approval of an interim governance structure to develop a long-term town plan, North Ayrshire Council approved elected member representation to the Irvine Town Board. The Board will oversee development of a planned £20million investment for the area. The HSCP formed a Finance Working Group to address the current financial pressures and develop financial recovery plans and savings. The Best Value thematic review for Workforce Innovation was carried out by Audit Scotland with the findings presented to the Audit and Scrutiny Committee during 2024/25. The Medium-Term Financial Outlook covering the period 2025/26 to 2027/28 was presented to Council in October 2024. This also included the launch of an extensive Budget engagement and Consultation process across North Ayrshire communities. The feedback from which was presented to Council in February 2025 in advance of the Budget. The process resulted in several Petitions submitted from communities which were considered by the Council’s Cabinet and Audit and Scrutiny Committee. 77
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Appendix 1 PUBLIC INFORMATION PUBLIC INFORMATION The Council’s General Services Revenue Estimates covering the period 2025/26 to 2027/28 (the Budget) were approved on 26 February 2025 Approval by the Audit and Scrutiny Committee of the Code of Corporate Governance statement for 2024. This set out details of how North Ayrshire Council complies with the Delivery of Good Governance in local Government; Framework. Review of the Council’s main strategic risks delivered through the Council’s Cabinet and Audit and Scrutiny committees. This included new risks and increased risks related to the Council’s financial sustainability. Planned Actions for 2025/26 The Council has a number of planned actions for 2025/26 which will help to further strengthen the governance framework: • Further support to the HSCP in addressing the financial pressures faced and ensuring appropriate reporting and governance arrangements are in place. • Continuation of close monitoring of the Council’s Absence management performance and governed through the Council’s Executive Leadership team. • Continued support for the governance of the Irvine Town Board and Ayrshire Growth Deal programme as they progress investment plans. • For 2025/26 a key focus on delivery of the Council’s Transformation programme and supporting governance arrangements which will be subject to a Best Value Thematic Review by Audit Scotland and the Accounts Commission. • Development of the Council’s Medium-Term Financial Plan for the period 2026/27 to 2028/29 including a review of community and elected member engagement through this process. • Approval of an AI policy for the Council to support future digital development opportunities, whilst ensuring appropriate data protection and information governance arrangements are in place. Assurance Subject to the above, and based on the assurances provided, we consider the governance and internal control environment operating during 2024/25 to provide reasonable and objective assurance that any significant risks impacting on the achievement of our actions 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 and action plans are in place to address identified areas for improvement. Craig Hatton Marie Burns Chief Executive Leader of the Council Date TBC Date TBC 78
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NORTH AYRSHIRE COUNCIL 29 May 2025 Audit and Scrutiny Committee Title: Accounting Policies 2024/25 Purpose: To seek the Audit and Scrutiny Committee’s approval of the accounting policies which will be adopted in the preparation of the Council’s annual accounts for the year to 31 March 2025. Recommendation: That the Audit and Scrutiny Committee approves the accounting policies as detailed in Appendix 1. 1. Executive Summary 1.1 The annual accounts for the 2024/25 financial year summarise the Council transactions during the year and its position at the year end of 31 March 2025. Under the Local Authority Accounts (Scotland) Regulations 2014, the Council is required to prepare an annual Statement of Accounts and Section 12 of the Local Government in Scotland Act 2003 requires that these accounts are prepared in accordance with the proper accounting practices. 1.2 These practices primarily comprise the Code of Practice on Local Authority Accounting in the United Kingdom 2024/25 (“the Code”), supported by International Financial Reporting Standards (IFRS). These are issued jointly by the Chartered Institute of Public Finance and Accountancy (CIPFA) and the Local Authority (Scotland) Accounts Advisory Committee (LASAAC) and are designed to give a “true and fair view” of the financial performance of the Council. 1.3 The accounting policies to be adopted by North Ayrshire Council are reviewed on an annual basis in line with the CIPFA Code and submitted to the Audit and Scrutiny Committee for approval in advance of the financial statements being prepared. 1.4 The proposed accounting policies for 2024/25 have been updated to reflect changes in the guidance received from CIPFA during 2024/25. 1.5 The accounting policies have been updated for the adoption of IFRS16 Leases with effect from 1 April 2024. There will be no impact on General Fund or HRA Reserves. Agenda Item 8 79
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2. Background 2.1 Accounting policies are defined in paragraph 3.3.2.1 of the Code as ‘the specific principles, bases, conventions, rules and practices applied by an authority in preparing and presenting financial statements’. 2.2 Councils are required to select accounting policies and apply changes to accounting policies in accordance with International Accounting Standard 8 - Accounting Policies. 2.3 The Council is required to adopt the accounting policies most appropriate to its particular circumstances for the purpose of giving a true and fair view. The accounting policies adopted should be reviewed regularly to ensure that they remain appropriate and consider the required treatment of any new policies relevant to the Council’s particular circumstances. Sufficient information should be disclosed in the financial statements to enable users to understand the accounting policies adopted and how they have been implemented. 2.4 The draft accounting policies proposed for adoption are detailed in Appendix 1 and include the following revisions identified during 2024/25: (i) Leases IFRS 16 Leases has been adopted from 1 April 2024. The adoption of the new standard will result in the balance sheet recognition of a right of use asset and related lease liability in relation to a number of former operating leases. IFRS 16 also applies to Service Concession contracts where the new calculations mean that future inflationary increases is now included in the valuation of the liabilities. This will not change the value of the asset as these are valued already as part of the council’s asset valuation plan. The value of the liability is calculated including future inflationary increases and is discounted based on an equivalent interest rate to the term of the years remaining on the contracts. This will result in an increased liability in relation to the PPP schools (Greenwood, St Matthews, Arran High and Stanley Primary) and Largs Campus. The total increase in liability will be offset by changes in the Revaluation Reserve and the Capital Adjustment Account. There will be no impact on General Fund or HRA Reserves. 3. Proposals 3.1 It is proposed that the Audit and Scrutiny Committee approves the accounting policies as detailed in Appendix 1 4. Implications/Socio-economic Duty Financial 4.1 None. 80
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Human Resources 4.2 None. Legal 4.3 None. Equality/Socio-economic 4.4 None. Environmental and Sustainability 4.5 None. Key Priorities 4.6 This report directly supports the Council Plan 2023 to 2028 by maximising financial flexibility to support the delivery of our priorities and focussing our investment on priorities. Community Wealth Building 4.7 None. 5. Consultation 5.1 The council’s appointed external auditors for 2024/25, Audit Scotland, were consulted on the changes detailed in this report. Mark Boyd Head of Service (Finance) For further information please contact David Forbes, Senior Manager (Strategic Business Partner), on 01294 324551. Background Papers None 81
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Appendix 1 Accounting Policies 2024 to 2025 General Principles The Accounts summarise the Council’s transactions for the 2024 to 2025 financial year and its position at the year-end of 31 March 2025. The Council is required to prepare an annual Statement of Accounts by the Local Authority Accounts (Scotland) Regulations 2014 and Section 12 of the Local Government in Scotland Act 2003 requires that they are prepared in accordance with proper accounting practices. These practices, under Section 21 of the 2003 Act, primarily comprise the Code of Practice on Local Authority Accounting in the United Kingdom 2023/24, supported by International Financial Reporting Standards (IFRS) and statutory guidance under Section 12 of the 2003 Act. The accounting convention adopted in the financial statements is principally historical cost, modified by the revaluation of certain categories of non-current assets and financial instruments. The accounts have been prepared on a going concern basis. A Accruals of Income and Expenditure Activity is accounted for in the year that it takes place, not simply when cash payments are made or received. In particular: • Revenue from contracts with service recipients, whether for services or the provision of goods, is recognised when (or as) the goods or services are transferred to the service recipient in accordance with the performance obligations of the contract. • Supplies are recorded as expenditure when they are consumed. Where there is a gap between the date supplies are received and their consumption, they are carried as inventories on the Balance Sheet. • Expenses in relation to services received (including services provided by employees) are recorded as expenditure when the services are received rather than when payments are made. • Interest payable on borrowings and receivable on investments is accounted for on the basis of the effective interest rate for the relevant financial instrument rather than the cash flows fixed or determined by the contract. • Suppliers’ invoices paid in the two weeks following the year-end have been included together with specific accruals in respect of further material items, provided the goods and services were received prior to 31 March. • Where revenue and expenditure have been recognised but cash has not been received or paid, a debtor or creditor for the relevant amount is recorded in the Balance Sheet. The de minimis level for recognition of such transactions has been agreed at £5,000, therefore all known transactions of £5,000 or above have been included. • Where debts may not be settled, the balance of debtors is written down and a charge made to revenue for the income that might not be collected. 82
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B Allocation of Central Support Costs A proportion of net central support services is allocated to services outwith the general fund. The balance of the net central support services is reported on the basis of how the services are structured and how the Council operates, monitors and manages financial performance. C Cash and Cash Equivalents Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are investments that mature in three months or less from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value. In the Cash Flow Statement, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Council’s cash management. D Prior Period Adjustments, Changes in Accounting Policies and Estimates and Errors Prior period adjustments may arise as a result of a change in accounting policies or to correct a material error. Changes in accounting estimates are accounted for prospectively, i.e. in the current and future years affected by the change and do not give rise to a prior period adjustment. Changes in accounting policies are only made when required by proper accounting practices or the change provides more reliable or relevant information about the effect of transactions, other events and conditions on the Council’s financial position or performance. When a change is made, it is applied retrospectively (unless otherwise stated) by adjusting opening balances and comparative amounts for the prior period as if the new policy had always been applied. Material errors discovered in prior years are corrected retrospectively by amending opening balances and comparative amounts for the prior period. E Charges to Revenue for Non-Current Assets Services are charged with the following amounts to record the cost of holding non-current assets during the year: • Depreciation attributable to the assets used by the relevant service. • Revaluation and impairment losses on assets used by the service where there are no accumulated gains in the Revaluation Reserve against which the losses can be written off. • Amortisation of intangible fixed assets attributable to the service. The Council is not required to raise council tax to cover depreciation, revaluation and impairment losses or amortisation. However, it is required to make an annual contribution from revenue towards the reduction in its overall borrowing requirement, equal to an amount calculated on a prudent basis determined by the Council in accordance with the Statutory Repayment of Loans Fund Advances. This is known as the Loans Fund Principal Repayment. Depreciation, revaluation and impairment losses and amortisation are replaced by the Loans Fund Principal Repayments in the General Fund Balance by way of an adjusting transaction within the Capital Adjustment Account in the Movement in Reserves Statement for the difference between the two. 83
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F Employee Benefits Benefits Payable during Employment Short-term employee benefits are those due to be settled wholly within 12 months of the year end. They include such benefits as salaries, wages, overtime and paid annual leave for current employees and are recognised as an expense in the year in which employees render service to the Council. All salaries and wages earned up to 31 March are included in the financial statements irrespective of when the payment was made. An accrual is made for the cost of holiday entitlements earned by employees but not taken before the year-end and which employees can carry forward into the next financial year. The accrual is made at the wage and salary rates applicable in the following year, being the period in which the benefits will be taken. Such accruals are required, under statute, to be reversed out of the General Fund Balance by a credit to the Accumulating Compensated Absences Adjustment Account in the Movement in Reserves Statement. Termination Benefits Termination benefits are amounts payable as a result of a decision by the Council to terminate an officer’s employment before the normal retirement date or an officer’s decision to accept voluntary redundancy. They are charged on an accruals basis to the relevant services line in the Comprehensive Income and Expenditure Statement at the point when the offer of termination can no longer be withdrawn by the Council. Where termination benefits include the enhancement of pensions, the General Fund balance is charged with the amount payable by the Council to the pension fund or pensioner in the year. Post-Employment Benefits The Council participates in two separate pension schemes: • The Scottish Teachers’ Pension Scheme administered by the Scottish Government. • The Local Government (Scotland) Pension Scheme administered by the Strathclyde Pension Fund. Both schemes provide defined benefits to members (retirement lump sums and pensions), earned while employees work for the Council. However, the arrangements for the teachers’ scheme mean that liabilities for these benefits cannot be identified specifically to the Council. The scheme is therefore accounted for as if it were a defined contributions scheme. No liability for future payments of benefits is recognised in the Balance Sheet and the Education line in the Comprehensive Income and Expenditure Statement is charged with the employer’s contributions payable to the Teachers’ Pension Scheme in the year. The Local Government Pension Scheme The Local Government Pension Scheme (LGPS) is accounted for as a defined benefits scheme. The assets and liabilities of Strathclyde Pension Fund attributable to the Council are included in the Balance Sheet on an actuarial basis using the ‘projected credit unit method’, i.e. an assessment of the future payments that will be made in relation to retirement benefits earned to date by employees, based on assumptions about mortality rates, employee turnover rates, etc., and projected earnings for current employees. Assets and liabilities are discounted to their value at current prices, as advised by the actuaries, Hymans Robertson, using an appropriate discount rate. 84
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The assets and liabilities of Strathclyde Pension Fund attributable to North Ayrshire Council are included in the Balance Sheet at their fair value: • Quoted securities – current bid price. • Unquoted securities – professional estimate. • Unitised securities – current bid price. • Property – market value. The change in the net pension asset or liability is analysed into the following components: Service Costs: • Current service cost – the increase in liabilities as a result of service earned by employees this year. This is allocated in the Comprehensive Income and Expenditure Statement to the services for which the employees worked. • Past service cost (including curtailments) – the increase in liabilities as a result changes to the scheme, including amendments or curtailments, where the changes impact on the service earned by employees in previous years. These costs are charged to the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement. • Net interest on the net defined benefit liability (asset), i.e. net interest expense for the Council – the change during the period in the net defined benefit liability or asset that arises from the passage of time. This is charged to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement, calculated by applying the discount rate used to measure the defined benefit obligation at the beginning of the period – taking into account any changes in the net defined benefit liability or asset during the period as a result of contribution and benefit payments. Remeasurements: • Return on plan assets – excludes amounts included in net interest on the net defined liability (asset). This is charged to the Pensions Reserve as Other Comprehensive Income and Expenditure. • Actuarial gains and losses – changes in the net pensions liability that arise because events have not coincided with assumptions made at the last actuarial valuation or because the actuaries have updated their assumptions. This is charged to the Pensions Reserve as Other Comprehensive Income and Expenditure. • Contributions paid to the Strathclyde Pension Fund – cash paid as employer’s contributions to the pension fund in settlement of liabilities. This is not accounted for as an expense. Statutory provisions require the General Fund balance to be charged with the amount payable by the Council to the pension fund or directly to pensioners in the year, not the amount calculated according to the relevant accounting standards. In the Movement in Reserves Statement, this means that there are transfers to and from the Pensions Reserve to remove the notional debits and credits for retirement or pension enhancement termination benefits and replace them with charges for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at the year-end. The balance that arises on the Pensions Reserve thereby measures the impact on the General Fund of being required to account for retirement benefits on the basis of cash flows rather than as benefits earned by employees. 85
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Discretionary Benefits The Council also has restricted powers to make discretionary awards to retirement benefits in the event of early retirements. Any liabilities estimated to arise as a result of an award to any member of staff, including teachers, are accrued in the year of the decision to make the award and accounted for using the same policies as are applied to the Local Government Pension Scheme. G Events After the Reporting Period These are events, both favourable and unfavourable, that occur between the end of the reporting period (31 March) and the date when the financial statements are authorised for issue. The Statement of Accounts are adjusted to reflect events where they provide evidence of conditions that existed at the end of the reporting period. Where events indicate conditions, which arose after the reporting period, which would have had a material effect, the Statement of Accounts are not adjusted but a disclosure is made in the notes of the nature of the event and the estimated financial effect. Events taking place after the date of authorisation for issue are not reflected in the Statement of Accounts. H Financial Instruments Financial Liabilities Financial liabilities are recognised on the balance sheet when the Council becomes party to the contractual provisions of a financial liability. Liabilities are initially measured at fair value and then carried at amortised cost. Annual charges to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement for interest payable are based on the carrying amount of the liability, multiplied by the effective interest rate of the instrument. The effective interest rate is the rate that exactly discounts estimated future cash payments over the life of the instrument to the amount at which it was originally recognised. For most of the borrowings that the Council has, this means that the amount presented in the balance sheet is the outstanding principal repayable (plus accrued interest) and interest charged to the Comprehensive Income and Expenditure Statement is the amount payable for the year according to the loan agreement. Costs associated with debt restructuring (premiums and discounts) are charged to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement in the year of repayment of the original debt in accordance with accounting regulations. Where premiums and discounts have been charged to the Comprehensive Income and Expenditure Statement, regulations permit the costs of restructuring to be released to revenue over the period of the replacement loan. The reconciliation of amounts charged to the Comprehensive Income and Expenditure Statement to the net charge required against the General Fund balance is managed by a transfer to or from the Financial Instruments Adjustment Account in the Movement in Reserves Statement. 86
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Financial Assets Financial assets are classified and measured based on the reasons, or business model, for holding the financial assets and the characteristics of the anticipated cash flows. There are three main classes of financial assets measured at: • Amortised cost. • Fair value through profit or loss. • Fair value through other comprehensive income. The Council’s business model is to hold assets to collect contractual cash flows and our financial assets are therefore classified as amortised cost. Financial Assets Measured at Amortised Cost Financial assets measured at amortised costs are recognised on the Balance Sheet when the Council becomes party to the contractual provisions of a financial asset and are initially measured at fair value and then carried at amortised cost. Annual credits to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement for interest receivable are based on the carrying amount of the asset multiplied by the effective rate of interest for the instrument. For the financial assets held by the Council, this means that the amount presented in the Balance Sheet is the outstanding principal receivable (plus accrued interest) and interest credited to the Comprehensive Income and Expenditure Statement is the amount receivable for the year in the loan agreement. Any gains or losses which arise on the derecognition of an asset are credited or debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement. Expected Credit Loss Model Potential impairment losses on Financial Assets Measured at Amortised Cost are determined using the Expected Credit Loss Model. The Council recognises expected credit losses on all of its financial assets held at amortised cost, either on a 12-month or lifetime basis. Only lifetime losses are recognised for trade receivables (debtors). Impairment losses are calculated to reflect the expectation that the future cash flows may not take place because the borrower may default on their obligations. Credit risk plays a crucial part in assessing the potential losses. Where risk has increased significantly since an asset was recognised, losses are assessed on a lifetime basis. Where risk has not increased significantly or remains low, losses are assessed on the basis of 12-month expected losses. For any identified impairment losses, a charge is made to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement. I Government Grants and Contributions Whether paid on account, by instalments or in arrears, government grants and third party contributions and donations are recognised as due to the Council when there is reasonable assurance that: • The Council will comply with the conditions attached to the payments. • The grants or contributions will be received. 87
