Agenda and draft minutes

Audit Committee
Wednesday, 10th June, 2020 10.00 am

Venue: The meeting will be held remotely via Microsoft Teams

Contact: Rachel Beale  Senior Business Support Officer - Democratic Services

No. Item


Welcome and Apologies / Croeso ac Ymddiheuriadau

Presented By: Chair


1.1       No apologies were received.


Declarations of Interest / Datganiadau o Fuddiant

Presented By: Monitoring Officer


2.1       There were no declarations of interest.


Confirmation of Audit minutes - 12/02/2020 / Cadarnhau cofnodion y Y Pwyllgor Archwilio - 12/02/2020 pdf icon PDF 283 KB

Presented By: Chair


3.1       The minutes of the meeting held on 12 February 2020 were confirmed as an accurate record.


Public Service Network Update / Rhwydwaith Gwasanaeth Cyhoeddus - diweddariad pdf icon PDF 131 KB

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4.1       The HoPSSU highlighted the following key headlines from the report:

  • The HoPSSU and the Deputy Chief Officer of the SRS had attended the Audit Committee meeting in October 2019 to discuss the concerns in relation to the non-compliance of the requirements of the public service network (PSN).
  • A considerable amount of work had been conducted since the above meeting and PSN accreditation had been successfully attained for Torfaen County Borough Council, which would last for a year.
  • Previous risks had now been mitigated and any issues were considered by officers on a monthly basis.


4.2       The Audit Committee agreed to note the content of the report and completion of the outstanding action.


Annual Governance Statement 2019/20 / Datganiad Rheolaeth Blynyddol 2019/20 pdf icon PDF 204 KB

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5.1       The MO&ACLO highlighted the following key headlines from the report:

  • The purpose of the Annual Governance Statement was to outline the governance processes and arrangements that had been operating within the Authority for 2019/20 and the Draft Annual Governance Statement was shown in the Appendix of the report.
  • The statement was in the same format as the one presented to the committee last year. It sets out the seven principles contained in guidance and demonstrates how the Council’s governance arrangements are consistent with those principles.
  • The review of effectiveness had taken into account the impact of the COVID-19 pandemic on the governance arrangements of the Council and the MO&ACLO referred members to the detail in paragraph 11.4 of the Draft Annual Governance Statement.
  • The completed Annual Governance Statement would be signed by the Leader and Chief Executive of the Council, alongside the Annual Statement of Accounts, which would be presented to Council for approval.


5.2       The Audit Committee agreed to note the content of the report.


Audit Wales - Draft Audit Plan plus COVID LETTER / Archwilio Cymru - Cynllun Archwilio Drafft a LLYTHYR COVID pdf icon PDF 157 KB

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6.1       The ELFA and AMFA highlighted the following key headlines from the report:

  • The original 2020 Audit Plan had been issued to the Council in March 2020; however the Plan had to be revisited because of the required response to the COVID-19 pandemic, which brought about a number of issues for the audit.
  • An additional letter was issued in early May 2020 to provide an update regarding the Government response to the pandemic and the responsibilities of the external auditor.
  • This audit would see an increased use of estimates, particularly around fixed assets and pensions, due to the physical restrictions caused by the current lockdown measures.
  • The Chartered Institute of Public Finance and Accounting (CIPFA) had considered whether it was possible to not apply large parts of the 2019-20 Code of Accounting Practice; however it concluded that the Code would apply in full, with the caveat that officers would be given more scope in order to prepare the accounts in light of the pandemic.
  • The timetable for the audit had been agreed with officers and a target date for completion had been set for 1 September 2020; however this was reliant on lockdown restrictions as electors had the right to physically inspect the accounts for 20 working days prior to completion of the audit.


6.2       The ALPA highlighted the following key headlines from the report:

  • A further letter had been issued to the Council on 5 June 2020 that provided an update on the content of the performance audit programme for 2020-21. The ALPA agreed to circulate the letter to members of the Audit Committee.
  • In relation to Wellbeing of Future Generations, the Auditor General had asked for the focus to switch from prevention to recovery planning.
  • The scope around financial sustainability was likely to focus on the financial impact of the COVID-19 pandemic on councils.