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Amounts recognised as due to the Council are not credited to the Comprehensive Income and Expenditure Statement until conditions attached to the grant have been satisfied. Monies advanced as grants and contributions for which conditions have not been satisfied are carried in the Balance Sheet as creditors. When conditions are satisfied, the grant or contribution is credited to the relevant service line (for revenue grants) or Taxation and Non- Specific Grant Income (for non-ring-fenced revenue grants and all capital grants). Capital grants are then reversed out of the General Fund Balance in the Movement in Reserves Statement. Where the grant has yet to be used to finance capital expenditure, it is posted to the Capital Grants Unapplied Account within the Capital Fund. Capital grants which are used and amounts previously posted to the Capital Grants Unapplied Account which have now been applied, are transferred to the Capital Adjustment Account. J Heritage Assets A heritage asset is defined as a tangible asset with historical, artistic, scientific, technological, geophysical or environmental qualities that is held and maintained principally for its contribution to knowledge and culture. The Council holds heritage assets consisting of civic regalia and silverware, historical artefacts, fine art and public artworks. The assets are held at valuation and no depreciation is charged on the assets. Expenditure to maintain the assets is written off to the Comprehensive Income and Expenditure Statement in the year of expenditure. Donated heritage assets are reflected in the balance sheet at valuation with a gain equivalent to the value of the asset reported in the Comprehensive Income and Expenditure Statement in the year of donation. Measurement The Council’s heritage assets are recognised on the Balance Sheet at values determined by specialist external valuers and by experienced officers within the Connected Communities service. Valuations have been largely undertaken on an insurance basis at retail level. Only items deemed to have a value of £10,000 and above have been disclosed in the Balance Sheet. Disclosure Not all of the Council’s identified heritage assets will be disclosed in the Balance Sheet. It is not deemed practicable to obtain external valuations for all items defined as heritage assets. These include: Museum and Gallery items with a value of less than £10,000, Castles, Monuments and War Memorials. K Intangible Assets Expenditure on non-monetary assets that do not have physical substance but are controlled by the Council as a result of past events (e.g. software licences) is capitalised when it is expected that it will bring benefits to the Council for more than twelve months. Intangible assets are measured initially at cost. Amounts are not revalued, as the fair value of the assets held by the Council cannot be determined by reference to an active market. The depreciable amount of an intangible asset is amortised over its useful life (generally between 88
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5 and 10 years) to the relevant service line(s) in the Comprehensive Income and Expenditure Statement. L Interest in Companies and Other Entities The Council has interests in companies and other entities which have the nature of subsidiaries, associates and joint ventures and require it to prepare group accounts. In the Council’s single entity accounts, these interests are recorded as financial assets at cost, less any provision for losses. M Internal Transactions Internal transactions between operational segments of the Council are included within the management accounts for budgetary control purposes only. All internal transactions between services have been excluded from the service expenditure analysis within the Comprehensive Income and Expenditure Statement resulting in reductions in both the gross expenditure and gross income reported, with no overall net impact. N Inventories Inventories include consumable stock and work-in-progress and are recognised in the Balance Sheet at the lower of cost and net realisable value. The valuation of work-in- progress has been made at cost plus an appropriate proportion of overheads, together with attributable profits and allowances for foreseeable losses. O Investment Properties Investment properties are those that are used solely to earn rentals and/or for capital appreciation. Investment properties are measured initially at cost and subsequently at fair value, being the price that would be received to sell such an asset in an orderly transaction between market participants at the measurement date. As a non-financial asset, investment properties are measured at highest and best use. Properties are not depreciated but reviewed annually and revalued regularly to ensure their carrying value reflects market conditions at the year-end. P Leases The Council adopted IFRS 16 (Leases) with effect from 1 April 2024. The main impact of the requirements of IFRS 16 is that, for arrangements previously accounted for as operating leases (i.e. without recognising the leased vehicles, plant, equipment, property and land as an asset, and future rents as a liability), a right-of-use asset and a lease liability are now included on the balance sheet from 1 April 2024. As noted under policy R Public Private Partnership, Non Profit Distributing and similar contracts, with effect from 1 April 2024 IFRS16 also applies to Service Concession Agreements and recognition of the resultant remeasurement of the lease liability. The Council as Lessee The Council classifies contracts as leases based on their substance. Contracts and parts of contracts, including those described as contracts for services, are analysed to determine whether they convey the right to control the use of an identified asset, through rights both to obtain substantially all the economic benefits or service potential from that asset and to direct its use. The scope of IFRS 16 Leases has been expanded to include arrangements with nil consideration, peppercorn or nominal payments. 89
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Initial measurement Leases are recognised as right-of-use assets with a corresponding liability at the date from which the leased asset is available for use (or from 1 April 2024, if later). The leases are typically for fixed periods in excess of one year but may have extension options. The Council initially recognises lease liabilities measured at the present value of lease payments, discounting by applying the Council’s incremental borrowing rate wherever the interest rate implicit in the lease cannot be determined. Lease payments included in the measurement of the lease liability include: • Fixed payments, including in-substance fixed payments. • Variable lease payments that depend on an index or rate, initially measured using the prevailing index or rate as at the adoption date. • Amounts expected to be payable under a residual value guarantee. • The exercise price under a purchase option that the authority is reasonably certain to exercise. • Lease payments in an optional renewal period if the authority is reasonably certain to exercise an extension option. • penalties for early termination of a lease, unless the authority is reasonably certain not to terminate early. The right-of-use asset is measured at the amount of the lease liability, adjusted for any prepayments made, plus any direct costs incurred to dismantle and remove the underlying asset or restore the underlying asset on the site on which it is located, less any lease incentives received. However, for peppercorn, nominal payments or nil consideration leases, the asset is measured at fair value. Subsequent measurement The right-of-use asset is subsequently measured using the fair value model. The Council considers the cost model to be a reasonable proxy except for: • Assets held under non-commercial leases. • Leases where rent reviews do not necessarily reflect market conditions. • Leases with terms of more than five years that do not have any provision for rent reviews. • Leases where rent reviews will be at periods of more than five years. For these leases, the asset is carried at a revalued amount. In these financial statements, right-of-use assets held under index-linked leases have been adjusted for changes in the relevant index, while assets held under peppercorn or nil consideration leases have been valued using market prices or rentals for equivalent land and properties. The right-of-use asset is depreciated straight-line over the shorter period of remaining lease term and useful life of the underlying asset as at the date of adoption. The lease liability is subsequently measured at amortised cost, using the effective interest method. The liability is remeasured when: • There is a change in future lease payments arising from a change in index or rate. 90
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• There is a change in the group’s estimate of the amount expected to be payable under a residual value guarantee. • The authority changes its assessment of whether it will exercise a purchase, extension or termination option. • There is a revised in-substance fixed lease payment. When such a remeasurement occurs, a corresponding adjustment is made to the carrying amount of the right-of-use asset, with any further adjustment required from remeasurement being recorded in the income statement. Low value and short lease exemption The Council has elected to apply recognition exemptions to low value assets (below £10,000 when new) and to short term leases i.e. existing leases that expire on or before 31 March 2025, and new leases with a duration of less than 12 months. Lease expenditure Expenditure in the Comprehensive Income and Expenditure Statement includes interest, straightline depreciation, any asset impairments and changes in variable lease payments not included in the measurement of the liability during the period in which the triggering event occurred. Lease payments are debited against the liability. Rentals for leases of low-value items or shorter than 12 months are expensed. Depreciation and impairments are not charges against council tax, as the cost of non-current assets is fully provided for under separate arrangements for capital financing. Amounts are therefore appropriated to the capital adjustment account from the General Fund balance in the Movement in Reserves Statement. Rentals paid under operating leases for vehicles, plant and equipment are charged to the appropriate service account in the Comprehensive Income and Expenditure Statement as an expense of the services benefiting for use of the leased assets. The Council as Lessor North Ayrshire Council has no finance leases where the Council is the lessor. The Council leases out property under non-cancellable leases. Income received is recognised in the Comprehensive Income and Expenditure Statement against the services managing the leases. Where the Council grants an operating lease over a property or an item of plant or equipment, the asset is retained in the Balance Sheet. Q Property, Plant and Equipment Assets that have physical substance and are held for use in the supply of services, for rental to others, or for administrative purposes and that are expected to be used during more than one financial year are classified as Property, Plant and Equipment. All valuations of land and buildings are carried out by Royal Institution of Chartered Surveyors qualified valuers, with the exception of valuations of council dwellings which are based on beacon values calculated by the District Valuer. Both valuations are in accordance with the methodologies and bases of estimation as set out in the professional standards of Royal Institution of Chartered Surveyors. 91
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Recognition Expenditure on the acquisition, creation or enhancement of Property, Plant and Equipment is capitalised on an accruals basis. Expenditure that merely maintains the condition of an asset (i.e. repairs and maintenance) is charged as an expense when it is incurred. The Council has a de minimis level of £10,000 for expenditure to be classed as capital. Land and Buildings with a valuation below £10,000 are not recognised on the Council Balance Sheet. Measurement Assets are initially measured at cost, comprising: • The purchase price. • Any costs attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended. The Council does not capitalise borrowing costs incurred whilst assets are under construction. The cost of any asset acquired other than by purchase is deemed to be its fair value. Assets are carried on the Balance Sheet using the following measurement bases: • Council Dwellings - Fair value, determined using the basis of existing use value for social housing. • Other Land and Buildings - Fair value, determined by the amount that would be paid for the asset in its existing use. Where there is no market-based evidence of fair value because of the specialist nature of an asset, depreciated replacement cost is used as an estimate of fair value. • Other Land and Buildings (Schools) - Fair value, because of the specialist nature of the asset, depreciated replacement cost is used as an estimate of fair value. • Vehicles, Plant and Equipment - depreciated historical cost. • Infrastructure Assets - depreciated historical cost. • Community Assets - depreciated historical cost. • Surplus Assets - fair value based on market value in highest and best use. • Assets Under Construction - historical cost. • Investment Properties (Common Good and Trusts only) - fair value based on market value in highest and best use. Assets included in the Balance Sheet at fair value are revalued on a rolling basis over a period not exceeding 5 years, with the exception of Surplus Assets and Investment Properties which are revalued annually. Where a sample of assets in each category has been valued in the current financial year, the change in values for the sample assets shall be assessed and extrapolated to determine if a potential material movement in the value of all assets within that category is indicated. The materiality threshold has been determined as 1.5% of the previous formal valuation, for 2024 to 2025 this is equivalent to £15.8m. Where a material movement is indicated, this will be disclosed within the annual accounts and additional valuation work will be undertaken in 92
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conjunction with colleagues from the Royal Institute of Chartered Surveyors to assess the valuations of all other assets within that category. Increases in valuations are matched by credits to the Revaluation Reserve to recognise unrealised gains. Where decreases in value are identified, the revaluation loss is accounted for as follows: • Where there is a balance of revaluation gains for the asset in the Revaluation Reserve, the carrying amount of the asset is written down against that balance (up to the amount of the accumulated gains). • Where there is no balance in the Revaluation Reserve or insufficient balance, the carrying amount of the asset is written down against the relevant service line(s) in the Comprehensive Income and Expenditure Statement. The Revaluation Reserve contains revaluation gains recognised since 1 April 2007 only, the date of its formal implementation. Gains arising before that date have been consolidated into the Capital Adjustment Account. Impairment Assets are assessed at each year-end to establish whether there is any indication that an asset may be impaired. Where indications exist, and any possible differences are estimated to be material, the recoverable amount of the asset is estimated and, where this is less than the carrying amount of the asset, an impairment loss is recognised for the shortfall. Where impairment losses are identified, they are accounted for as follows: • Where there is a balance of revaluation gains for the asset in the Revaluation Reserve, the carrying amount of the asset is written down against that balance (up to the amount of the accumulated gains). • Where there is no balance in the Revaluation Reserve or insufficient balance, the carrying amount of the asset is written down against the relevant service line(s) in the Comprehensive Income and Expenditure Statement. Where an impairment loss is subsequently reversed, the reversal is credited to the relevant service line(s) in the Comprehensive Income and Expenditure Statement, up to the amount of the original loss, adjusted for depreciation that would have been charged if the loss had not been recognised. Depreciation Depreciation is provided for on all Property, Plant and Equipment assets. An exception is made for assets without a determinable finite useful life (i.e. freehold land and certain Community Assets) and assets that are not yet available for use (i.e. assets under construction). Investment Properties and Assets Held for Sale are not subject to depreciation. Depreciation is charged on a straight-line basis over the useful life of the assets (as advised by a suitably qualified officer). Depreciation is charged in the year of acquisition but not in the year of sale. 93
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Where a Property, Plant and Equipment asset has major components whose cost is significant in relation to the total cost of the item, the components are depreciated separately. For the purposes of component accounting the Council considers significant components being those with a cost that is at least 20% of the overall cost of the asset. Individual assets shall be disregarded for component accounting where their carrying value is below £2m. Revaluation gains are also depreciated, with an amount equal to the difference between current value depreciation charged on assets and the depreciation that would have been chargeable based on their historical cost being transferred each year from the Revaluation Reserve to the General Fund. Disposals When it becomes probable that the carrying amount of an asset will be recovered principally through a sale transaction rather than through its continuing use, it is reclassified as an Asset Held for Sale. The asset is revalued immediately before reclassification and then carried at the lower of this amount and fair value less costs to sell. Where there is a subsequent decrease to fair value less costs to sell, the loss is posted to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement. Gains in fair value are recognised only up to the amount of any previously recognised losses. Depreciation is not charged on Assets Held for Sale. Property, land and buildings are classified as ‘held for sale’ when the following criteria are met: • The property is available for sale in its present condition. • The sale is highly probable. • The asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value. • The sale is expected to qualify for recognition as a completed sale within one year. When an asset is disposed of or decommissioned, the carrying amount of the asset in the Balance Sheet is written off to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement as part of the gain or loss on disposal. Receipts from disposals are credited to the same line in the Comprehensive Income and Expenditure Statement as part of the gain or loss on disposal. Any revaluation gains accumulated for the asset in the Revaluation Reserve are transferred to the Capital Adjustment Account. To comply with statutory guidance, this gain or loss is excluded when determining the General Fund balance within the Movement in Reserves Statement. The Council has determined, in accordance with Local Government Circular 09/2022 Statutory Override Accounting for Infrastructure Assets for Scottish Local Authorities, that the carrying amount to be derecognised in respect of a replaced part of an infrastructure asset is to be taken to be, and accounted for, as a nil amount. In accordance with the circular the Council is not required to make subsequent adjustments to the carrying amount of the asset with respect to that part. 94
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R Public Private Partnership, Non Profit Distributing and similar contracts Public Private Partnership, Non Profit Distributing and similar contracts are agreements to receive services, where the responsibility for making available the property, plant and equipment needed to provide the services passes to the Public Private Partnership or Non Profit Distributing contractor. As the Council is deemed to control the services that are provided under its Public Private Partnership or Non Profit Distributing contractor schemes and as ownership of the property, plant and equipment will pass to the Council at the end of the contracts for no additional charge, the Council carries the assets used under the contracts on its Balance Sheet as part of Property, Plant and Equipment. The original recognition of these assets at fair value (based on the cost to purchase the property, plant and equipment) was balanced by the recognition of a liability for amounts due to the scheme operator to pay for the capital investment. For North Ayrshire Council Schools PPP contract, the liability was written down by an initial capital contribution of £1.743 million. The amounts payable to the Public Private Partnership or Non Profit Distributing contractor operators each year are analysed into four elements: • Service charges and lifecycle replacement costs – value of services including cleaning and janitorial services, repairs and maintenance, energy, non domestic rates and insurances debited to the relevant service in the Comprehensive Income and Expenditure Statement. • Interest payments – the interest charge on the outstanding Balance Sheet liability, debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement. • Contingent rent – increases in the amount to be paid for the property arising during the contract, debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement. • Liability repayment– repayment of the principal owed to the Public Private Partnership operator, applied to write down the Balance Sheet liability. With effect from 1 April 2024, IFRS 16 (Leases) also applies to service concession arrangements. Under IFRS16, where indexation affects future service concession payments, the lease liability requires to be remeasured. Instead of expensing the increased payment, the net present value of future payments that comprise the liability is recalculated based on the revised level of payments. In accordance with Scottish Local Government Finance Circular 10/2022, the Council has applied a statutory accounting flexibility to the Public Private Partnership and Non Profit Distributing contracts to realign the value of the Liability Repayment element of the unitary charge to reflect a prudent charge for the repayment of the Liability across the useful economic life of the assets. S Provisions, Contingent Liabilities and Contingent Assets Provisions Provisions are made where an event has taken place that gives the Council a legal or constructive obligation that probably requires settlement by a transfer of economic benefits or service potential, and a reliable estimate can be made of the amount of the obligation. 95
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For instance, the Council may be involved in a court case that could eventually result in the making of a settlement or the payment of compensation. Provisions are charged as an expense to the appropriate service line in the Comprehensive Income and Expenditure Statement in the year that the Council becomes aware of the obligation, and measured at the best estimate, at the balance sheet date, of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the balance sheet. Estimated settlements are reviewed at the end of each financial year; where it becomes less than probable that a transfer of economic benefits will be required (or a lower settlement than anticipated is made); the provision is reversed and credited back to the relevant service. Where some or all of the payment required to settle a provision is expected to be recovered from another party (e.g. from an insurance claim), this is only recognised as income for the relevant service if it is virtually certain that reimbursement will be received if the Council settles the obligation. Contingent Liabilities A contingent liability arises where an event has taken place that gives the Council a possible obligation, whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the Council. Contingent liabilities also arise in circumstances where a provision would otherwise be made but either it is not definite that an outflow of resources will be required, or the amount of the obligation cannot be measured reliably. Contingent liabilities are not recognised in the balance sheet but disclosed in a note to the accounts. Contingent Assets A contingent asset arises where an event has taken place that gives the Council a possible asset whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the Council. Contingent assets are not recognised in the balance sheet but disclosed in a note to the accounts where it is probable that there will be an inflow of economic benefits or service potential. T Reserves Reserves are created by appropriating amounts out of the General Fund Balance in the Movement in Reserves Statement. When expenditure to be financed from a reserve is incurred, it is charged to the appropriate service in that year to score against the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement. The reserve is then appropriated back into the General Fund Balance in the Movement in Reserves Statement so that there is no net charge against council tax for the expenditure. Certain reserves are kept to manage the accounting processes for non-current assets, financial instruments and retirement benefits and do not represent usable resources for the Council. These reserves are explained in the relevant notes. 96
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U Revenue Expenditure Funded from Capital Under Statute Expenditure incurred during the year that may be capitalised under statutory provisions but does not result in the creation of a non-current asset is charged as expenditure to the relevant service in the Comprehensive Income and Expenditure Statement in the year. Where the Council has determined to meet the cost of this expenditure from existing capital resources or by borrowing, a transfer in the Movement in Reserves Statement from the General Fund Balance to the Capital Adjustment Account then reverses out the amounts charged so that there is no impact on the level of council tax. V VAT All income and expenditure excludes amounts relating to Value Added Tax, as all Value Added Tax collected is payable to His Majesty’s Revenue and Customs and net Value Added Tax paid is fully recoverable by the Council. W Fair Value Measurement The Council values some of its non-financial assets, such as Surplus Assets and Investment Properties (Common Good Funds and Trusts only), and some of its financial instruments at Fair Value. Fair Value is the price that would be received either on the sale of an asset or to transfer a liability in an orderly transaction between market participants at the measurement date. The Fair Value measurement assumes that the transaction to sell the asset or transfer the liability takes place either: • In the principal market for the asset. • In the absence of a principal market, in the most advantageous market for the asset. The Council measures the Fair Value of an asset or liability using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. When measuring the Fair Value of a non-financial asset, the Council takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Council uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. Inputs to the valuation techniques in respect of assets and liabilities for which Fair Value is measured or disclosed in the Council’s financial statements are categorised within the fair value hierarchy, as follows: • Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities that the Council can access at the measurement date. • Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. • Level 3 – unobservable inputs for the asset or liability. 97
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NORTH AYRSHIRE COUNCIL 29 May 2025 Audit & Scrutiny Committee Title: Strategic Risk Register 2025/26 Purpose: To inform the Committee of the Council's agreed Strategic Risk Register for 2025/26. Recommendation: That Committee notes the Strategic Risk Register for 2025/26. 1. Executive Summary 1.1 The Strategic Risk Register has been reviewed and updated for 2025/26. 1.2 It is recommended that seven of the eight previous risks remain on the Strategic Risk Register (SRR) at their existing risk scores. 1.3 The Financial Sustainability of the Health and Social Care Partnership risk has increased in risk scoring from 20 to 25. 2. Background 2.1 North Ayrshire Council is committed to ensuring that it is proactive in identifying and managing the risks impacting on the authority. The Council recognises that a certain amount of risk is inevitable if the organisation is to achieve its objectives. 2.2 The aim of risk management is to reduce the likelihood and/or impact of risk by identifying and controlling risks to the Council. If risk is to be managed appropriately, and Services are aware of these risks, risk management can contribute positively towards the organisation's decision-making processes, making the Council more innovative and effective in its approach to service delivery. 2.3 The most significant risks are identified through the Council's Strategic Risk Register, recognising the challenges facing the Council and demonstrating the arrangements in place to manage these risks. 2.4 The Strategic Risk Register has been reviewed and updated for 2025/26 and is attached at Appendix 1 to this report. For each of the risks detailed within the register a number of components are identified: • Risk proximity factors; Agenda Item 9 99
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• Risk score; • Potential effect on the Council's priorities; • Internal controls currently in place; • Assessment of controls; and • Additional actions identified. 2.5 To assist in the assessment of each risk, the Council’s agreed risk matrix was used to ensure consistency. This is used to assess the likelihood of occurrence (on a scale from 1 to 5) and the significance of the impact of the risk should it occur (on a scale from 1 to 5). The risk score is the product of likelihood multiplied by impact. Only those risks rated as high or very high (10 or above) will feature on the Strategic Risk Register to ensure a focus on managing the most significant risks. 2.6 Seven risks remain on the Strategic Risk Register at their existing risk scores – all risks except the Financial Sustainability of the Health and Social Care Partnership which has increased. 2.7 The Financial Sustainability of the Health and Social Care Partnership risk has increased in risk from score 20 to 25 due to continuously increasing budget pressures. The risk likelihood has gone from a score of 4 to 5. This risk previously increased from 16 to 20 in the previous update at mid-year. 2.8 This risk is now scored at the maximum level possible both in terms of impact and likelihood after existing controls have been applied. 2.9 Very High Risks • Financial Sustainability – this risk reflects the ongoing financial challenge faced by the Council year on year (risk score 20). • Financial Sustainability of the Health and Social Care Partnership – this reflects the significant ongoing financial challenges faced by the Partnership and the risk these present to the Council which are increasing (risk score 25). This matter is currently being addressed by the Council through current financial performance reporting governance and through the recent Budget setting process for 2025/26. However it should be stressed that this position continues to present significant challenges for the financial sustainability of the Council. • Inequalities – this highlights the socio-economic inequalities faced in North Ayrshire (risk score 20). • Community Capacity Building and Empowerment – this highlights the challenges associated with the community empowerment act (risk score 20). • Property Asset Risk – This reflects the impact of long-term restricted budgets on the Councils ability to maintain these to a good standard (risk score 20). High Risks • Cyber Security – this reflects the ongoing risk from external cyber-attack which is being faced by all organisations (risk score 16). • Transformation – this reflects the wider risks associated with delivering the current Transformation Programme and developing a pipeline of future initiatives (risk score 12). It is recognised there remains a need for wider reform in order to 100
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fully address the financial challenges faced by the Council over the medium and longer-term. • Climate Change – this risk has been on the Strategic Risk Register following the declaration by the Council of a Climate Change Emergency during 2019 (risk score 16). 2.10 Council services have identified high level strategic actions within their planning for 2025/26 to help the Council mitigate against its strategic risks. These actions are detailed in summary format in the Risk Management Action Plans following each Risk within Appendix 1. These actions will assist with performance monitoring and reporting on the strategic risks. 2.11 The Council’s Internal Audit Plan 2025/26 is scheduled to be approved at the Audit and Scrutiny Committee on 13 March 2025 and is risk-based with clear links in place between the audit plan and key risks the Council faces. Longer-term risks & Horizon Scanning 2.12 The Strategic Risk Register identifies the most significant risks which the Council faces at the present time. 2.13 The Corporate Risk Management Group identifies any new relevant risks though internal reviews and external horizon scanning utilising a number of sources. 3. Proposals 3.1 Committee is requested to note the Strategic Risk Register for 2025/26. 4. Implications/Socio-economic Duty Financial 4.1 The Council continues to have a robust long- and medium-term financial planning framework. Key strands include development of key transformation themes and the establishment of an Investment Fund that will generate future savings alongside delivery of a number of key Council priorities. Human Resources 4.2 None. Legal 4.3 None. Equality/Socio-economic 4.4 The risk to the Council is that North Ayrshire residents, and in particular certain groups, will experience increasing levels of poverty and its effects. Current control measures fall into two categories - measures to address the root causes of socio- 101
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economic inequalities - income through employment or benefits – and mitigation measures to minimise the impacts of poverty. Climate Change and Carbon 4.5 The Council has declared a climate change emergency and has in place an Environmental Sustainability and Climate Change Strategy. Significant work to help mitigate the risk of flooding is included within the Capital Plan. The Council is undertaking an ambitious renewable energy programme. Key Priorities 4.6 A successful risk management framework helps to underpin the delivery of the Council’s strategic priorities in Our Council Plan 2023-2028. Community Wealth Building 4.7 None. 5. Consultation 5.1 The Strategic Risk Register has been reviewed in consultation the Corporate Risk Management Group and relevant Chief Officers. Mark Boyd Head of Service (Finance) For further information please contact Alex Fitzharris, Team Manager (Risk), on 01294- 324515. Background Papers None. 102
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Appendix 1 - Strategic Risk Report 2025/26 Risk Code SRR2526_R01 Risk Title Financial Sustainability Latest Note Date 26-Feb-2025 Risk Owner Mark Boyd Risk Proximity Factors Consequences / Impact Existing Risk Control Measures Likelihood Impact The risk is that the level of funding from Scottish Government to local government falls significantly below the level required to operate services effectively. This will require the Council to take increasingly difficult and challenging decisions. The revised 2025/26 local government settlement represents an increase in core funding of £7.254m (2.05%). This is against a backdrop of significant inflationary cost increases and risks, including and anticipated shortfall in funding for employer national insurance contributions for direct staff of £2.647m. The North Ayrshire position is further affected by a reducing overall population demographic and a growing elderly population. This will further impact the Council’s share of funding across the short, medium and long term. Although there is a commitment through the Verity House agreement for Councils and Scottish Government to work together there continues to be challenges around the level of flexibility the Council has on key areas of Budget, most notable in areas like HSCP funding and funding for teachers and support staff, where conditions remain. In 2024/25 in-year cost pressures across the Council’s General Fund and the Health and Social Care Partnership present a significant risk to the sustainability of the Council’s finances. The General fund currently projects an in-year overspend of £0.3m and the HSCP has an overall projected outturn of £5.824m for 2024-25, reduced to £4.415m through identified financial recovery actions. The NAC element of this as a funding partner is a year-end overspend of £4.285m, reduced to £3.106m through recovery actions. There is an increasing risk to achieving financial balance during 2024-25. The Scottish Government has passed legislation to give Councils powers to charge additional council tax for second homes. This is an area the Council will consider within the context of local circumstances and island communities. Scottish Government funding to support the Council’s capital programme has also not kept pace with rising costs. Set against high inflationary driven construction costs there is a risk that the 10-year capital programme will be unaffordable. This could require projects to be reduced in scale or even ceased. Funding not keeping pace with demand and inflationary cost pressures means that there will be a reduction in some service areas potentially resulting in higher risks for service users. The future delivery of balanced budgets will become increasingly challenging. The capital programme could also be significantly impacted leading to reduced levels of capital investment. Robust monitoring of the Council’s revenue and capital budgets is in place as well as regular reporting of financial performance of the IJB to Cabinet and Audit and Scrutiny. To assist financial planning The Medium and Long- Term Financial Outlook (LTFO) to 2033/34 was approved at Council on 13 December 2023 – this is the cornerstone of the Council's financial planning in the medium to long term. The annual budget process for the General Fund revenue and Capital Programmes and financial performance monitoring process will continue to provide the framework from which control measures will continue in addressing the financial position. Delivery of the Council’s Change Programme is also vital in addressing the Budget challenges and this is being progressed by the Council’s Transformation Board, which is chaired by the Chief Executive. Utilising the Council’s available statutory powers is another important area in addressing the financial challenges. 4 5 Status Risk Score Heat Map Change in Score Approach No change Treat Increasing Risk 20 103
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Strategic Risk Action Plan Date Updated 26-Feb-2025 Analysis of Effectiveness of Controls Further Action Required Target Date for Completion Officers Responsible Current Status: RAG Regular financial monitoring of Revenue and Capital Budgets. 11 September 2024: Ongoing financial monitoring process across capital and revenue, including identification of measures to address in-year position. 26 Feb 2025: Recent finance reports trending towards break-even position for the Council’s general fund. Major challenges remain however regarding the financial performance of the IJB. The Council will require to make interim funds available to the IJB in 2024/25 and this will be on the basis of repayment in future years. This will be considered by Cabinet. 31-Mar-2025 Mark Boyd Maintain Financial Governance Arrangements for IJB. 11 September 2024: New Finance Working Group set up to address in-year and medium-term pressures. Includes representation from the HSCP, Health and the Council, Main focus is on development of a finance recovery plan. 26 Feb 2025: The Finance Working group continues to progress transformation and recovery actions, however it is unlikely it will achieve financial balance in 2024/25. Information continues to be reported through to the Council’s Cabinet 31-Mar-2025 Mark Boyd Progress dialogue via COSLA with Scottish Government on a range of areas including fair funding, multi-year settlements, reduction in levels of ring-fenced resources, true costs of SG policy areas, financial flexibilities and a New Deal partnership with SG and local government. 11 September 2024: Discussions ongoing, however, SG have just announced £0.5Billion of cuts Further dialogue being progressed around teacher number restrictions and areas of revenue generation. 26 Feb 2025: Further progress made in this area as part of the Local Government settlement through reduced levels of ring-fencing, however, further progress needs to be made as consitions remain around teacher numbers and HSCP funding. Financial flexibilities have been progressed by the Council through approval of 100% premium for second home-owners council tax and through a review of non-domestic rates empty property relief 31-Mar-2025 Mark Boyd Develop the 2025/26 to 2027/28 revenue budget (medium-term financial strategy) and capital programme taking account of all pressures and savings via Directorates and Transformation programme. 11 September 2024: The 2025/26 Budget process has commenced earlier, in view of the current financial challenges. Special Council meeting arranged for 9 October, 2024 to set out the financial outlook and outline initial proposals as part of a 26-Feb-2025 Mark Boyd 104
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community engagement programme to commence from 10 October, 2024. 26 Feb 2025: Medium-Term financial plan approved by Council on 26 February 2025, included over £4m of savings and a 7% increase in council tax. The budget also included a £4m risk provision to help manage the risks and pressures facing the Council. The Budget also included additional funding contribution to the HSCP of £2.114m plus a further £0.759m funding from the Council to ensure 100% funding in respect of employers national insurance contribution. This element of pressure being borne by the council. 105
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Risk Code SRR2526_R02 Risk Title Inequalities Latest Note Date 16-Jan-2025 Risk Owner Caroline Cameron; Sam Anson; David Hammond Risk Proximity Factors Consequences / Impact Existing Risk Control Measures Likelihood Impact North Ayrshire residents, and in particular certain excluded groups, will experience increasing levels of poverty and its effects, as a result both of the economic situation and further public sector funding challenges. Health inequality is closely linked to poverty, employment and people's earliest experiences as children, and will increase. The population of North Ayrshire is projected to fall over the next 10 years but there will also be a larger proportion of the population considered dependent (not economically active). The impact on specific risk groups is greatest for our children, young people and families, unemployed people and those in in- work poverty and people exposed to the risks of drug and alcohol addiction. Demand for HSCP and Council Services will increase. As reductions in resources increase, early intervention and prevention activities are at risk, thus increasing the potential for an increase in costly crisis interventions. The local economy will be impacted by reduced spending power by economically inactive residents. The HSCP re-affirmed its commitment to Tackling Inequalities by continuing to consider it a key priority with the Partnership’s Strategic Plan. Through the HSCP strategic plan, the Partnership sets out actions to tackle inequality through its Partnership Pledge and across its strategic priorities. Tackling inequalities is addressed across HSCP service areas. An example of actions to help address local inequalities include: Establishing the Money Matters service in 9 GP practices and 7 local schools in the more deprived areas of North Ayrshire. This will improve accessibility of the service to those who would benefit most. Building on this approach through the launch of the Financial Inclusion Partnership bringing a range of key partners and stakeholders together to improve access and support for the most vulnerable NA residents. Increase the number of employability mentors in Justice Services, to support those with experience of the justice service into meaningful employment or training opportunities and to help divert away from criminal behaviours. Working closely with Housing colleagues to support transitions from care and ensuring care experienced young people can access a positive and stable housing destination. In our Drug and Alcohol Services, we are implementing actions to reduce the number of local drug and alcohol related harms and deaths. This includes implementing the national MAT (Medicated Assisted Treatment) standards and increasing the number of ABIs (Alcohol Brief Interventions) delivered across North Ayrshire. Through the Caring for Ayrshire programme, we have set out a phased approach to improve local primary care premises (GP Practices and Health Centres). This will improve overall professional capacity within GP practices for Multi-Disciplinary Teams, ensuring the right support is available for local people with health concerns. 5 4 Investment in early intervention teams and approaches in Children’s Services to support vulnerable families, including in Child Protection and Whole Family Support. The Council considers reducing inequalities to be at the heart of its work. The Communities & Housing Directorate leads the Community Planning Partnership for the Council, and the CPP’s Local Outcomes Improvement Plan has a central purpose of reducing inequalities. Locality Planning priorities and Community Investment Fund funded initiatives are also focused on a range of inequalities, including poverty, age-related inequalities and digital inequalities. Recent CIF-funded projects have focused on employability, addictions and community food. Sam Anson, Executive Director (Education) and David Hammond, Executive Director (Communities & Housing) led the work of the Child Poverty and Cost of Living Board, chaired by the Council Leader. The five strategic themes of the Board were: • No Wrong Door – access to services • Employability • Food • Islands • Childcare This work has now been mainstreamed by the Community Planning Partnership (CPP) to ensure greater partner visibility and impact. 106
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Work to address child poverty and the Cost-of-Living crisis includes a range of employability initiatives to support parents and people with disabilities, each of whom are Scottish Government priority groups. Progress has been made with partners to undertake a review of the Child Poverty & Cost of Living approach, with recommendations being finalised for consideration by the Board. This is supported by the data and Single Shared Assessment projects being developed by the Transformation team, to provide holistic support for residents who need it most. The Child Poverty Early Intervention Fund is being used to address gaps in current planning and provision. Previous funding decisions were made as a consequence of the mini-enquiries to support employability and travel, childcare developments and support for care experienced young people and families. Further allocations are currently being developed. Through the Scottish Government’s Fairer Futures Partnership we have established a Child Poverty Strategy Team, who came into post in January 2025. This team will have key oversight role in collectively delivering holistic support, alongside the transition to a wellbeing economy, in reducing child poverty rates in North Ayrshire. We have started work as one of three areas involved in the Collaboration for Health Equity in Scotland (CHES) programme. The aims of CHES are to answer two fundamental questions: 1) What are the most impactful areas for intervention in Scotland to make meaningful progress in closing inequities in healthy life expectancy, and 2) how can national and local organisations work more effectively to close the gap between policy intent and impact in these areas? The Scottish Government has provided a second year of funding to address inequalities on the islands. This has been used to fund energy support, welfare advice and support, third sector interventions and school activities. The commitment to reducing inequalities is also reflected in the following plans: • The Educational Service Improvement Plan • Connected Communities strategic plans and • Facilities Management plans. Examples of actions to reduce inequalities: • Deployment of Scottish Attainment Challenge funding to reduce the poverty related attainment gap in schools • Use of the Pupil Equity Fund to ensure equity of pupil experience in schools, at the discretion of head teachers • Cost of the School Day actions to reduce, for example, the cost of school uniforms and clothing, food and outings • Support for care experienced young people, both in schools and through youth services • Additional national and local investment in Active Schools to focus on inequalities and equity • The Fairer Food Network, with 14 community larders which support the needs of individual communities • A network of warm spaces and events to mitigate energy use and social isolation • Work to support “New Scots,” in schools, with families and in community settings through language support and capacity building, including women’s groups • LGBT support groups for young people and those over 18 • Mentoring support for young people in secondary schools through a partnership with MCR Pathways 107
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Work is in hand with the Third Sector Chief Officers Group to co-design expenditure proposals from the Child Poverty & Early Intervention Fund on three priorities relating to child poverty, namely childcare, support in employability and financial inclusion. A sub-group has been established and initial proposals scoped in relation to the first two priorities, with the group due to meet again prior to the end of March 2025 to finalise proposals and expenditure commitments. In addition to the above, the HSCP re-affirmed its commitment to tackling Inequalities by continuing to consider it a key priority with the Partnership’s Strategic Plan. Through the HSCP strategic plan, the Partnership sets out actions to tackle inequality through its Partnership Pledge and across its strategic priorities. Tackling inequalities is addressed across HSCP service areas. An example of actions to help address local inequalities include: Establishing the Money Matters service in 9 GP practices and 7 local schools in the more deprived areas of North Ayrshire. This will improve accessibility of the service to those who would benefit most. Building on this approach through the launch of the Financial Inclusion Partnership bringing a range of key partners and stakeholders together to improve access and support for the most vulnerable NA residents. Increase the number of employability mentors in Justice Services, to support those with experience of the justice service into meaningful employment or training opportunities and to help divert away from criminal behaviours. Working closely with Housing colleagues to support transitions from care and ensuring care experienced young people can access a positive and stable housing destination. In our Drug and Alcohol Services, we are implementing actions to reduce the number of local drug and alcohol related harms and deaths. This includes implementing the national MAT (Medicated Assisted Treatment) standards and increasing the number of ABIs (Alcohol Brief Interventions) delivered across North Ayrshire. Through the Caring for Ayrshire programme, we have set out a phased approach to improve local primary care premises (GP Practices and Health Centres). This will improve overall professional capacity within GP practices for Multi-Disciplinary Teams, ensuring the right support is available for local people with health concerns. Investment in early intervention teams and approaches in Children’s Services to support vulnerable families, including in Child Protection and Whole Family Support. Participation strategies for children and young people and adults to ensure our strategies and investment are informed by as wide a range of views as possible. Status Risk Score Heat Map Change in Score Approach No Change Treat Stable 20 108
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Strategic Risk Action Plan Date Updated 20-Feb-2025 Analysis of Effectiveness of Controls Further Action Required Target Date for Completion Officers Responsible Current Status: RAG Global and national conditions which affect the cost-of-living and poverty continue to undermine the effectiveness of local control measures. Substantial work continues to mitigate inequalities but child poverty data, for example, continues to show an increase. National data collection methodologies have changed which explains the change in part, but North Ayrshire continues to have c. 29% of children living in poverty. Although unemployment has reduced, it continues to be a driver of poverty, with in-work poverty a key factor. Access to benefits is a key driver of poverty and the range of strategies described above continues to ensure we are maximising access to entitlements. The Single Shared Assessment work will improve this. 19 September 2024: The wide range of strategies and initiatives described above, being further developed and implemented, is anticipated to make a significant contribution to a range of inequalities. The review of the CPCOL Board, Child Poverty & Early Intervention Fund, Fairer Futures funding, and single shared assessment project are designed to help ‘shift’ the dial in tackling inequalities. Actions are being progressed and remain within the target dates for completion. 20 Feb 2025: The work of the CPCOL board has been mainstreamed as a workstream of the CPP board following discussion with both groups and in recognition of the importance of the work as a core function of the partnership. This improves visibility and governance. Work is being developed around the codesigned use of an allocation of the Child Poverty and Early Intervention Fund along with the Third Sector Chief Officers Group. This will improve capacity for change across third sector initiatives delivering on child poverty outcomes. The recent review of Locality Partnerships has resulted in a series of recommendations designed to refocus the work of the partnerships on their prime driver of reducing inequality. 31-Mar-2025 Caroline Cameron 109