6.3       Following questions from the Committee, the HoFS and the invitees made the following points:

  • In relation to the long-term implications of using estimates, the HoFS confirmed that the accounts had been produced in the same format as in previous years and he did not envisage changes to the assumptions within the audit.
  • The ELFA had not seen the Welsh Government (WG) report regarding pooled NHS budgets and care home arrangements, as Grant Thornton were not involved; however they were keeping in touch with the Council’s Finance department around this issue.
  • The ALPA explained that work around Wellbeing of Future Generations had been re-scoped and would continue to be a consideration as part of recovery planning; however it would not form a stand-alone project during the current climate.


6.4       The Audit Committee agreed to note the content of the report.


Wales Audit Office (WAO) Certificate of Compliance - Audit Of Torfaen County Borough Council's 2020/21 Improvement Plan / Tystysgrif Cydymffurfio Swyddfa Archwilio Cymru (SAC) - Archwiliad o Gynllun Gwella Cyngor Bwrdeistref Sirol Torfaen 2020/21 pdf icon PDF 220 KB

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7.1       The SCI&SO1 highlighted the following key headlines from the report:

  • The purpose of the report was for the Committee to receive the Certificate of Compliance following the WAO’s audit of the Council’s 2020-21 Annual Improvement Plan.
  • The Council agreed it’s 2020/21 Plan for publication on 3 March 2020.
  • The WAO undertook their audit during April 2020.
  • Following the audit, the Auditor General believed that the Council had discharged its duties under section 15 (6) to (9) of the Local Government (Wales) Measure 2009, and had acted in accordance with WG guidance sufficiently to discharge its duties.


7.2       The Audit Committee agreed to note the Certificate of Compliance issued by the Auditor General following the WAO’s audit of the Council’s 2020/21 Improvement Plan.


Treasury Management Activities 2019/20 / Gweithgareddau Rheoli'r Trysorlys 2019/20 pdf icon PDF 241 KB


8.1       The LFO highlighted the following key headlines from the report:

  • The total interest received and accrued from all investments during 2019/20 was £253,018, with the average rate of interest earned on investment at 0.78%.
  • The Council entered into a £10 million 20-year market loan on 17 March 2020, at a rate of 1.88%, to address the Council’s long-term under borrowing position at the current advantageously low interest rates.
  • As a direct result of the COVID-19 pandemic and its likely effects on the UK economy, the Bank of England cut base rate from 0.75% to 0.25% on 10 March 2020, with a further cut to 0.10% nine days later.
  • In addition to the long-term borrowing outlined above, £20 million of temporary borrowing was also taken in six tranches at the end of March 2020 for periods of six days to six months, to support short-term cash requirements associated with responding to the requests of WG in dealing with the pandemic.
  • The operational boundary for external debt could be exceeded if necessary but not for long periods of time, and this did occur for a short period at year end in order to fund grants relating to the pandemic.


8.2       The Audit Committee agreed to note:

(i)   The Treasury Management borrowing activity for 2019/20;

(ii)The Treasury Management investment activity for 2019/20; and

(iii)                The review of the Treasury Prudential Indicators.


Risk Management - Annual Update Report / Rheoli Risg - Diweddariad Blynyddol pdf icon PDF 671 KB


9.1       The SCI&SO2 highlighted the following key headlines from the report:

  • The Council’s approach to risk management was robust and fully embedded, and the Corporate Governance and Risk Management Group met on a quarterly basis.
  • The revised Risk Management Policy and the revised Terms of Reference for the Corporate Governance and Risk Management Group could be found within Appendices 1 and 2 of the report respectively.
  • Appendix 3 of the report provided a snap-shot of the risks within the Council’s Risk Register as at Quarter 3 of 2019/20.


9.2       Councillor Ashley lost connection for part of the debate and was therefore unable to cast a vote regarding the Committee’s decision.


9.3       The Audit Committee agreed to note the progress made to date to further embed a process across all service areas for the identification of any risks facing the Council; and the management and monitoring of those identified risks on a quarterly basis throughout the year.