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Risk Code SRR2526_R03 Risk Title Financial Sustainability of the Health and Social Care Partnership Latest Note Date 16-Jan-2025 Risk Owner Caroline Cameron Risk Proximity Factors Consequences / Impact Existing Risk Control Measures Likelihood Impact Resources have not kept pace with the demand for and cost of social care services. The budget settlement for 2024-25 is extremely challenging with a gap of over £10m across the IJB. Financial modelling suggests significant ongoing challenges across the medium-term. There is no certainty around future funding against growing demand, increasing costs and demographic pressures, with one-year budget settlements remaining in place. The ongoing work to review the Integration Scheme and to develop new risk-sharing arrangements between the Council and Health Board in relation to the acute set aside and primary care prescribing present a financial risk to the Partnership and Council. The Partnership is projecting an overspend of £5.0m in 2024/25, reduced from the £6.5m forecast in August 2024 due to the implementation of a financial recovery plan. The financial position moving into 2025/26 remains challenging for the IJB. Funding levels could result in savings being made that are not in alignment with the strategic plan. This could impact on the future demand levels e.g. reduction in early intervention and prevention means that future demand is increased. An in-year overspend position impacts on financial reserves and ultimately poses a financial risk to the Council and NHS Board as funding bodies. The IJB have formally written to NAC and the NHS to advise of the estimated financial support required. Funding levels increase the requirement to transform services at scale and pace. The IJB actively monitors the financial position with regular detailed reporting. Directors of Finance of the Council and Health Board have oversight and regular updates are provided to the Council's Cabinet. There is an integrated approach to managing the totality of NHS and Council resources delegated to the IJB. A three-year Medium-term Financial Outlook is updated on a rolling basis each year. Previous financial settlements have seen both partners meet the Scottish Government settlement conditions with any additional resources passed to the IJB. The Partnership has developed a new 3-year Transformation Plan 2024-2027 which will be approved by the IJB in March 2024. There is £2.2m of earmarked reserves set aside to support service change and re-design. This is fully committed and any slippage has been drawn down in-year to support the financial position. 5 5 Status Risk Score Heat Map Change in Score Approach Increase from 20 to 25 Treat Increasing risk 25 110
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Strategic Risk Action Plan Date Updated 16-Jan-2025 Analysis of Effectiveness of Controls Further Action Required Target Date for Completion Officers Responsible Current Status: RAG Budget Monitoring - Regular budget monitoring reports to IJB are effective. 18 September 2024: Strengthen support from Finance Team to front line services and increased engagement with Heads of Service and Senior Management Teams, including line by line reviews of all budget areas. Review and enhancement of frequency and level of financial information provided to support oversight and decision making in line with financial constraints, with an added focus on areas of underspend to maximise opportunities to delay or stop spend and contribute to the overall financial challenge. 16 January 2025: The capacity of the NHS finance team to provide up to date monitoring information has been raised and discussions are ongoing to ensure accurately and timely information is provided to the IJB. 31-Mar-2025 Caroline Cameron Corrective Action – Transformation Board is effective 18 September 2024: A three-year Transformation Plan covering the period 2024-2027 was approved by the IJB in March 2024. This focusses on addressing the future financial challenge in a sustainable way, as well as reviewing service delivery models and implementing local and national priorities. 16 January 2025: The transformation board has a themes-based agenda e.g. children & families, community care & health etc. This has allowed a stronger focus on each area. Regular updates have been presented to the IJB on progress. 31-Mar-2025 Caroline Cameron Enhanced Financial Controls 18 September 2024: Establishment of a Budget Working Group to facilitate increased oversight and scrutiny of the financial position and transformation programme as well as detailed budget planning for future financial years. The first meeting took place on 9th September. Review of expenditure authorisation levels across the Partnership and escalate specific decisions to senior officers. Staff communication in relation to discretionary/non-essential spend. Review of temporary posts and robust vacancy management/approval – only essential frontline posts will be approved for recruitment. Strengthen across services the existing approval and prioritisation approaches for new care requests, which will be approved in line with resource availability. A new group has been established to sign off all higher value care packages (Over £40k). 6th March 2025: The Finance Working Group has now met 6 times and covered a 31-Mar-2025 Caroline Cameron 111
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range of areas to support increased oversight and scrutiny of the financial position and transformation programme and to support detailed budget planning for future years. This has supported proposals for the 2025/26 budget coming forward before March 2025 for approval and an improved understanding of the scale of the financial challenge and the difficult decisions required to manage this. The Financial Recovery Plan is estimated to deliver £4m of benefit in-year, with the forecast outturn reported to be £5m, a reduction from the £6.5m reported in August 2024. Some of the benefit of the plan has been eroded by unexpected financial pressures in-year. National Influence/Escalation 6th March 2025: Through the NA Chief Officer the IJB have raised concerns nationally with Scottish Government, with Civil Servants and Politically re the impact of the financial position aligned to performance, for example the priority of the Delayed Discharge Mission. Scottish Government plans to publish an NHS Renewal plan at the end of March 2025 which will describe how the £200m funding set out as part of the budget will be deployed to improve performance. As part of this, and through NHS Boards, HSCPs were requested to submit costed improvement plans. North Ayrshire HSCP submitted a request for £9.5m of additional funding of which the majority of funding is for social care, the HSCP await feedback following submission by all Boards to Scottish Government. Concerns have also been raised nationally by Audit Scotland through their Finance Bulletin on IJBs published on 6th March and by Chief Officers as a collective, Chief Officers shared the national scale of financial challenge with Scottish Government officials and politicians on 5th March with a request that IJB requests for funding are prioritised. 112
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Risk Code SRR2526_R04 Risk Title Cyber Security Latest Note Date 15-Jan-2025 Risk Owner Fiona Walker Risk Proximity Factors Consequences / Impact Existing Risk Control Measures Likelihood Impact The potential compromise of business operations or a data breach orchestrated via either digital channels or the IT infrastructure. This can include targeting of the user base. Risk derives from both Council operations and those of its supply chain. The increasing importance of delivering services through digital channels and maximising efficiency through effective and secure use of technology. This includes a growing adoption of cloud-based computing resources which extend processing capabilities, and associated risks, beyond the Council’s network. Hybrid remote and mobile working is now the normal working practice for over 3,000 staff. Such a distributed work force increases the complexity of protecting against cyber and data protection risks. Failure by Services to adopt and comply with strategies, policies and procedures may result in a failure to adequately ensure the desired levels of cyber-security required to maintain and protect council systems and data. There may be a significant impact on the authority through the release of personal and/or sensitive information resulting in a loss of public confidence and significant financial loss incurred through fines and service disruption. A successful cyber-attack (malicious external or internal action) on the Council’s IT environments could also result in significant service disruption, loss of income streams and possible data loss/exposure. Impacts of a cyber-attack could include economic (i.e. inability to collect online payments), societal disruption (i.e. loss of diaries and client appointments), and reputational damage (i.e. loss of public confidence in digital services). It is recognised that it is not possible for any organisation to expect to be completely protected against continually evolving cyber threats. A threat actor with sufficient motivation, resource and capability will be able to compromise the most secure system. The Council takes a sociotechnical approach to reducing risk by continually developing protective measures through technical, organisational and people-focused controls. Technical controls are implemented in areas such as network defences, secure configuration of systems, user authentication, malware protection, and vulnerability management. These are based on best practice and independently tested on an annual basis to confirm their effectiveness in accordance with compliance schemes. The Council employ a fully managed Security Operations Centre (SOC) service which provides advanced monitoring, detection and response capabilities on a 24 hours a day, 365 days a year basis. The Council maintains a comprehensive set of policies, standards, guidelines, metrics and reporting mechanisms as part of its information security governance structure. A comprehensive training and awareness programme is delivered to nurture a cyber- aware workforce and culture. 4 4 Status Risk Score Heat Map Change in Score Approach No change Treat Stable 16 113
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Strategic Risk Action Plan Date Updated 15-Jan-2025 Analysis of Effectiveness of Controls Further Action Required Target Date for Completion Officers Responsible Current Status: RAG Incident Detection and Response – Recent cyber-attacks on public sector organisations highlight the need for robust incident detection and response procedures and technologies. The current response procedures been shown to be effective based on incidents experienced so far, however detection capabilities will need to be reviewed and improved. . 13 September 2024: Progress on the Digital Office joint procurement exercise has remained extremely slow, as a result the Council have opted to procure a SOC/MDR service independently. The procurement exercise is now progressing. 15 January 2025: Following a process of market consultation and vendor engagement, the Council have recently procured a Managed Security Operations Centre (SOC) service for an initial period of three years. The project is currently in the implementation phase and we anticipate the service being fully operational by the end of February 2025. 31-Mar-2025 Fiona Walker Training and Awareness 13 September 2024: Cyber Security training continues to be delivered; however this is now a Teams delivered course to maximise the attendance numbers. The Cyber Security Essentials E-Learning course continues to be available for 2024 and is undergoing a full re-write for 2025 to ensure this remains current. This training is being supplemented with a programme of awareness raising initiatives including educational staff news items and webinars. Phishing simulations have continued in order to assess the effectiveness of existing training and further increase awareness. 15 January 2025: The mandatory Cyber Security Essentials E-Learning course remains our training initiative with the greatest reach. This course has been fully re-written and is now live for all employees to complete annually. The mandatory E-Learning course is being supplemented by a range of further initiatives to include all-staff webinars, awareness raising news posts and other communications, this approach aims to ensure messaging is kept current and reflects the rapidly evolving threat landscape. Phishing simulations continue to be used to validate effectiveness of training and awareness initiatives. Ongoing Fiona Walker 114
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Risk Code SRR2526_R05 Risk Title Transformation Latest Note Date 25-Feb-2025 Risk Owner Mark Boyd Risk Proximity Factors Consequences / Impact Existing Risk Control Measures Likelihood Impact There is a risk that transformation and change activities, which are core to the future delivery models and long-term financial sustainability of both the Council and Health and Social Care Partnership, fail to deliver at the level of scale and pace required. Failure to deliver transformational change will impact on the Council’s financial sustainability, effectiveness of service delivery and delivery of the outcomes set out in the Council Plan 2023-28 and the Local Outcome Improvement Plan (LOIP). Failure to deliver the HSCP Transformation programmes across the Partnership, involving North Ayrshire Council (NAC) and NHS Ayrshire & Arran (NHSAA) services may lead to the identified outcomes not being delivered; resulting in financial instability, reduced performance, deteriorating patient outcomes, and reputational damage within North Ayrshire Health and Social Care Partnership (NAHSCP). Failure to embed cultural transformation activities may lead to difficulties in building future workforce capacity and in ensuring we have an engaged, skilled and knowledgeable workforce to meet service demand. The transformation programme aligns to the Council Plan and is monitored via the Transformation Board. The Board is chaired by the Chief Executive. Workstreams have been developed across Transport and Travel, Digital, Land and Property assets, Sustainability, Financial Inclusion as well as ongoing reviews across Waste Services, ELC, Learning Resources and Housing. HSCP have an established Transformation Board to closely monitor progress with plans, regular updates on programme to the IJB and regular meetings with the Chief Executive and S95 Officer to review progress and mitigation plans. Cultural transformation activities continue to evolve to support the Council’s transformation and improve effectiveness and capability. This includes sharing learning and skills, engagement, design experiments and a whole systems approach to transformation and change. Our workforce planning approach utilises a variety of tools and techniques, such as career development, succession planning, vacancy management, redeployment and early release schemes to ensure our workforce requirements for the future, in terms of skills and capabilities, are planned. Each Head of Service has a workforce plan, and these are monitored six-monthly with continued HR support and guidance to ensure service review and redesign of the workforce is on track. 3 4 Status Risk Score Heat Map Change in Score Approach No Change Treat Stable 12 115
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Strategic Risk Action Plan Date Updated 25-Feb-2025 Analysis of Effectiveness of Controls Further Action Required Target Date for Completion Officers Responsible Current Status: RAG Existing project level governance and controls remain effective and are constantly reviewed. 11 September 2024: Programme continues to be developed and work being progressed to feed a pipeline of financial efficiencies into the Budget programme for 2025/26. 25 February 2025: Scoping has commenced to inform the next stages of a further property transformation workstream, focusing maximising the benefits that can be derived from the property estate (ie, capital receipts, community wealth building, net-zero, etc). Quarterly Mark Boyd / Chief Executive and Executive Directors Review current governance arrangements and project delivery in view of land and property workstream to seek optimal delivery aligned to the council’s net zero ambitions. 11 September 2024: Governance arrangements in place and property programme being progressed. This will feed into the 2025/26 Budget programme. 25 February 2025: Regional Land and Assets workstream being further developed with NAC as lead organisation. Work to deliver the Irvine Locality Workstream, approved by Cabinet in March 2024, is well progressed with the majority of staff now occupying Cunninghame House. 26-Feb-2025 Mark Boyd / Chief Executive and Executive Directors 116
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Risk Code SRR2526_R06 Risk Title Climate Change Latest Note Date 24-Feb-2025 Risk Owner Russell McCutcheon Risk Proximity Factors Consequences / Impact Existing Risk Control Measures Likelihood Impact Climate change is expected to continue and worsen in the future if no action is taken, with increases to mean global temperatures, sea level rises and the increasing frequency and severity of weather events such as floods, heatwaves, droughts and storms. More frequent and intense heavy rainfall events increase the risk of soil erosion and flooding. Rises in mean sea level increases risks of coastal erosion, flooding, saltwater intrusion and soil salinisation (risk to agricultural land and freshwater habitats). Severe weather is already affecting public services across Scotland, with operational, reputational, financial and legal consequences. There is also an ongoing impact of severe winter weather including snowfall and freezing temperatures which impact service delivery and the integrity of our roads open space and buildings infrastructure. This shift in weather patterns caused by climate change is also affecting biodiversity across Scotland. Increased frequency of severe weather conditions and flooding events may lead to more instances of damage to Council infrastructure and property, interruptions to service delivery and increased demands on services, often with little notice. Risk to life, transport disruption and pollution to the local environment, as well as impact adversely on the local economy if businesses are unable to operate. Council requirement to provide immediate response and manage the adverse effects of more frequent and severe weather emergency situations, including support to local communities and businesses. The Council is required to comply with the ‘Public Bodies Climate Change Duties’ under the Climate Change (Scotland) Act 2009. These duties require the Council to assess the risks, threats and opportunities associated with climate change and identify actions to increase resilience to climate change. North Ayrshire Council declared a Climate Emergency in June 2019, committing to act on climate change and reduce carbon emissions. In January 2020 the Council approved the target to become net-zero carbon by 2030, for both Council estate emissions and area-wide emissions. Following implementation of the Council’s third Environmental Sustainability and Climate Change Strategy (2021-23), Cabinet approved the new Sustainable North Ayrshire Strategy (2024-27) in December 2023. This strategy provides a road map to achieve the net zero carbon emissions by 2030 target. There are 5 workstreams within the Sustainable North Ayrshire strategy, namely Energy, Nature, Transport, Waste and Adaptation. We continue to utilise Adaptation Scotland’s Capability Framework to ensure North Ayrshire takes a strong, proactive approach to adapting to climate change. Officers are participating in the Sustainable Scotland Network’s ‘Adaptation Scotland Benchmarking Group’ to learn and share best practice with other local authorities. Adaptation actions are identified within the Ayrshire Flood Risk Management Plan (2021), the Ayrshire Local Flood Risk Management Plan (2022), the Ayrshire Shoreline Management Plan and in the Adaptation Capability Framework. Flood studies are undertaken to help the Council identify areas that are at risk of flooding and to appraise options to reduce flood risk to communities and infrastructure. In addition, actions to mitigate Climate Change risk are held within strategies such as the Local Transport and Active Travel Strategy, Local Biodiversity Action Plan, Vacant and Derelict Land Strategy and Weather and Winter Emergencies Plan. Asset management plans are in place which are regularly reviewed for our Roads, Fleet, Housing, Property and Open Spaces. Furthermore, through the Ayrshire Civil Contingencies Team there are emergency planning arrangements in place in the event of severe weather and flooding conditions causing major disruption and damage to the area or to individual communities within it. 4 4 Status Risk Score Heat Map Change in Score Approach No change Treat Stable 16 117
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Strategic Risk Action Plan Date Updated 24-Feb-2025 Analysis of Effectiveness of Controls Further Action Required Target Date for Completion Officers Responsible Current Status: RAG Reducing Carbon Emissions: North Ayrshire Council declared a Climate Emergency in June 2019, committing to act on climate change and reduce carbon emissions. In January 2020 the Council approved the target to become net-zero carbon by 2030, for both Council estate emissions and area-wide emissions. The Council has taken action against climate change since our first Carbon Management Plan in 2006/07, by working to reduce emissions associated with Council services, and using the baseline year of 2005/06 from which to measure progress. Since the baseline year of 2005/06, Council estate emissions have reduced by 67%, from 63,334 tonnes of carbon dioxide equivalent (tCO2e) to 20,745 tCO2e. Area-wide emissions are published by BEIS. Current records show total emissions have reduced across North Ayrshire by 42.6%, from 1,454 kilo-tonnes of carbon dioxide (ktCO2) in 2005 to 835 ktCO2 in 2019. To ensure North Ayrshire Council can develop a leading, cross- sector and community led approach we established a Climate Change Steering Group (CCSG) in 2021. The CCSG is chaired by the Cabinet Member for Green Environment and Economy, and brings together young people, local businesses and community organisations from across North Ayrshire. Existing controls remain effective and are under review as our response to climate change develops and we progress towards achieving net zero by the 2030 target. 20 September 2024: Actions detailed within the Sustainable North Ayrshire Strategy continue to be implemented, with progress monitored through the Council’s corporate performance management system for example: • Participation in the Scottish Climate Intelligence Service to expand action on and monitor area-wide emissions. • Publication of North Ayrshire’s first Local Heat and Energy Efficiency Strategy (LHEES) and progression of initial actions from Delivery Plan. • Development of two solar PV farms on former landfill sites. • Completion of feasibility study for the decarbonisation of built assets. • Progression of green hydrogen generation study. • Development of North Ayrshire Nature Network strategy to address statutory. requirements to tackle the nature crisis. • Partnership working with Ayrshire Roads Alliance to undertake Electric Vehicle Infrastructure project. • Successful realisation of £725,998 external funding for domestic energy efficiency measures through ECO4 Flex partnership. 20 September 2024: Progress continues on delivery of the Sustainable North Ayrshire Strategy, including: • The two solar farm projects are nearing completion and are due to be energised in the spring of 2025 • The North Ayrshire Network Strategy has been reviewed by the Policy Advisory Panel and will be presented to Cabinet in March 2025 • A transformation workstream to address the decarbonisation of the fleet • Corporate engagement on behaviour change, including undertaking a Leadership Conference, Chief Officer Leadership Team workshop and Member Workshop. Undertaking physical energy efficiency measures within the corporate estate (predominantly lighting upgrades) and developing a forward programme of further interventions 24 February 2025 Business and Sustainability Fund agreed through 2024/25 budget in delivery including appointment of Programme Manager and development of Islands Net Zero Accelerator (NZA) and Phase Two Mainland NZA programmes. Islands NZA Programme supported by £25k funding from Zero Waste Scotland. Wider Place strategy updates continue to be provided through Pentana and governed through the Place Project Board. 31-Mar-2027 Russell McCutcheon 118
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Strategic Risk Action Plan Date Updated 24-Feb-2025 Analysis of Effectiveness of Controls Further Action Required Target Date for Completion Officers Responsible Current Status: RAG Flood Risk Management Plan: Cycle 2 of the Ayrshire Local Flood Risk Management Plan has been developed and was published on 31st December 2022. Studies and modelling will be undertaken to identify and prioritise vulnerable areas where financial damage and risk to life are most likely. There is an ongoing programme of monthly inspections of debris screens which have been installed to prevent vulnerable culverts from blocking and causing flooding. CCTV inspections of culverts are also undertaken to identify blockages and deterioration of assets that might cause flooding. This has been effective in reducing flooding, although there are capacity issues h that this process cannot address. The Upper Garnock Valley FPS has been completed and is currently providing flood protection. Ayrshire Shoreline Management Plan: The Ayrshire Shoreline Management Plan will be replaced with a Coastal Change Adaptation Plan. The adaptation plan will enable the Council and other stakeholders to effectively plan our future actions whilst allowing for flexibility in response to future changes. It will incorporate recent international and UK advances in adaptation and shoreline management planning to allow for local interpretation and involvement. 20 September 2024: 1. The Millport Coastal Flood Protection Scheme is 99% complete and we will commence a further flood protection scheme at the Mill Burn, also in Millport. 2. The Three Towns flood study is underway. This study will confirm flood risk from the Stevenston Burn & the Stanley Burn. The impacts of climate change will be evaluated. Where flood risk is confirmed, scoping of the next steps will be completed and this will inform the second stage of the study. 3. The North Ayrshire Water Body Clearance & Repair Schedule has been updated to include details of the planned assessment of various water bodies. Where these assessments find that the condition of the water bodies would or could contribute to significant flood risk, then the necessary clearance and repair work will be scheduled and completed. 4. Storm Gerrit brought widespread flooding to North Ayrshire on the 27 December 2023. Emergency repairs to culverts in Millport and Kilbirnie have now been completed. 5. In April 2024, a blockage in the Minister’s Cast culvert increased flood risk to roads and properties in Irvine including The Circuit leisure facility and Woodlands Primary School. The clearance and repair framework was used to commission emergency works that restored the performance of the culvert. 6. A draft coastal management study at Irvine & Stevenson is complete and was subject to public consultation in September 2024. When finalised, the study will help to inform a local Coastal Change Adaptation Plan. This plan will set out triggers for when the coastal erosion and flood risk adaptations identified in the management study should be implemented. 24 February 2025: 1. The construction of the Millport Coastal Flood Protection Scheme is complete. The scheme performed well during Storm Éowyn and no significant reports of coastal flooding in Millport were received. A pre-tender notification for the Millport Mill Burn Flood Protection Scheme was issued in January 2025. It is anticipated that the contract will be awarded in Autumn 2025, that construction will commence in late 2025, and that completion will be in 2026. 2. The first stage of the Three Towns Flood Study was completed in February 2025 and the scope has been agreed for the second stage. 3. The scheduled clearance and repair work continues to be implemented to help reduce flood impacts to people and property. 4. Following completion of the coastal management studies for Stevenston & Irvine, progress is being made to develop local Coastal Change adaptation plans for the study areas. A site investigation is planned to confirm the presence of contaminated spoil and how exposed this material could be to future coastal erosion. 5. Following completion of the Upper Garnock Flood Protection Scheme and an update of 30-Jun-2028 Thomas Reaney 119
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Strategic Risk Action Plan Date Updated 24-Feb-2025 Analysis of Effectiveness of Controls Further Action Required Target Date for Completion Officers Responsible Current Status: RAG the Lower River Irvine hydraulic model, a consultant has been appointed to update the relevant parts of the Council’s flood resilience plan, including measures at Cunninghame House and Marress House. 120
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Risk Code SRR2526_R07 Risk Title Community Capacity Building and Empowerment Latest Note Date 3-Feb-2025 Risk Owner Rhonda Leith Risk Proximity Factors Consequences / Impact Existing Risk Control Measures Likelihood Impact Unrealistic timescales for progressing of aspects of legislation of the Community Empowerment Act (Scotland) 2015, such as Community Asset Transfer. Pressure to support community capacity building and the variation of needs within a reducing workforce. Duplication of effort across HSCP and Locality Partnerships to foster community participation and deliver engagement activities. Complying with the complex and resource intensive consultation legislation in service redesign. Rising energy and utility costs relating to property management. Budget savings and pressure on property maintenance budgets. Where the risk is not managed effectively the potential benefits of community capacity building and empowerment may be lost. Widening inequality gap between those communities where levels of capacity and engagement with the empowerment agenda are high and those with less social capital where interest remains low, which constrains the ability to influence the planning and delivery service. Any disconnect between the Council’s aspirations, community appetite for increasing ownership of assets and what communities themselves feel able and prepared to commit to can result in community assets reverting back to Council. Accelerating asset transfer risks losing services and facilities and risks the ability to plan, connect and deliver strategic services. Over-engagement carries disengagement and engagement fatigue. Increased property costs can be a deterrent for organisations engaging and completing the CAT process. Lack of budget to undertake proactive maintenance is resulting in NAC buildings falling into disrepair detracting organisations from progressing to lease and or ownership of NAC assets. Ongoing commitment to community empowerment and locality partnerships from CPP. Six locality partnerships and alignment with HSCP locality arrangements. Leadership of the CPP Senior Officers’ Group. Enabling approach with community partners and support with third sector interface to build capacity and identify opportunities for growth and sustainability. Reviewed guidance and processes relating to community empowerment functions. Participatory budgeting approach local grants, commitment to PB with partners and leading practice in mainstreaming participatory approaches. External funding bid help for groups through regular meetings with third sector, funders and funding officer. Membership of The Consultation Institute. Investment from Community Asset Transfer Start Up Fund, prioritising additional staffing capacity to support CAT in TACT. A collaboration and shared resource approach across Connected Communities Teams will be taken to ensure the Service deliver on this priority. Careful monitoring of staffing capacity to ensure legislation is met. Standing item at Senior Manager Meetings to assess impact Progress discussions with key stakeholders re dependencies on the progress and impact of delays. 5 4 Status Risk Score Heat Map Change in Score Approach No change Treat Increasing 20 121
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Strategic Risk Action Plan 20-Feb-2025 Analysis of Effectiveness of Controls Further Action Required Target Date for Completion Officers Responsible Current Status: RAG Implementation of Community Empowerment Act: Existing controls remain effective and are kept under review. 19 September 2024: New Strategic CLD Plan 2024 – 2027 in final stages of development and continues to identify priorities and support available. 31-Mar-2025 Rhonda Leith 19 September 2024: Linking with National partners i.e. Scottish Government to ensure timely communication to any changes relating to national legislation and allow preparations to be in place. 31-Dec-2024 Rhonda Leith Staff capacity: Existing controls remain effective however forthcoming VER structure changes will result in a reduction of CLD professional staff and risks further pressures on staff to deliver effectively to key outcomes. 19 September 2024: Function review within the CLD team underway to assess capacities and impact following the service redesign. Focus will be on assigning resource to key priorities. 20 February 2025: Ongoing discussions being held with key stakeholders re capacity across Council services and impact on timescales. 31-Dec-2024 Rhonda Leith Duplication of effort: Clearly defined roles and lean processes are reviewed and maintained to avoid duplication of effort and minimise time and resource wastage. The team foster open communication channels with both staff and key stakeholders. 19 September 2024: The aim is to capture and address issues through the review of functions underway within the CLD team. 31-Dec-2024 Rhonda Leith Consultation: Existing controls remain effective. Existing controls remain effective and hybrid engagement models have been implemented post covid to encourage and provide greater access to participation. 19 September 2024: Cross Service support for consultation and engagement is being further developed with the promotion of existing tools and supports across all Council services to encourage ownership over service engagement. 20 February 2025: An extensive programme of budget engagement took place between 10 October and 25 November 2024 including surveys across six main themes as well as in person and online focus groups. The approach was designed to support our residents to contribute their views, make the surveys more accessible and avoid digital exclusion. This has resulted in 4,461 responses and almost 40 community conversations across the six budget themes, more detailed feedback on proposals and considerable engagement with community groups across North Ayrshire. The engagement has also enabled our residents to bring petitions on specific options to the Audit and Scrutiny Committee and Cabinet, demonstrating a high level of engagement with democracy within our communities 31-Mar-2025 Rhonda Leith 122
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Increased property costs and lack of investment in community assets. 19 September 2024: Matter escalated through a range of mechanisms including Health & Safety, PMI/Risk meetings and reporting systems as well as more frequent management on-site building visits to assess building condition and escalate accordingly. A strategic plan is in the early stages of development to address identified condition issues in buildings earmarked for potential Community Asset Transfer (CAT). Specific investment funds have been allocated to support this initiative. 20 February 2025: Strategic plan for use of CAT investment funds in place. ELT oversight continues of plan and spend. Horizon scanning for other potential investment opportunities carried out on an ongoing basis. 31-Mar 2025 Rhonda Leith 123
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Risk Code SRR2526_R08 Risk Title Property Asset Risk Latest Note Date 25-Feb-2025 Risk Owner Russell McCutcheon Risk Proximity Factors Consequences / Impact Existing Risk Control Measures Likelihood Impact The long-term impact of restricted budget availability for investment in the Council’s property assets means these assets are in declining condition and have greater long term investment needs. Systemic building safety issues have been evidenced by issues such as national high profile safety issues, and the presence of RAAC through the public sector property portfolio. These have highlighted the substantial increasing burden of property asset management. There have been a number of near misses or critical failures of aging heating plant and equipment which the council cannot afford to replace on a programmed basis. Inflationary pressures, and on-going volatility in the construction & related activities sphere, place further difficulties in the ability of restricted budgets to address all priorities. Maintenance issues and failure of building components are increasingly likely to result in disruption to service delivery. There is also an increasing risk of health and safety and statutory compliance obligations not being achieved. Property events requiring significant interventions leading to service disruption, closure of facilities, decant etc. are in increasing in frequency and often over-lapping (often coinciding with weather events). Property condition information is gathered and recorded within the Council’s electronic asset management system, providing a baseline to measure building element lifecycle replacement requirements across the corporate estate. The limited investment available is therefore targeted on priorities. Reactive maintenance, and statutory compliance are also undertaken corporately by PMI, by appropriately trained / experienced staff. There is an on-going Transformation programme workstream focusing on property rationalisation as a means of reducing the financial burden of the estate through reducing overall area occupied (aligned to carbon reductions). Post Incident reviews and lessons learned exercises with actions undertaken where feasible to do so. Risk based property reviews are underway to examine, on a property by property basis, where property risks have the potential to impact service delivery. The information gathered influences both investment plans and business continuity plans. This work is on-going in respect of the school estate and is being rolled-out to other services’ assets. An additional £0.5m has been allocated in the 25/26 budget to the Property Lifecycle Budget to address condition issues within the corporate estate. In addition, £0.5m has been allocated to undertake energy efficiency measures in the property estate and a joint Sustainability / PMI working group has been established to identify and progress relevant investment. This will be coordinated to ensure optimal benefit for both energy efficiency and property condition. Business Continuity Planning, taking cognisance of the risks posed by potential building unavailability is also being strengthened. 4 5 Status Risk Score Heat Map Change in Score Approach No Change Treat Stable 20 124
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Strategic Risk Action Plan Date Updated 25-Feb-2025 Analysis of Effectiveness of Controls Further Action Required Target Date for Completion Officers Responsible Current Status: RAG CC&M team within PMI managing reactive maintenance and statutory compliance. Team resources stretched; however, restricted budgets are principal risk. 13 September 2024: Team resources remain stretched, presently exacerbated by recent staff departure, recruitment exercise currently on-going. 21 February 2025: Although previous vacancies were successfully filled, further staff departure now requires recruitment process – continuing to stretch resources. Ongoing Russell McCutcheon Asset management team within PMI collecting asset condition information and leading prioritisation of lifecycle investment. Improved asset management system is being investigated; however, restricted budgets are principal risk. 13 September 2024: Work continues in relation to the new asset management system, including bench-marking and information sharing with other authorities. Ongoing Russell McCutcheon Property rationalisation programme Locality based property review work currently underway to increase scale and pace of implementation. 13 September 2024: The Irvine Property Accommodation programme received Cabinet approval in March 24 and is progressing to programme. 21 February 2025: The programme of accommodation moves flowing from the Irvine Property Review is well advanced and scoping has commenced for further review of the Council’s estate across all localities. Ongoing Russell McCutcheon Risk based property review process Requires up to date property information, including client information and cross service buy-in to be effective. 13 September 2024: The Education Estate has been reviewed in its entirety and quarterly meetings have been established to continue this work on a priority-basis. The approach has also been utilised in respect of the communities estate. 21 February 2025 In addition to the estate review meetings noted above, Business Continuity Planning, taking cognisance of the risks posed by potential building unavailability is also being strengthened. Ongoing Russell McCutcheon 125
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NORTH AYRSHIRE COUNCIL 29 May 2025 Audit and Scrutiny Committee Title: Internal Audit Annual Report 2024/25 Purpose: To provide the Committee with an annual report on the work of Internal Audit during 2024/25 and provide an opinion on the governance, risk management and internal control environment of the Council. Recommendation: The Committee is asked to note the content of the annual report and the opinion of the Senior Manager on the Council’s governance, risk management and internal control environment. 1. Executive Summary 1.1 The purpose of this report is to present the annual report on the internal audit activity during 2024/25, and to provide an independent opinion on the adequacy and effectiveness of the Council’s governance, risk management and internal control systems for the year ended 31 March 2025. 2. Background 2.1 The Public Sector Internal Audit Standards (PSIAS) require that the Chief Internal Auditor prepares an annual report on the activities of Internal Audit and that the report should contain a view on the adequacy of the Council’s governance, risk management and internal control frameworks. The annual report for 2024/25 is attached at Appendix 1 and outlines the role of Internal Audit, the performance of the section during the year and the key audit findings. It also contains the annual internal audit opinion. 2.2 The required annual report for financial year 2024/25, together with the statement on internal controls, is included in Appendix 1. 2.3 The internal audit plan for 2024/25 (approved by the Audit and Scrutiny Committee in March 2024 and updated in October 2024) has been substantially completed. Audit fieldwork remains in progress on seven assignments. Two audit assignments are at draft report stage, meaning the assurance opinion can be included in the overall annual audit opinion. 2.4 All audit findings during the year support and inform the objective opinion of the Senior Manager (Audit, Fraud, Safety, Risk & Insurance) on the adequacy of the Council’s Agenda Item 10 127
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governance, risk management and internal control environment. The assurance category given to each individual audit informs the overall level of assurance. 2.5 The annual internal audit opinion also contributes to the Annual Governance Statement which is published as part of the Council’s annual accounts and is included under separate cover to this Audit and Scrutiny Committee meeting for approval. 2.6 Based on the audit work carried out, the opinion of the Senior Manager (Audit, Fraud, Safety, Risk & Insurance) is that reasonable assurance can be placed on the adequacy and effectiveness of the Council’s systems of governance, risk management and internal control. 3. Proposals 3.1 It is proposed that the Committee notes the content of the annual report and the opinion of the Senior Manager on the Council’s governance, risk management and internal control environment. 4. Implications/Socio-economic Duty Financial 4.1 None. Human Resources 4.2 None. Legal 4.3 None. Equality/Socio-economic 4.4 None. Climate Change and Carbon 4.5 None. Key Priorities 4.6 The work of Internal Audit helps to support the efficient delivery of the strategic priorities within Our Council Plan 2023-2028. Community Wealth Building 4.7 None. 128
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5. Consultation 5.1 Council Services are consulted on the findings of Internal Audit throughout the year. No specific consultations have taken place in relation to this annual report. Mark Boyd Head of Service (Finance) For further information please contact John McCallum, Senior Manager (Audit, Fraud, Safety, Risk & Insurance), on 01294 324607. Background Papers None. 129
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Appendix 1 INTERNAL AUDIT ANNUAL REPORT 2024/25 1. Introduction 1.1. The purpose of this report is to summarise the Internal Audit activity for 2024/25 and provide an opinion on the overall adequacy and effectiveness of the Council’s governance, risk management and internal control frameworks. 1.2. The Council’s Section 95 Officer has overall responsibility for Internal Audit in North Ayrshire Council. The Senior Manager (Audit, Fraud, Safety, Risk & Insurance) reports to the Section 95 Officer, with the right of access to the Chief Executive and the Chair of the Audit and Scrutiny Committee on any audit matter. These rights of access help ensure the organisational independence of Internal Audit. 1.3. The presence of an effective internal audit function contributes towards, but is not a substitute for, effective control. It is the responsibility of management to have adequate controls in place and to ensure these controls are operating effectively. A sound control system will help safeguard assets, ensure records are reliable, promote operational efficiency and ensure adherence to the Council’s policies and procedures. Such systems of internal control can provide only reasonable and not absolute assurance against loss. 2. Reporting requirements of the Public Sector Internal Audit Standards (PSIAS) 2.1. During 2024/25 Internal Audit operated in accordance with the PSIAS requirements which are an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations. The PSIAS helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. 2.2. Internal Audit operates within the Internal Audit Charter, most recently approved by the Audit and Scrutiny Committee in March 2025. 2.3. The PSIAS places a number of reporting obligations on the Chief Internal Auditor in respect of the annual report. These obligations are summarised below: PSIAS Ref Requirement Evidence 1110 The chief audit executive must confirm to the board, at least annually, the organisational independence of the internal audit activity. The Senior Manager reports directly to the Audit and Scrutiny Committee, and unfettered access is available to the Chief Executive as required. 1320 The results of the quality and assurance programme and progress against any improvement plans must be reported in the annual report. The results of the external quality assessment, carried out in 2022, were reported to the Audit and Scrutiny Committee in September 2022. All actions are complete. 130
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PSIAS Ref Requirement Evidence 2450 The chief audit executive must deliver an annual internal audit opinion and report that can be used by the organisation to inform its governance statement. This report to Audit and Scrutiny Committee provides the annual report and statement of assurance on internal controls. 2450 The annual internal audit opinion must conclude on the overall adequacy and effectiveness of the organisation’s framework of governance, risk management and control. This report to Audit and Scrutiny Committee provides the annual statement of assurance at Annex B. 2450 The annual report must also include a statement on conformance with the Public Sector Internal Audit Standards and the results of the quality assurance and improvement programme. This report to Audit and Scrutiny Committee provides a statement on the conformance with the PSIAS at Section 5 below. 3. Planned and Actual Activity during 2024/25 3.1. The internal audit plan was approved by the Audit and Scrutiny Committee in March 2024 with a mid-year update to the plan approved in October 2024. Productive time is allocated in the plan to the delivery of audit assignments with a balance of time retained within the service for non-productive activities which includes management and strategy, attendance at meetings, administration and staff training and development. 3.2. The mid-year revised plan included 17 assignments where an audit output was anticipated with a further 3 unplanned investigations undertaken during the year as a result of issues arising which required audit input. 10 of these assignments have been completed, 2 are at draft report stage, 7 are currently work in progress and one has not yet started. 3.3. Of the 7 work in progress audits, 3 relate to the HSCP / North Ayrshire Integrated Joint Board (NAIJB), 2 relate the Corporate Services directorate and one relates to the Place directorate. The fieldwork for these audits has commenced and is at various stages of completion. 3.4. The audit that has not yet commenced relates to Income Management and although this was intended to be undertaken during 2024/25 it was agreed with service management, due to year-end priorities, to delay this for a short period of time. This will now commence during Q1 of 2025/26. The assurance levels and associated actions arising from this and the 7 work in progress assignments are therefore yet to be confirmed. The results of these assignments will be reported to a future meeting of the Audit and Scrutiny Committee. 3.5. In line with the Council’s defalcation procedures, all instances of suspected fraud and irregularity should be reported to Internal Audit. These are investigated by the specialist Corporate Fraud Team and are not included within this annual report. 131
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3.6. All audit reports finalised during 2024/25 were reported to meetings of the Audit and Scrutiny Committee. A summary of outputs achieved are included in Annex A. 3.7. The outcomes from the audit work during the year have generally been positive, with mostly substantial and reasonable assurance opinions. Five audit reports have been finalised during the year where elements of the scope have resulted in a limited assurance opinion. These are as follows: • Education Leavers and Movers – This audit reviewed the arrangements for managing staff who move post internally or leave the Council completely. A number of findings were identified resulting in limited assurance being obtained. These included a lack of formal notification procedures, forms not being completed in full and/or on time and a lack of routine reviews by school management to identify staff who had left or moved. A number of generic accounts and higher-than-expected levels of powerful account access were also identified. A number of actions were agreed to address the issues identified and these were implemented at pace following the audit. • Missing Laptops – A review of the arrangements surrounding the delivery and deployment of devices to Lockhart, in August 2021, was undertaken following the reporting of lost devices from Education. It was identified that standard receipting and deployment processes were not adhered to at the time and supporting documentation is no longer available due to staff leaving and a change in the IT case management system. As a result some devices are unaccounted for. Actions have been identified and implemented to improve the record keeping arrangements within Education and ICT and a full review of the school inventory has been carried out to improve the completeness of the records held. • Accounts Payable Transaction Testing – There was a notable uplift in the volume and value of duplicate payments identified during the 2024/25 accounts payable audit, including one significant duplicate. Instances of P-Card transactions being split into smaller portions in order to bypass approval limit thresholds were also identified, resulting in a limited level of assurance being obtained. Steps have been taken since the completion of the audit to recover the funds relating to the duplicate payments. • Community Associations – An audit of the arrangements for ensuring that community associations (CA) were complying with the terms of their SLAs was undertaken and, while these were reasonable for the majority of CAs reviewed, key control failures were noted in relation to one CA resulting in limited assurance being obtained. It was found that there was no formal process for monitoring compliance with SLAs and evidence of compliance was not always retained by the Council. Escalation processes for non-compliance were also required to be put in place. Actions were agreed to improve the process going forward and an enhanced monitoring regime has been implemented since the completion of the audit. • HSCP Online Bank Account – Following the notification of a potential breach of financial regulations within the HSCP, an audit investigation reviewed the circumstances around the set up and management of an online bank account within the Corporate Parenting team, which was outwith the Council’s corporate bank accounts. Whilst there was no suggestion of misappropriation of funds a number of findings were identified. The audit found that purchases had been made from the account that did not adhere to the Council’s procurement processes, the records held for the bank account were incomplete and staff 132
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responsible for the management of the account had not completed financial training. Actions have since been taken to close the account and to confirm that no other accounts of this nature exist. The HSCP have also taken steps to ensure that relevant staff are trained in financial management. 3.8. It is important to also highlight some of the most positive outcomes arising from the audit work concluded during the year. This includes reviews of Pupil Equity Funding and Transformation and Change Management, both of which are key areas of interest for the Council, and both concluded with substantial audit opinions. This provides evidence that the risks within these areas are being effectively managed in line with best practice. 3.9. These findings, together with those from other audits carried out and the individual assurance levels, contribute to the annual internal audit opinion in Annex B of this report. 4. Audit Resources 4.1. The Internal Audit section is directly managed by the Team Manager (Internal Audit), who reports to the Senior Manager (Audit, Fraud, Safety, Risk & Insurance). The Senior Manager is responsible for Internal Audit, as well as Corporate Fraud, Risk and Insurance and Corporate Health and Safety. 4.2. As well as the Team Manager, the Internal Audit team consisted of two part-time Internal Auditors, one of which was recruited during the year, as well as a part- time Computer Auditor. The Senior Manager role was vacant for a portion of the year until it was filled in August 2024. 4.3. All staff within the section hold a relevant qualification, either through an institute which is part of the Consultative Committee of Accountancy Bodies (CCAB) or the Institute of Internal Auditors (IIA). 4.4. The Internal Audit Charter requires the Senior Manager to report to the Section 95 Officer and the Audit and Scrutiny Committee if resources available fall below an acceptable level for the audit work required. No material instances of resource limitation have occurred during 2024/25. 5. Performance 5.1. During 2024/25, Internal Audit provided regular updates to the Audit and Scrutiny Committee on the activities of the service. Elected Members had the opportunity to discuss all Internal Audit reports and question either the Senior Manager or relevant officers from Council services. Elected Member training was provided to the Committee in May 2022, with individual training made available to new members joining the Committee during the year. 5.2. The Council’s performance management system, Pentana, is used to follow-up on audit action points. Officers with responsibility for implementing audit actions are required to update the system and updates are provided to the Audit and Scrutiny Committee on a quarterly basis. Where actions are overdue, officers are required to attend the Committee to update Elected Members on plans to ensure that actions are implemented. 133
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5.3. The Senior Manager is required to confirm annually internal audit’s compliance with the Public Sector Internal Audit Standards (PSIAS). A significant achievement during 2022/23 was the successful completion of the External Quality Assessment. Under the terms of the PSIAS, each organisation’s Internal Audit team is required to undertake an External Quality Assessment (EQA) at least once in each five-year period. This helps to ensure compliance with the standards. 5.4. A peer to peer review network of the Scottish Local Authorities Chief Internal Auditors Group (SLACIAG) is in place. The review of the Council's Internal Audit team was completed by West Dunbartonshire Council and was reported to the Audit and Scrutiny Committee in September 2022. The review assessed the compliance of the Council's Internal Audit team with the 14 sections of the PSIAS and noted that the team fully conforms with 13 of the standards and generally conforms with the remaining one. Overall the assessor was able to provide substantial assurance that the Council's Internal Audit team complies with the requirements of the PSIAS. There were four minor routine recommendations for improvement to further improve compliance, and these have all been completed. In summary, the Internal Audit service continues to conform with the PSIAS. 5.5. Internal Audit has a strong working relationship with all Council services and is frequently asked for audit advice on an ad-hoc basis. The volume of these requests is outwith the control of Internal Audit however it is important that Internal Audit responds to these requests when asked, as it ensures advice is provided at the right time to ensure that organisational value is maximised. In 2024/25, there were 19 requests for service advice. Added to this, Internal Audit is included on the project board of a number of corporate working groups, and these are listed in Annex A. These assignments are for provision of advice and guidance and therefore do not result in an assurance report being brought to the Committee. 6. Other Responsibilities 6.1. The Senior Manager is also the Chief Internal Auditor for the NAIJB. In the interests of information sharing, the results of the NAIJB audit work are shared with the Audit and Scrutiny Committee. 7. Opinion 7.1. There is a formal requirement for the Chief Internal Auditor to prepare an assurance statement on the adequacy of internal control systems within the Council. The internal audit annual statement on the adequacy of internal controls is included in Annex B. 8. Conclusion 8.1. The 2024/25 internal audit plan has been substantially completed. There are no limitations of scope to the issued audit opinion. 134
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Summary of Internal Audit Work 2024/25 Annex A Type Audit Opinion Reported to A&S Committee Actions Arising Priority 1 Priority 2 Priority 3 Total COMPLETED WORK Assurance Code of Corporate Governance * Substantial 29 August 2024 0 0 0 0 Assurance Supply Teachers * Substantial 29 August 2024 0 0 0 0 Assurance Payroll Transaction Testing - (23/24) * Reasonable 29 August 2024 0 0 0 0 Assurance Leavers & Movers in Education * Limited 31 October 2024 3 6 0 9 Assurance Property Asset Management * Reasonable 31 October 2024 1 2 0 3 Assurance Housing Rent Arrears * Substantial 31 October 2024 0 1 0 1 Assurance Community Associations Limited 31 October 2024 3 1 0 4 Investigation HSCP - Online Bank Account Limited 31 October 2024 4 1 0 5 Assurance Supported Complex Needs Accommodation * Reasonable 23 January 2025 3 2 0 5 Assurance Regeneration – Governance of Funding * Substantial 23 January 2025 0 0 0 0 Assurance ICT Environmental and Physical Controls Reasonable 23 January 2025 1 1 0 2 Investigation Missing Laptops Limited 23 January 2025 2 1 0 3 Assurance Pupil Equity Funding Substantial 13 March 2025 0 0 0 0 Assurance iPay Impact * Reasonable 13 March 2025 2 2 0 4 Assurance Accounts Payable Transaction Testing Limited 13 March 2025 3 8 0 11 Assurance Aids and Adaptations Reasonable 29 May 2025 0 5 0 5 Assurance Transformation and Change Management Substantial 29 May 2025 0 0 0 0 Assurance Community Equipment Store Reasonable 29 May 2025 2 0 0 2 Assurance Payroll Transaction Testing - (24/25) Reasonable 29 May 2025 0 4 0 4 Annual Accounts Community Councils n/a n/a n/a n/a n/a n/a Annual Accounts Tenants and Residents Associations n/a n/a n/a n/a n/a n/a 135
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Summary of Internal Audit Work 2024/25 Annex A REPORTING PHASE** Investigation Housing Performance Indicators Reasonable/Limited tbc tbc tbc tbc tbc Assurance Locality Planning Reasonable tbc tbc tbc tbc tbc WORK IN PROGRESS Type Audit Opinion Reported to A&S Committee Actions Arising Priority 1 Priority 2 Priority 3 Total Assurance ICT Access Controls tbc tbc tbc tbc tbc tbc Assurance ICT Information Security Management tbc tbc tbc tbc tbc tbc Assurance Child Protection tbc tbc tbc tbc tbc tbc Assurance Procurement tbc tbc tbc tbc tbc tbc Assurance IJB - Transformation tbc tbc tbc tbc tbc tbc Assurance Ayrshire Growth Deal tbc tbc tbc tbc tbc tbc Assurance Homelessness tbc tbc tbc tbc tbc tbc NOT STARTED Assurance Income Management tbc tbc tbc tbc tbc tbc OTHER/ONGOING Consultancy O365/Information and Collaboration Project Board Not Applicable: These assignments are for the provision of advice and guidance and therefore do not result in an assurance report being brought to the Committee. Consultancy Artificial Intelligence Working Group Consultancy CRM Project Board Consultancy Corporate Telephony Project Board Consultancy Education – A365 Project Board Consultancy Connected Communities – Grant Funds Procedure Review Small Advisory 19 various requests * 2023/24 audit but not sufficiently concluded at the time of the 2023/24 annual report, therefore opinion included in 2024/25. ** Audits not yet finalised but sufficiently in draft to conclude on the level of assurance. 136
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Annex B Internal Audit Annual Statement on the Adequacy of Internal Controls To the Members and Chief Executive of North Ayrshire Council As Chief Internal Auditor for North Ayrshire Council, I am pleased to present my annual statement on the overall adequacy and effectiveness of the framework of governance, risk management and control of the Council for the year ended 31 March 2025. Respective responsibilities of management and internal auditors in relation to governance, risk management and control It is the responsibility of the Council’s senior management to determine, establish and maintain sound systems of governance, risk management and control to ensure that the organisation’s resources are properly applied in a manner and on the activities intended and that these arrangements are sufficient to address the risks facing their services. This includes responsibility for the prevention and detection of fraud. Management is also charged with monitoring the continuing effectiveness of these arrangements and taking action as appropriate. It is the responsibility of the Chief Internal Auditor to provide an annual assessment of the overall adequacy and effectiveness of the Council’s framework of governance, risk management and control. Sound internal controls 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; • safeguard assets; • ensure the relevance, reliability and integrity of information, so ensuring as far as possible the completeness and accuracy of records; and • ensure compliance with statutory requirements. 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. The work of internal audit Internal audit 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 risk management, control and governance processes. During 2024/25 the Internal Audit section operated in accordance with United Kingdom Public Sector Internal Audit Standards (PSIAS) which came into force with effect from 1 April 2013 (updated in March 2017). The requirements under PSIAS represent best practice and are mandatory. 137
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Annex B The Chief Internal Auditor prepares an annual internal audit plan which outlines the programme of work to be undertaken. The plan is developed utilising a risk-based methodology and takes into account the requirement placed upon the Chief Internal Auditor to deliver an annual internal audit opinion. The plan needs to be flexible to reflect the changing risks and priorities of the organisation. The plan, and any material changes to the plan during the year, are approved by the Audit and Scrutiny Committee. All internal audit reports are brought to the attention of management, including system weaknesses and/or non-compliance with expected controls, together with agreed action plans. It is management’s responsibility to ensure that due consideration is given to internal audit reports and that appropriate action is taken on audit recommendations. This includes management taking remedial action where appropriate or accepting that there may be a level of risk exposure if the weaknesses identified are not addressed for operational reasons. Internal Audit 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. Matters arising from internal audit work are also reported to the Chief Executive, Head of Finance (as Section 95 Officer), Members of the Audit and Scrutiny Committee, and external audit. Summary of Internal Audit Activity 2024/25 A total of 19 internal audit reports have been issued during 2024/25. 6 audit opinions give substantial assurance, 8 reasonable assurance and 5 limited assurance. Two reports are in draft and are anticipated to have either a reasonable or reasonable / limited assurance opinion. A diverse range of audit areas have been covered during the year. As well as planned assignments, Internal Audit also offers advice and guidance on the Council’s control environment as and when required and will carry out non-fraud investigations which are brought to our attention. A range of recommendations have been raised in the areas covered by the 2024/25 internal audit plan. Many expected key controls have been in place and operating effectively, however Internal Audit has also identified scope for improvement in some systems. All 58 action points raised in the year have been accepted by management and will result in continued improvement of the Council’s governance, risk management and control environment. Basis of Opinion The 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 audit work undertaken by Internal Audit in previous years and knowledge of any significant audit findings after the year end; • the assessment of risk completed during the preparation of the annual audit plan; • reports issued by the Council’s external auditors and other review and inspection agencies; • knowledge of the Council’s governance, risk management and performance monitoring arrangements; and 138
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Annex B • any other items brought to the attention of internal audit by whatever means which may warrant further investigation. Opinion On the above basis, Internal Audit can provide reasonable assurance over the framework of governance, risk management and control and that adequate controls were in place and were operating throughout the Council in 2024/25. John McCallum CPFA Senior Manager (Audit, Fraud, Safety, Risk & Insurance) 29 May 2025 139
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PUBLIC INFORMATION PUBLIC INFORMATION NORTH AYRSHIRE COUNCIL 29 May 2025 Audit and Scrutiny Committee Title: Corporate Fraud Team Annual Report 2024/25 Purpose: To provide the Audit and Scrutiny Committee with an update report on the work of the Corporate Fraud Team during 2024/25. Recommendation: That the Committee notes the work carried out by the Corporate Fraud Team. 1. Executive Summary 1.1 The Corporate Fraud Team provides the Council with the capacity to investigate fraud both within and against the organisation. 1.2 Committee receives bi-annual updates on the work of the team. A mid-year update for 2024/25 was provided in November 2024 and this report provides an overview of the key activities and outcomes for the full year. 2. Background Investigation Work 2.1 Referrals for investigation have been made to the team from a number of different sources, including Revenues and Benefits and Housing, members of the public and other agencies and local authorities. The publicity used by the team, including posters and leaflets, and contact information on the Council website, continues to be successful in generating a stream of referrals. 2.2 Investigations have been carried out across a range of areas including employee- related matters as well as Council Tax, Discretionary Housing Payments, Scottish Welfare Fund, Blue Badges and Housing tenancy issues. Although responsibility for investigating Housing Benefit fraud now lies with the DWP Single Fraud Investigation Service (SFIS), issues may be identified by the Corporate Fraud Team which can result in changes being made to benefits in payment. Formal joint working arrangements are in place with the DWP for cases where there are suspected frauds relating to both DWP benefits and Council Tax Reduction. 2.3 The team investigates all tenancy abandonments which are referred by Housing. While Housing focus on recovering the tenancy, the Corporate Fraud Team can add Agenda Item 11 141
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PUBLIC INFORMATION PUBLIC INFORMATION value by locating the missing tenant, which can often lead to changes to benefits or discounts in payment elsewhere, as well as enabling Housing to recover rent arrears that would not have otherwise been recovered, and the costs associated with house clearances and cleaning. 2.4 Employee-related investigations are the subject of a separate report to the appropriate Service and the findings are also reported to the Audit and Scrutiny Committee as each investigation is finalised. Outcomes 2024/25 2.5 The team received 331 referrals for investigation during 2024/25 (2023/24: 398 referrals). All referrals made to the team are investigated although many can subsequently prove unfounded. 2.6 359 cases were closed during 2024/25 (2023/24: 385 cases). These can be categorised as follows: Outcome Number of Cases Closed with no issues identified 170 Referred to another agency (including SFIS) or Council Service for investigation 76 Closed with results achieved (fraud, error or other recovery/action) 113 TOTAL 359 2.7 Fraud and error totalling £0.057m were identified and are categorised in the table below: Category Value (£000) Housing Benefit 9 Council Tax (including CTR, Single Person Discount and other recoveries) 31 Housing Other (including arrears now recoverable) 4 Payments to Employees (e.g. salary, time, travel etc.) 13 TOTAL 57 2.8 In addition to the financial outcomes noted above, other outcomes/benefits were noted as follows: • 58 tenancies were recovered by Housing with some assistance from the Corporate Fraud Team. • 63 referrals were made to the Single Fraud Investigation Service. • 19 referrals were made to other services, local authorities or agencies. • In respect of blue badge cases investigated, 15 cases concluded with a warning letter to the badge holder (2023/24: 2 warning letters), 13 warning letters were issued to third parties (2023/24: 2 warning letters), and 7 expired badges were recovered (2023/24: 1 badge recovery). • 9 investigations resulted in updates and corrections to records. • 4 internal investigation reports have been taken forward with recommended actions for control improvements. 142
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PUBLIC INFORMATION PUBLIC INFORMATION International Fraud Awareness Week 2.9 International Fraud Awareness Week took place from 17 – 23 November 2024. IFAW was promoted throughout North Ayrshire Council by social media campaign. National Fraud Initiative (NFI) 2.10 The National Fraud Initiative (NFI) is a long-established exercise which takes place across the UK every two years and involves the matching of relevant datasets across public bodies to identify possible fraud or error for further investigation. 2.11 The latest data sets were submitted to the Cabinet Office in October 2024, with initial matches released in December 2024. Further releases have occurred since December and more are expected throughout 2025. This information has, and will continue to, be disseminated to the appropriate teams across the council for investigation as matches are released. 2.12 Data was uploaded in support of the ReCheck exercise (an additional data matching service which compliments the NFI) in January, with matches released back to the Council in January 2025 and again in March. Compliance with the Code of Practice 2.13 CIPFA published their Code of Practice on Managing the Risk of Fraud and Corruption in 2014. The Code covers five key principles which are to: • Acknowledge the responsibility of the governing body for countering fraud and corruption; • Identify the fraud and corruption risks; • Develop an appropriate counter fraud and corruption strategy; • Provide resources to implement the strategy; and • Take action in response to fraud and corruption. 2.14 Each principle has specific steps which are required to be met in order to comply with the Code. A self-assessment against the Code, its principles, and its specific steps has been carried out. Having considered these principles, it is concluded that North Ayrshire Council has adopted a response that is appropriate for its fraud and corruption risks and commits to maintain its vigilance to tackle fraud. 3. Proposals 3.1 It is proposed that the Committee notes the work carried out by the Corporate Fraud Team. 143
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PUBLIC INFORMATION PUBLIC INFORMATION 4. Implications/Socio-economic Duty Financial 4.1 None. Human Resources 4.2 None. Legal 4.3 None. Equality/Socio-economic 4.4 None. Climate Change and Carbon 4.5 None. Key Priorities 4.6 The work of the Corporate Fraud Team helps to support the efficient delivery of the strategic priorities within Our Council Plan 2023-2028. Community Wealth Building 4.7 None. 5. Consultation 5.1 No consultation has been required in the preparation of this report. Mark Boyd Head of Service (Finance) For further information please contact John McCallum, Senior Manager (Audit, Fraud, Safety, Risk & Insurance), on 01294 324607. Background Papers None 144
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NORTH AYRSHIRE COUNCIL 29 May 2025 Audit and Scrutiny Committee Title: Internal Audit and Corporate Fraud Action Plans: Quarter 4 update Purpose: To advise the Audit and Scrutiny Committee on the progress made by Council Services in implementing the agreed actions from Internal Audit and Corporate Fraud reports as at 31 March 2025. Recommendation: That the Committee notes the current position with the implementation of Internal Audit and Corporate Fraud actions. 1. Executive Summary 1.1 The CIPFA document 'Audit Committee Principles in Local Authorities in Scotland' highlights that Audit Committees should monitor and review the progress made in implementing audit recommendations. 1.2 Service managers are responsible for ensuring that agreed actions arising from Internal Audit and Corporate Fraud reviews are implemented. This provides assurance that identified control weaknesses have been addressed and are being managed effectively. 1.3 All actions are monitored on the Pentana system and service managers are responsible for updating Pentana as they progress each action. This enables Internal Audit to monitor progress on a 'real-time' basis and address any delays in implementation. 1.4 This report details the position as at 31 March 2025. 2. Background 2.1 The last report to the Audit and Scrutiny Committee on 13 March 2025 highlighted that there were 12 outstanding actions at the end of December 2024: Three actions were overdue and the remaining 9 actions had not yet passed their due date. 2.2 In addition to these 12 carried forward actions, there have been 15 new actions agreed, giving a total of 27 actions for review. 2.3 Services have completed 23 actions since the last report. All Council Services are required to retain evidence of work carried out in completing their actions and Internal Audit carries out 'spot-checks' on a sample of completed actions on an ongoing basis. Agenda Item 12 145
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2.4 The remaining 4 actions were not due for completion until after that 31 March 2025. 3. Proposals 3.1 It is proposed that the Committee notes the current position with the implementation of Internal Audit and Corporate Fraud actions. 4. Implications/Socio-economic Duty Financial 4.1 None. Human Resources 4.2 None. Legal 4.3 None. Equality/Socio-economic 4.4 None. Climate Change and Carbon 4.5 None. Key Priorities 4.6 The effective implementation of agreed Internal Audit and Corporate Fraud actions helps to support the efficient delivery of the strategic priorities within the Council Plan 2023-2028. Community Wealth Building 4.7 None. 5. Consultation 5.1 Council Services are consulted during the completion of each Internal Audit and Corporate Fraud review and have also provided updates on progress made in implementing action points. 146
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Mark Boyd Head of Service (Finance) For further information please contact John McCallum, Senior Manager (Audit, Fraud, Safety, Risk & Insurance), on 01294 324607. Background Papers None. 147
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PUBLIC INFORMATION PUBLIC INFORMATION NORTH AYRSHIRE COUNCIL 29 May 2025 Audit and Scrutiny Committee Title: Internal Audit Reports issued Purpose: To inform the Committee of the findings of Internal Audit work completed since March 2025. Recommendation: That the Committee considers the outcomes from the Internal Audit work completed. 1. Executive Summary 1.1 The Council's local Code of Corporate Governance requires effective arrangements to be put in place for the objective review of risk management and internal control. Internal Audit is an important element in this framework as it reviews internal controls and offers Elected Members and officers an objective and independent appraisal of how effectively resources are being managed. 1.2 The remit of the Audit and Scrutiny Committee includes the monitoring of Internal Audit activity. The submission of regular reports assists the Committee in fulfilling this remit. 2. Background 2.1 This report provides information on Internal Audit work completed since March 2025. Internal control reviews have been completed in respect of the areas detailed in Appendix A to this report. The aim of these reviews is to provide assurance that the internal control framework within the areas examined is appropriate and operating effectively. 2.2 The findings from each audit assignment have been notified in writing to the Chief Executive, the Section 95 Officer and the relevant Executive Director and Head of Service on the completion of each assignment. Where appropriate, this has included an action plan with recommendations for improving internal control. Appendix A includes the report and action plan from each audit. 2.3 The findings from 4 separate audit assignments are detailed at Appendix A to this report and the levels of assurance for each are noted in the table below: Audit Title Assurance Level Aids and Adaptations Reasonable Transformation and Change Management Substantial Community Equipment Store Reasonable Payroll Transaction Testing Reasonable Agenda Item 13 149
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PUBLIC INFORMATION PUBLIC INFORMATION 3. Proposals 3.1 It is proposed that the Committee notes the outcomes from the Internal Audit work completed since March 2025. 4. Implications/Socio-economic Duty Financial 4.1 None. Human Resources 4.2 None. Legal 4.3 None. Equality/Socio-economic 4.4 None. Climate Change and Carbon 4.5 None. Key Priorities 4.6 The work of Internal Audit helps to support the efficient delivery of the strategic priorities within Our Council Plan 2023-2028. Community Wealth Building 4.7 None. 5. Consultation 5.1 The relevant Services are consulted on Internal Audit findings during each audit assignment. Mark Boyd Head of Service (Finance) For further information please contact John McCallum, Senior Manager (Audit, Fraud, Safety, Risk & Insurance), on 01294 324607. Background Papers None. 150
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PUBLIC INFORMATION Appendix A PUBLIC INFORMATION INTERNAL AUDIT REPORT AIDS AND ADAPTATIONS Assurance Level: Reasonable Version: Final Date: 31/03/2025 Author: Seun Adebanjo File Ref: 2025-PA-005 Classification: Public 151
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PUBLIC INFORMATION PUBLIC INFORMATION AIDS AND ADAPTATIONS 1 Background 1.1 Through the Health and Social Care Partnership (HSCP), the Council assists adults living with illness, disability or frailty to maintain their independence, by offering equipment and adaptations which allow them to continue living in their own homes. 1.2 On receipt of a referral, screening and triage will be carried out and if a need is identified, the referral will be allocated to the appropriate team. An Occupational Therapist (OT) will assess the service user and complete an OT specialist request form via the CareFirst system detailing the aids or adaptations required. A senior OT will approve the OT specialist request forms. 1.3 Jobs relating to Council tenants will either be carried out by Building Services or an external supplier. If the job is allocated to Building Services, a job is raised on the Building Services URM system. 1.4 Owner occupiers and private tenants can apply for financial assistance for aids and adaptations. Grants for Improvement/Repair are given by Local Authorities under a framework set out in the Housing (Scotland) Act 2006. This process requires the applicant to submit 3 quotes to the Council, which will be checked to ensure that the proposal meets their needs. Approval to progress the application will be granted by a Senior OT. 2 Objectives and Scope 2.1 The main objective of this audit was to review the controls in relation to aids and adaptations within the Health and Social Care Partnership by checking the implementation status of prior audit recommendations and to ensure that: • Detailed procedures exist for the aids and adaptations process incorporating changes to operations or legislation and its impact on aids and adaptations activities. • Adequate controls are in place for assessing and awarding aids and adaptations for Council tenants as well as ensuring that work and payments are properly approved, and follow-ups are carried out on a timely basis. • Adequate controls are in place for the grant application process for homeowners and private tenants as well as ensuring that; all paperwork is completed and retained, work and payments are properly approved, and follow- ups are carried out on a timely basis. • Reconciliations are undertaken to ensure that budget monitoring information is accurate and up to date. 2.2 The period covered by the audit is 1st April 2021 to 30th November 2024 3 Findings Aids and Adaptations Process for Council Tenants 3.1 The auditor reviewed the most current standard operating procedures (SOPs) for Council tenants and observed that the procedures are still a work-in-progress, as some of the documents were described as draft and did not adequately incorporate all 152
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PUBLIC INFORMATION PUBLIC INFORMATION of the relevant activities of the Council. The SOPs did not include the following to aid better understanding of the aids and adaptations process for Council tenants: • Brief description of Council tenants’ aids and adaptations activities. • Brief description of the regulations guiding aids and adaptations including Annual Return Charter (ARCs). • Brief descriptions of stakeholders’ activities e.g. Building Services, External Contractors etc. • Jobs categorisation and allocation process between Building Services and external suppliers/contractors. • No access guidelines, including mitigations to minimise additional charges. • Follow-up process, timelines, and escalation process. • Allowable variations and justification process. • Periodic reporting, timescales and purpose of each report. (action a) 3.2 The admin team currently update the budget monitoring spreadsheet, an operational access database and the CareFirst system at each stage of this process for all Council tenant jobs. All serve a different purpose. This is very time consuming for staff and increases the risk of keying errors being made. In addition, the access database is not supported by IT Services and is currently unprotected. (action b) 3.3 A new processing system (Eclipse) is being developed to replace the existing applications such as CareFirst, which is yet to be finalised, and is expected to go live by Mid-2025. 3.4 We reviewed the number of jobs completed during a three-month period and identified instances where the final invoice amount was higher than the agreed amount for the jobs, as keyed into the Building Services URM system. On further examination of the cases identified, we found that no further approval had been obtained from a senior OT, or Service Level Agreement (SLA) put in place between HSCP and Building Services, to support the additional charges. (action c) 3.5 In one of the jobs examined, we observed that the expected date of completion was surpassed by 50 days between the specialist request form being completed and the job being completed. Reasons for the delay were not documented in the Work-In- Progress (WIP) report as part of follow-up exercise. 3.6 We observed that some aids and adaptations jobs received and scoped between June and November 2024 amounting to £190,003 are still classified as WIP as of December 2024. The reason for the long wait was not indicated in the WIP report. Further engagement with Building Services by the auditor revealed that some of the jobs have been completed but were still classified as WIP. (action d) Aids and Adaptations Process for Owner Occupiers/Private Tenants 3.7 The auditor reviewed the grants budget monitoring spreadsheet for 2024-25 which contained 245 referrals for grant applications and there were 125 forms with applicants that have not progressed to the next stage. 22% of the 125 forms had been carried over from previous years and had been pending between 2021 and 2023. We noticed from the review of the 125 grant application forms that 29 application forms had comments alongside them explaining the status, whereas the other 96 forms did not. (action e) 153
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PUBLIC INFORMATION PUBLIC INFORMATION 3.8 The procedures and guidelines for monitoring applications did not include a guide for chasing up outstanding paperwork, setting and tracking of timelines for the closure of pending referrals, or the rationale for closing longstanding applications, e.g. those over 2 years old. The monitoring of applications procedure has been updated at the suggestion of the auditor during the audit. 4 Internal Audit Opinion 4.1 Overall, reasonable assurance was obtained with regard to the aids and adaptations process. An area of concern is the delay in a follow-up being carried out and the lack of evidence that a follow-up has been carried out. Definitions of Assurance Levels: Substantial A sound system of governance, risk management and control exist, with internal controls operating effectively and being consistently applied to support the achievement of objectives in the area audited. Reasonable There is a generally sound system of governance, risk management and control in place. Some issues, non-compliance or scope for improvement were identified which may put at risk the achievement of objectives in the area audited. Limited Significant gaps, weaknesses or non-compliance were identified. Improvement is required to the system of governance, risk management and control to effectively manage risks to the achievement of objectives in the area audited. None Immediate action is required to address fundamental gaps, weaknesses or non-compliance identified. The system of governance, risk management and control is inadequate to effectively manage risks to the achievement of objectives in the area audited. NB The level of assurance given is at the discretion of Internal Audit. 154
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PUBLIC INFORMATION PUBLIC INFORMATION KEY FINDINGS AND ACTION PLAN AIDS AND ADAPTATIONS Action a Finding We have reviewed the most current standard operating procedures (SOPs) for Council tenants and observed that the procedures are still work-in-progress, as some of the documents were described as draft and did not adequately incorporate all of the relevant activities of the Council. Action Description The SOPs should be updated to include the for better understanding of the activities of aids and adaptations. For example, these should be updated to include: • Detailed procedures exist for the aids and adaptations process incorporating changes to operations or legislation and its impact on aids and adaptations activities. • Adequate controls are in place for assessing and awarding aids and adaptations for Council tenants as well as ensuring that work and payments are properly approved, and follow-ups are carried out on a timely basis. • Adequate controls are in place for the grant application process for homeowners and private tenants as well as ensuring that; all paperwork is completed and retained, work and payments are properly approved, and follow-ups are carried out on a timely basis. • Reconciliations are undertaken to ensure that budget monitoring information is accurate and up to date. Risk Inconsistent approach by staff, possible key tasks not being carried out and lack of business continuity if staff familiar with the process are not available. Priority (1, 2, 3) 2 Paragraph Reference 3.1 Managed by Sharon Hackney, AHP Senior Manager and Professional Lead Assigned to Beth Griffin, Team Manager OT Due Date 30/04/2025 Management Comment SOPs being updated to include requested action information. Completion due by 30/04/2025. SOP cover note/introduction developed to include aids and adaptations activities, descriptions of regulations and legislation guiding aids and adapts. ARC info and brief description of stakeholder activities included in cover note. Action b Finding The admin team currently update the budget monitoring spreadsheet, an operational access database and the CareFirst system at each stage of the process for all Council tenant jobs. All serve a different purpose. This is very time consuming for staff and increases the risk of keying errors being made. In addition, the access database is not supported by IT Services. Action Description Management should investigate the feasibility of streamlining the end-to-end process as part of the transition to Eclipse to minimise 155
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PUBLIC INFORMATION PUBLIC INFORMATION the number of instances where data input is required, where possible. In the meantime, management should ensure that the access database (DB) is restricted to a limited number of authorised users only and that the DB is suitably protected (e.g. by way of strong password) until such time as the new system has been implemented. Risk Inefficient use of staff time and increased risk of keying errors. Priority (1, 2, 3) 2 Paragraph Reference 3.2 Managed by Sharon Hackney, AHP Senior Manager and Professional Lead Assigned to Beth Griffin, Team Manager OT / Leigh-Ann Mitchell, Senior Manager (Governance) Due Date 30/09/2025 Management Comment Ongoing issue for a number of years with no clear resolution. Each system is required for individual functions, and as such requires updated separately. Carefirst/Eclipse – approvals route only. We will review our processes as part of the transition to Eclipse and will attempt to minimise multiple data inputs where possible. Database needed for waiting list (individuals awaiting adaptation). Management will ensure that the access database (DB) is restricted to a limited number of authorised users only and that the DB is suitably protected (e.g. by way of strong password) until such time as the new system has been implemented. Review of authorised users and use of a password to be completed by 30/04/2025 Spreadsheet needed for ARC, KPIs and budget monitoring. Integra reports for budget monitoring (this only shows invoiced, whereas the spreadsheet shows where work has been ordered and invoiced at different costs to original order) Action c Finding A review of jobs completed revealed instances where the final invoice amounts were higher than the agreed amount for the jobs as keyed into the Building Services URM system. On further examination of the cases identified, we found that no further approval had been obtained from a senior OT, or Service Level Agreement (SLA) put in place between HSCP and Building Services, to support the additional charges. Action Description An SLA should be developed between Housing, HSCP, Building Services and PMI services which outline the agreed arrangements for managing additional charges. The reasons for additional charges should be recorded and subsequently approved by HSCP management. Tolerances for additional costs that can be incurred without prior agreement should be agreed and kept under review, in order to avoid undue delays which increase the costs further. These 156
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PUBLIC INFORMATION PUBLIC INFORMATION additional costs should still be recorded and notified to HSCP in retrospect. Risk Unauthorised financial expenditure or inability to properly monitor budget due to unplanned expenditure. Priority (1, 2, 3) 2 Paragraph Reference 3.4 Managed by Sharon Hackney, AHP Senior Manager and Professional Lead, Yvonne Baulk, Head of Service (Housing & Public Protection) Assigned to Stephen Connor, Team Manager, Housing / Beth Griffin, Team Manager OT Due Date 30/04/2025 Management Comment SLA development and final sign off pending. Discussion at next Adaptations WG regarding tolerance levels and authorisations for unforeseen costs as per email trail. Action d Finding We observed that some aids and adaptations jobs received and scoped between June and November 2024, amounting to £190,003, are still classified as Work-in-Progress (WIP) as of December 2024.The reason for the long wait was not included in the WIP report. Further engagement with Building Services by the auditor revealed that some of the jobs have been completed but were still classified as WIP. Action Description HSCP and Building Services should articulate in the SLA the process for the completion of works and ensuring that performance measures are properly monitored by the HSCP. Adaptations Admin should be reminded to request a follow-up upon job completion, with OTs also reminded to record the outcome of the follow-up on CareFirst. Management should ensure that monitoring is carried out to identify and resolve instances where a follow-up has not been carried out in a timely manner. Risk Difficulty in determining the status of jobs and tracking progress. Follow-up to ensure that the service user is getting full benefit from their aids and adaptations is not timely. Priority (1, 2, 3) 2 Paragraph Reference 3.6 Managed by Sharon Hackney, AHP Senior Manager and Professional Lead, Yvonne Baulk, Head of Service (Housing & Public Protection) Assigned to Beth Griffin, Team Manager OT Due Date 30/04/2025 Management Comment HSCP are updated on individual job progress through email communication and regular meetings are held between both services. This process will be formalised within the cross service SLA along with the target timescales for job completion. Weekly completions report run on a Monday by Adaptations Team. Monthly meeting with Building Services to discuss Scoping, Quotes and Operations for both HSCP and BS – WIP hadn’t been a focus, however Agenda now developed to allow for 157
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PUBLIC INFORMATION PUBLIC INFORMATION WIP progress updates on a monthly basis to record progress and reasoning for any jobs falling out with timescales. BS to send weekly WIP email updates to inform monthly discussion. OT Team Managers to monitor follow up completions at monthly staff supervision sessions as part of caseload management discussions. SOP updated to reflect the above. Action e Finding The auditor reviewed the grants budget monitoring spreadsheet for 2024-25 which contained 245 referrals for grant applications and there were 125 forms with applicants that have not progressed to the next stage. Action Description Consideration should be given to implementing a process to chase up applications sent out, to determine if the application should be progressed or closed off as no longer required. Risk A client is continuing to struggle without the aids or adaptations required to maintain their independence. Priority (1, 2, 3) 2 Paragraph Reference 3.7 Managed by Sharon Hackney, AHP Senior Manager and Professional Lead Assigned to Beth Griffin, Team Manager OT Due Date Completed Management Comment SOP updated to include chasing up of application packs sent out to determine progress or closure. Priority Key used in Action Plan 1 (High) Control weakness where there is a material impact on the achievement of the control objectives, generally requiring prompt attention. 2 (Medium) Control weakness which needs to be rectified, but where there is no material impact on the achievement of the control objectives. 3 (Low) Minor weakness or points for improvement. 158
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PUBLIC INFORMATION PUBLIC INFORMATION INTERNAL AUDIT REPORT TRANSFORMATION AND CHANGE MANAGEMENT Assurance Level: Substantial Version: Final Date: 3rd April 2025 Author: Anne-Marie Fenton File Ref: 2025-PA-004 Classification: Public 159
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PUBLIC INFORMATION PUBLIC INFORMATION TRANSFORMATION AND CHANGE MANAGEMENT 1 Background 1.1 In 2020, Audit Scotland recommended in its Best Value Assurance Report that the Council develops its transformation themes into projects and further developing the governance arrangements to ensure the council has the skills needed to implement the next stage of transformation and develops a robust benefits realisation tracker to assess whether the Council has achieved its aims. The annual audit 22-23 noted that all the recommendations from the 2020 report had been actioned. 1.2 The Council’s Strategic Risk Register includes a high risk SRR2425_R05 “There is a risk that transformation and change activities, which are core to the future delivery models and long-term financial sustainability of both the Council and Health and Social Care Partnership, fail to deliver at the level of scale and pace required.” 2 Objectives and Scope 2.1 The main objectives of the audit were to ensure that: • there are adequate governance arrangements in place for transformation workstreams. • adequate financial monitoring arrangements are in place for the transformation workstreams. • there are adequate programme management arrangements in place for transformation workstreams. 3 Findings Governance Arrangements 3.1 The Council’s Transformation Programme is overseen by the Transformation Board. The Board is chaired by the Chief Executive and includes all Directors and relevant Heads of Service. The Board meets six times per year and receives updates from all ongoing workstreams. 3.2 All workstreams are linked to a Council Plan priority and representation from relevant services on the Transformation Board and individual project boards ensure that the programme is linked to appropriate strategies and policies. Financial Monitoring 3.3 Financial information including target savings and costs associated with the projects is included in the reports to the Transformation Board. If a project diverges significantly from its budget, options would be developed by the Project Manager and their team to be discussed at the project board, Transformation Board or ELT, depending on the level of impact. 3.4 The savings from Transformation projects form part of the Council’s budget and the financial monitoring information for the Transformation programme at a very high level forms part of the revenue and capital budget monitoring reports that are presented to Cabinet approximately every 2 months. Material variances are reported to Cabinet. 160
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PUBLIC INFORMATION PUBLIC INFORMATION Programme Management 3.5 3 workstreams within the Transformation Programme were selected for more detailed audit testing. These were Digital, Sustainability and Waste Services. 3.6 The Digital workstream has recently been set up as the successor to the Accessing Our Council workstream. The projects from Accessing Our Council were largely completed in the summer of 2024. The first Working Group for the new Digital workstream took place in February 2025 and is planned to take place every two months, in line with the Transformation Board. The first individual project for this workstream is Purchase to Pay (P2P) which was in the “discovery” phase at the time of audit testing and a risk workshop to develop the risk register was planned but had not yet been arranged. 3.7 The Sustainability workstream has one large, high-profile capital project, which is the establishment of 2 Solar PV (photo-voltaic) farms at Nethermains and Shewalton. A second large project on Decarbonisation of the Council’s Fleet was in the process of setting up a project board at the time of audit testing. The Solar PV project has close scrutiny and risk management arrangements. 3.8 There are a number of smaller projects and activities within the Sustainability workstream that do not have their own project board and associated documentation, but they are reported upon at the 2-monthly Sustainability Project Board meetings, completing a standard template for each activity to update the board on progress. This template does include a section for risk management where risks that arise are noted. Following discussions with Internal Audit, the Project Manager for the Sustainability workstream is planning to prepare an overall risk register for the workstream. 3.9 The Waste Review similarly has one large project, the HWRC (Household Waste Recycling Centre) Booking System, which has recently had its own project board set up. The wider programme was previously discussed at service management meetings which only took place 3 times in 2024, but the service has now set up a formal programme board, meeting monthly since January 2025. 3.10 The risk log for the HWRC Booking System has been completed and recently updated. None of the other Waste Review projects are at a stage where a risk log would be established. 4 Internal Audit Opinion 4.1 Overall, substantial assurance was obtained with regard to the governance and management of transformation projects within the Council. The programme is reviewed regularly at a senior level within the Council and proportionate governance arrangements for individual workstreams sit underneath this. 161
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PUBLIC INFORMATION PUBLIC INFORMATION Definitions of Assurance Levels: Substantial A sound system of governance, risk management and control exist, with internal controls operating effectively and being consistently applied to support the achievement of objectives in the area audited. Reasonable There is a generally sound system of governance, risk management and control in place. Some issues, non-compliance or scope for improvement were identified which may put at risk the achievement of objectives in the area audited. Limited Significant gaps, weaknesses or non-compliance were identified. Improvement is required to the system of governance, risk management and control to effectively manage risks to the achievement of objectives in the area audited. None Immediate action is required to address fundamental gaps, weaknesses or non-compliance identified. The system of governance, risk management and control is inadequate to effectively manage risks to the achievement of objectives in the area audited. NB The level of assurance given is at the discretion of Internal Audit. 162
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PUBLIC INFORMATION PUBLIC INFORMATION INTERNAL AUDIT REPORT COMMUNITY EQUIPMENT STORE Assurance Level: Reasonable Version: Final Date: 30th April 2025 Author: Claire Morris File Ref: 2025-PA-006 Classification: Public 163
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PUBLIC INFORMATION PUBLIC INFORMATION COMMUNITY EQUIPMENT STORE 1 Background 1.1 The Health and Social Care Partnership (HSCP) provides equipment to help individuals live more safely, comfortably and independently in their own home. 1.2 The Equipment Store (‘the Store’) in Irvine is responsible for managing three categories of such equipment:- • Standard equipment – this type of item is requested by Occupational Therapists to help service users around the home. Equipment includes items such as raised toilet seats, bath boards, bed rails etc. A stock of standard items is held in the Store. • ‘Telecare’ – this type of item is requested by Social Workers to improve the safety of service users within their home. Telecare includes items such as smoke alarms, heat sensors and door sensors, but does not include community alarms – which are managed by the HSCP’s Technology Enabled Care Lead Officer. A stock of telecare items is held in the Store. • ‘Special order equipment’ – this type of item is required when standard equipment does not meet the needs of the service user. A tailored piece of equipment will be ordered by the user’s Occupational Therapist and delivered to the Store. The Store will arrange its delivery to the service user. 2 Objectives and Scope 2.1 The objective of this audit was to ensure:- • Stock levels are accurate and well managed • The process for issuing stock is efficient • All equipment is maintained to ensure it remains safe to use • There is a process for dealing with equipment returned to the Store 3 Findings Stock Management 3.1 The Store uses dedicated software (ELMS) to manage and record the allocation of stock to service users. 3.2 The accuracy of the stock information in ELMS is checked via fortnightly stock counts. 3.3 Audit tested the accuracy of ELMS stock records by:- • Obtaining copies of stock count records for recent stock counts • Attending the Store and carrying out a stock count on a sample of items • Selecting a sample of equipment purchases from Integra and ensuring ELMS is being updated to reflect the delivered items timeously. 3.4 Whilst no issues were noted with obtaining stock count records or during the on-site stock count, Audit did identify 2 instances where equipment purchases (totalling £7,099) had not been reflected in ELMS. (action a) Issuing Stock 3.5 Requests for standard stock and telecare, or the delivery of special order items, are made by Occupational Therapists and Social Workers by completing the relevant requisition template and submitting it to the Store. 164
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PUBLIC INFORMATION PUBLIC INFORMATION 3.6 Templates from NAC officers are submitted via Carefirst and templates from NHS officers are submitted via email. 3.7 All requests are recorded in ELMS, with the Store:- • Recording the request against the service user • Allocating the item of stock to the service user • Recording the delivery date 3.8 The Store also notifies the original requester (via Carefirst or email) that the item has been delivered. 3.9 Audit selected a sample of requests and confirmed that:- • ELMS had been fully updated • The requisitioner had been notified of the delivery being complete. 3.10 We identified one instance of a user’s ELMS record not fully reflecting the installed items. This was corrected during the Audit. (action a) Equipment Maintenance 3.11 LOLER (Lifting Operations and Lifting Equipment Regulations) state that equipment being used to lift people should be thoroughly examined six monthly. 3.12 NAC has a collaborative contract with South and East Ayrshire for the testing of such lifting equipment. 3.13 The Store provides a list of all equipment needing LOLER inspection or servicing to the contractor for action. 3.14 Audit obtained a report of outstanding service dates as at 6 February 2025 and found that 42 equipment checks were overdue – with 26 of these relating to 2024. The Store confirmed an issue with the reporting of ‘non-access’ by the contractor had resulted in the overdue checks. (action b) 3.15 The Store has confirmed that all cases of non-access are now being reported by the contractor monthly. Returned Equipment 3.16 Users are asked to return equipment that they no longer need to the Store. 3.17 The Store has equipment to wash down metal and plastic items and uses an external company to clean fabric items. 3.18 After cleaning, the Store Technician will assess whether an item is suitable for re-use and record this in a log. The Store Manager will review this and make the final decision on whether to add the item back into stock or scrap it. 3.19 Audit selected a sample of items from the log and ensured that stock records in ELMS had been adjusted to reflect the re-use/scrap decision. No issues were noted during testing. 165
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PUBLIC INFORMATION PUBLIC INFORMATION 4 Internal Audit Opinion 4.1 Overall, reasonable assurance was obtained with regard the controls within the Equipment Store. 4.2 Ensuring all outstanding LOLER testing is completed as soon as possible should be a priority for the Service. Definitions of Assurance Levels: Substantial A sound system of governance, risk management and control exist, with internal controls operating effectively and being consistently applied to support the achievement of objectives in the area audited. Reasonable There is a generally sound system of governance, risk management and control in place. Some issues, non-compliance or scope for improvement were identified which may put at risk the achievement of objectives in the area audited. Limited Significant gaps, weaknesses or non-compliance were identified. Improvement is required to the system of governance, risk management and control to effectively manage risks to the achievement of objectives in the area audited. None Immediate action is required to address fundamental gaps, weaknesses or non-compliance identified. The system of governance, risk management and control is inadequate to effectively manage risks to the achievement of objectives in the area audited. NB The level of assurance given is at the discretion of Internal Audit. 166
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PUBLIC INFORMATION PUBLIC INFORMATION KEY FINDINGS AND ACTION PLAN COMMUNITY EQUIPMENT STORE Action a Finding Discrepancies in ELMS records were identified during the Audit. Action Description Stores should investigate these discrepancies and take corrective action as appropriate. Risk Delays in allocating equipment to users; decisions based on inaccurate information Priority (1, 2, 3) 1 Paragraph Reference 3.4, 3.10 Managed by Kerry Logan, Head of Service (Health & Community Care) Assigned to Lorraine Dyet, Senior Manager (Health & Community Care) Due Date 06/06/25 Management Comment A full investigation into ELMS records discrepancies has been undertaken and corrective action to ensure accurate records has been taken. Following this there has been implementation of an updated Store delivery process, with gaps in the previous process being the identified cause of discrepancies. Alongside the process, the Store Manager(s) will verify deliveries to ensure that the process is followed correctly and to highlight any errors/prevent risk of inaccuracies - this was implemented on the 21/03/25. Store processes and the issues highlighted by the audit have been placed on HCC service risk register and will be reviewed in an ongoing basis. Action b Finding Not all LOLER servicing is being undertaken within the 6 month timeframe set by HSE legislation. Action Description All incidences of non-access or incomplete servicing of equipment should be reported to the Care at Home Team as soon as possible. Co-ordinated action between the Stores and the Care at Home Team should be taken to arrange access. Risk Users and / or carers are injured by lifting equipment that has not been serviced timeously; breach of HSE legislation; reputational damage to the Council. Priority (1, 2, 3) 1 Paragraph Reference 3.14 Managed by Kerry Logan, Head of Service (Health & Community Care) Assigned to Lorraine Dyet, Senior Manager (Health & Community Care) Due Date 06/06/25 Management Comment Regular monthly meetings with the service provider, Arjo, are in place to monitor and manage timescales for LOLER servicing. These meetings will continue to be prioritised, and late service items is a standing agenda item. The Store Manager will liaise with the relevant Care at Home Manager(s) for care at home visit times where issue with access 167
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PUBLIC INFORMATION PUBLIC INFORMATION have been identified – this process has been agreed with the service provider and is in place. Arjo will now send weekly updates implemented from 02/04/25 in regard to no access to allow the store to follow up accordingly and ensure more timeous response to reduce risk. Communication has been issued to all Care at Home Managers and Care at Home Assistants regarding service/Loler dates for equipment within the community to ensure any issues are highlighted to the Store as appropriate to allow stores to action accordingly. As part of procurement exercise that Team Manager has been involved in, issues with outstanding Service/Loler relation to Slings has been raised and expectations clearly written into new contract. Store processes and the issues highlighted by the audit have been placed on HCC service risk register and will be reviewed in an ongoing basis. Priority Key used in Action Plan 1 (High) Control weakness where there is a material impact on the achievement of the control objectives, generally requiring prompt attention. 2 (Medium) Control weakness which needs to be rectified, but where there is no material impact on the achievement of the control objectives. 3 (Low) Minor weakness or points for improvement. 168
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PUBLIC INFORMATION PUBLIC INFORMATION INTERNAL AUDIT REPORT PAYROLL TRANSACTION TESTING Assurance Level: Reasonable Version: Final Date: 30th April 2025 Author: Yvonne Trundle File Ref: 2025-PA-007 Classification: Public 169
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PUBLIC INFORMATION PUBLIC INFORMATION PAYROLL TRANSACTION TESTING 1 Background 1.1 This audit was conducted as part of the approved 2024/25 Internal Audit Plan and data analytic tools were used to interrogate the HR Payroll system and examined any anomalies which arose. 1.2 The HR Payroll system is called CHRIS. The Employee Account is used to access and complete internal online forms for contract amendments and terminations. Verint is the system used to submit contract amendments and terminations to Payroll and Resourcing. 1.3 The audit covered the following areas: • Overtime • Working time regulations • Last payment for leavers • Salary amendment • Pay Adjustments • High mileage claims • High travel and subsistence claims • Employee details • Allowances 2 Objectives and Scope 2.1 The main objectives of this audit were to ensure that: • High overtime payments are valid, properly authorised and no duplicate overtime payments have been made. • Employees working an average of 48+ hours per week have complied with the working time directive regulations. • Employees last pay is correct, properly authorised and any overpayments have been identified and rectified. • Salary amendments are valid and authorised. • Pay adjustments are valid, properly authorised and no duplicate pay adjustments have been made. • High mileage claims are in line with the Terms and Conditions of Employment, are valid and properly authorised. • Travel and subsistence expenses are in line with the Terms and Conditions of Employment, are valid and properly authorised. • Employee details are valid and complete. • Allowances are in line with the Terms and Conditions of Employment, are valid and properly authorised. 2.2 The audit covered the period 1st October 2023 to 30th September 2024. 170
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PUBLIC INFORMATION PUBLIC INFORMATION 3 Findings Overtime 3.1 The auditor selected a sample of 10 high overtime payments based on overtime of 50% more than base pay. This testing identified an overpayment of £335.62 to a Community Safety employee who was paid 25.6 hours as double time instead of basic rate. The service contacted the Payroll team and the overpayment will be recovered. 3.2 A Building Services employee did not complete the job details section of a standby timesheet, so only the daily totals are recorded. This was not corrected by the person approving the timesheet. In addition, although the overtime was approved the approver was not an authorised signatory and when processed by Building Services, no check was carried out against the authorised signatory list. (action a) 3.3 The normal overtime authorisation process was not followed by Transport resulting in an overtime spreadsheet being emailed to Resourcing which did not have approval from an authorised signatory. However, this was subsequently processed by Resourcing. (action b, c) 3.4 There were 35 potential duplicate overtime payments where payments have been made to employees for the same overtime period but paid in a different payrun. The auditor reduced this number to 17 by checking payments over £100. The results were passed to the services to investigate which resulted in a total of 10 duplicate overtime payments totalling £3,273.14 being identified. 3.5 The audit identified a duplicate overtime overpayment of £728.04 for a Facilities Management employee and Payroll advised the overpayment will be recovered. The overtime was processed twice by the Payroll team after the employee asked the Area Officer to check with Payroll if it had been paid. The Payroll Officer could not find the overtime paperwork and did not check the Payroll system, in line with the procedure, so it was rekeyed. Payroll have taken the necessary steps to remind the team member to follow the required procedure. 3.6 The audit identified 9 duplicate overpayments for HSCP totalling £2,545.10 and HSCP advised the overpayments will be recovered. The Business Support Officer in HSCP advised that changes have been made to their current processes, including fortnightly and monthly paid employees will no longer be keyed to CHRIS weekly and instead will be keyed as per the payroll deadline for the relevant payrun. Also, additional checks will be carried out on CHRIS when the system provides a warning that the overtime being keyed is for the same overtime period to verify it is not a duplicate payment and to ensure the employee is due overtime hours for working in a different area. Working Time Regulations 3.7 The auditor calculated the average weekly working hours for the period 1 January 2024 to 30 June 2024 and there were 35 employees working an average of more than 48 hours per week. It was noted that 24 of the employees have completed a working time regulation opt out form which is recorded on the Payroll system. There are 11 employees with no working time regulation opt out form recorded on the Payroll system (2 in Facilities Management, 8 in Waste Operations and 1 in Streetscene). The Senior Managers were contacted and all 11 employees have now completed the working time regulation opt out form. 171
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PUBLIC INFORMATION PUBLIC INFORMATION Leavers Last Pay 3.8 The auditor selected a sample of 10 leavers to check their final pays were correct and properly approved. This testing resulted in the identification of 2 overpayments totalling £3,257.41 due to the late submission of termination paperwork. Both had already been identified and rectified by the Payroll team. 3.9 There were 11 employees that left within 21 days of starting and the pays were checked to ensure they were only paid for the hours worked. This testing resulted in the identification of 4 overpayments totalling £11,931.77 due to late termination paperwork. All had been identified by the Payroll team and appropriate steps have been taken to recover the funds. This included an overpayment of £4,300.23 that was referred to the Corporate Fraud team and fully investigated. 3.10 The auditor carried out additional tests on leavers to identify overpayments. This resulted in 17 potential overpayments being queried with Payroll. Payroll confirmed there had been 14 overpayments and 13 had already been identified and rectified by Payroll. An overpayment of £334.32 (gross) for 27 November 2023 to 30 November 2023 was identified by the audit and Payroll advised an account was raised to recover the overpayment. 3.11 The auditor tested for employees that have left and returned to ensure there is no overlap in contracts. There were 3 employees found that had an overlap but further checking confirmed that there were no findings to note. Salary Amendments 3.12 A sample of 10 salary amendments were selected for audit testing. This test identified 4 of the amendment forms were submitted after the effective date. The payroll team have limited control over the timing of the information that they receive however do routinely remind contacts of the key payroll dates and deadlines. As such no further recommendation has been made. Pay Adjustments 3.13 The auditor summarised the pay adjustments per code and carried out audit testing on 3 of the codes. A total of 146 payments totalling just under £800k were made under the heading of compromise payments, a total of 2,516 payments totalling just under £1.3m were made for pay adjustment superannuation and a total of 324 payments totalling almost £26k were made for disturbance allowances. A sample of 15 were checked (5 for each selected payment code). There were no findings to note from this testing. 3.14 A sample of 5 potential duplicate pay adjustment payments over £500 to current employees were also selected for audit testing. There were no findings to report from this testing. High Mileage Claims 3.15 The auditor tested for mileage claims over 1000 miles and all 5 were checked. There were no findings to report from this testing. 172
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PUBLIC INFORMATION PUBLIC INFORMATION High Travel and Subsistence Claims 3.16 A sample of 5 high value travel and subsistence payments were selected for audit testing. One claim resulted in an overpayment of £205.15 as the employee keyed 373 miles under the travel column instead of the business miles column resulting in a payment of £373 instead of a payment of £167.85. The employee confirmed this was an error and Payroll confirmed the overpayment was recovered in their March pay. 3.17 The auditor identified a subsistence payment made to a staff member which was made up of 5 individual claims, however: • The back up for only 4 of the forms could be provided by the service. • The employee claimed mileage on each claim and claimed subsistence for fuel supported by fuel receipts resulting in an overpayment of £303 (excluding VAT). A further £983.58 subsistence (excluding VAT) has been claimed and management should review this to confirm whether additional overpayments have been made. The employee has not claimed subsistence since March 2024. (action d) Employee Details 3.18 The auditor tested for duplicate national insurance numbers, blank national insurance numbers, invalid national insurance format, blank date of birth, duplicate bank details and blank bank details. This resulted in 2 employees with the same bank details and same name but slightly different spellings of both the first name and surname, different NINO, different address and different date of birth. This indicates they are not the same person. It has been passed to Corporate Fraud to investigate further. Allowances 3.19 The auditor summarised the amount paid per allowance and selected the 3 allowance codes with the highest values to check the employees were entitled to the allowance payments. The allowances checked were Mental Health, Unsocial Hours and Cash Preservation. There were no findings to note from this testing. 4 Internal Audit Opinion 4.1 Overall, reasonable assurance was obtained with regard to transactions on the payroll system. The audit identified a number of overpayments due to duplicate overtime claim forms being processed and errors when claiming subsistence. In addition, there were overpayments due to the late submission of termination forms, most of which had already been identified and rectified by the Payroll team. 173
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PUBLIC INFORMATION PUBLIC INFORMATION Definitions of Assurance Levels: Substantial A sound system of governance, risk management and control exist, with internal controls operating effectively and being consistently applied to support the achievement of objectives in the area audited. Reasonable There is a generally sound system of governance, risk management and control in place. Some issues, non-compliance or scope for improvement were identified which may put at risk the achievement of objectives in the area audited. Limited Significant gaps, weaknesses or non-compliance were identified. Improvement is required to the system of governance, risk management and control to effectively manage risks to the achievement of objectives in the area audited. None Immediate action is required to address fundamental gaps, weaknesses or non-compliance identified. The system of governance, risk management and control is inadequate to effectively manage risks to the achievement of objectives in the area audited. NB The level of assurance given is at the discretion of Internal Audit. 174
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PUBLIC INFORMATION PUBLIC INFORMATION KEY FINDINGS AND ACTION PLAN PAYROLL TRANSACTION TESTING Action a Finding A Building Services employee did not complete the job details section of a standby timesheet, so only the daily totals are recorded. This was not corrected by the person approving the timesheet. In addition, the overtime was approved but the approver is not an authorised signatory and when processed by Building Services, no check was carried out against the authorised signatory list. Action Description Building Services should remind employees to complete all sections of the standby timesheet, approvers should be reminded to reject standby timesheets that are not properly completed and the admin team should be reminded to check that overtime is approved by an authorised signatory before processing. Risk Employees overtime hours might be incorrect resulting in an over or under payment; breach of the Codes of Financial Practice. Priority (1, 2, 3) 2 Paragraph Reference 3.2 Managed by Yvonne Baulk, Head of Service (Housing & Public Protection) Assigned to Billy Borthwick, Senior Manager (Operations) Due Date 15/04/25 Management Comment All standby operatives have been briefed on how to complete the SBY timesheet correctly through a series of 30-minute workshops delivered by the Contract Performance team. All standby operatives have been updated on how to complete the SBY timesheet fully and correctly through text message reminder sent to all craft operatives’ mobile devices. All Supervisors have been reminded by Senior Officers of their responsibility to check that all timesheets are fully and correctly completed and will reject where this is not the case. Senior Officers will ensure that they add all new staff to the approved signatory list through BS Admin Team. BS Admin Team will check all signatures are from approved staff only and will reject where not. Action b Finding The normal overtime authorisation process was not followed by Transport resulting in an overtime spreadsheet being emailed to Resourcing which did not have approval from an authorised signatory. However, this was subsequently processed by Resourcing. Action Description The Resourcing team should be reminded to ensure that overtime is approved by a relevant authorised signatory before being processed and should be returned if proper approval is not provided. Risk Employees overtime hours might be incorrect resulting in an over or under payment; breach of the Codes of Financial Practice Priority (1, 2, 3) 2 Paragraph Reference 3.3 175
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PUBLIC INFORMATION PUBLIC INFORMATION Managed by Fiona Walker, Head of Service (People & ICT) Assigned to Jackie Smillie, Senior Manager (People Services) Due Date Complete Management Comment The Resourcing team have been reminded of the importance of checking authorised signatories and have been advised that overtime which has not been authorised by a relevant signatory must be returned for appropriate approval. The Resourcing Team review the Authorised Signatory screen to confirm the relevant signatory is current. Action c Finding The normal overtime authorisation process was not followed by Transport resulting in an overtime spreadsheet being emailed to Resourcing which did not have approval from an authorised signatory. However, this was subsequently processed by Resourcing. Action Description Transport management should reinforce the overtime approval processes currently in place and to ensure that these are adhered to by admin staff to ensure that the email to Resourcing includes evidence of approval by an authorised signatory. Risk Employees’ overtime hours might be incorrect resulting in an over or under payment; breach of the Codes of Financial Practice Priority (1, 2, 3) 2 Paragraph Reference 3.3 Managed by Laurence Cree, Head of Service (Sustainability, Transport & Corporate Property) Assigned to Gordon Mitchell, Senior Manager (Transport) Due Date Complete Management Comment This was an administrative error as any weekly overtime / additional hours are sent to Resourcing on a Monday morning and authorised signatories are copied in for verification. Unfortunately on this occasion the employee forgot to include the relevant manager. The admin team have been reminded of the process and advised to be more careful going forward. Action d Finding The auditor identified a subsistence payment made to a staff member which was made up of 5 individual claims, however: • The back up for only 4 of the forms could be provided by the service. • The employee claimed mileage on each claim and claimed subsistence for fuel supported by fuel receipts resulting in an overpayment of £303 (excluding VAT). A further £983.58 subsistence (excluding VAT) has been claimed and management should review this to confirm whether additional overpayments have been made. The employee has not claimed subsistence since March 2024. Action Description The service should request the employee reimburses the £303 overpayment for subsistence. The service should investigate any additional overpayments that should be reimbursed by the employee. Risk Overpayment of travel and subsistence allowance 176
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PUBLIC INFORMATION PUBLIC INFORMATION Priority (1, 2, 3) 2 Paragraph Reference 3.17 Managed by Kerry Logan, Head of Service (Health & Community Care) Assigned to Loraine Dyet, Senior Manager (Locality Services) and Louise Davidson, Senior Manager (Health & Community Care) Due Date 30/05/25 Management Comment A number of meetings have taken place with the Business Support Team, Senior Management and Operational Team Manager to undertake a full review and to avoid ensure steps are put in place to prevent recurrence. The following actions have been implemented: • Detailed guidance to be included within sample mileage claims at CAH induction course. • Formal discussion has taken place with line manager and guidance reissued to full team. • Once total reimbursement figure has been confirmed by Business Support, they will inform Team Manager and Line Manager. • Line manager will confirm reimbursement payment with employee and formal discussion to be recorded within employee file. • Further claim forms submitted by the employee following date of audit period have been reviewed, no actions were required. • SOP and guidance issued to clerical team on Arran regarding mileage claims which will be audited internally by Business Support. Priority Key used in Action Plan 1 (High) Control weakness where there is a material impact on the achievement of the control objectives, generally requiring prompt attention. 2 (Medium) Control weakness which needs to be rectified, but where there is no material impact on the achievement of the control objectives. 3 (Low) Minor weakness or points for improvement. 177
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