9.4       Councillor Ashley returned to the meeting.


Council's Action Plan for Governance and Improvement / Cynllun Gweithredu'r Cyngor ar gyfer llywodraethu a gwella pdf icon PDF 365 KB

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10.1    The SCI&SO1 highlighted the following key headlines from the report:

  • The actions being monitored by the Audit Committee were set out in Appendix 1 of the report.
  • Due to the elections the review referred to in Recommendation 1 on page 128 of the agenda was put on hold and agreed to be completed within 2020/21 and again due to COVID-19. All existing grant recipients have received notification of the budget cuts and grant offer letter sent out confirming 1 year funding with a pending review in 2020/21. Once the current priorities of COVID-19 have reduced, the panel members will meet to discuss options for the review, once completed, the commencement of the review will take place and grant recipients will be consulted. The grant recipients have received a revised Grant Agreement for 2020/21 and have been given notice of a pending review which may change their grant agreement in year then the inception meetings will be arranged once the panel have confirmed the priorities of the review.
  • Since the last update in October 2019, three local reports and three national reports had been received by the Council from its external regulators and inspectors, as detailed in paragraph 5.1 of the report.
  • The Healthier Communities Overview and Scrutiny Committee had made four further recommendations following the Care Inspectorate Wales (CIW) inspection findings. All four recommendations were accepted by the relevant Chief Officers / Executive Members and would continue to be monitored.


10.2    Following questions from the Committee, the SCI&SO1 made the following points:

  • In relation to ‘Local Authority Funding of Third Sector Services’ on pages 127 and 128 of the agenda, Recommendations 1 and 2 were linked, and as a result the Council was awaiting action from WG before it could proceed; however the SCI&SO1 agreed to supply a further response regarding this issue to all members of the Audit Committee.
  • The Chief Officer Social Care & Housing and the Healthier Communities Overview and Scrutiny Committee agreed with members of the Audit Committee that safeguarding training should be mandatory for all members and there was scope to include this within the Council’s Constitution.
  • In terms of the lessons learnt that could be drawn from the place-based models of prevention work already adopted by the Council in areas such as Blaenavon and Trevethin, a full update would need to be sought via senior officers within the Education department.


10.3    The Audit Committee:

(i)   Noted the Torfaen specific reports received by the Council since the last update in October 2019;

(ii)Noted any new recommendations / proposals for improvement received and accepted by the Council since the last update report;

(iii)                Reviewed the progress made, as set out in the Action Plan, ensuring appropriate action is being taken to address recommendations previously accepted by the Council with regards to its governance arrangements; and

(iv)   Noted feedback from the Council’s Overview and Scrutiny Committees following their review of progress to address the service specific recommendations that sit within their portfolios.


Internal Audit Annual Report 2019/20 / Adroddiad Blynyddol Archwilio Mewnol 2019/20 pdf icon PDF 247 KB

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11.1    The HoIA highlighted the following key headlines from the report:

  • The overall conclusion was that the System on Internal Control continues to be classified as ‘sound’ with scope for improvement. This opinion was drawn from a review of the core financial systems of the Authority, which were shown in Appendix A of the report.
  • A summary of all audit jobs completed in the year could be found in Appendix B of the report.
  • The Internal Audit Plan for the year always contained more work than it was possible to complete, in order to cater for any delayed work.
  • 75% of the Audit Plan had been completed during 2019/20, which exceeded the target of 74%. The remaining 25% would be rolled into the 2020/21 Plan.
  • Follow up audits in relation to the audits that identified 2 high priority recommendations would occur during 2020/21; however the HoIA had been verbally informed that the issues had been addressed.
  • The control framework was operating as intended.
  • Due to the COVID-19 pandemic, audits had been suspended from mid-March 2020 and staff within the Audit department had been redeployed to support other service areas. All staff had now returned to the Audit department and were keen to resume their original duties.


11.2    The Chair congratulated all officers involved for achieving and exceeding the targets set within the 2019/20 Audit Plan.


11.3    The Audit Committee agreed to note the content of the report.


Draft Internal Audit Plan 2020/21 / Cynllun Archwilio Mewnol Drafft 2020/21 pdf icon PDF 130 KB

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12.1    The HoIA highlighted the following key headlines from the report:

  • The process of developing the Internal Audit Plan could be seen in paragraph 4.1 of the report.
  • The Internal Audit Plan for the year always contained more work than it was possible to complete, in order to cater for any delayed work.
  • Audit staff had been redeployed into other service areas in April and May 2020 because of the COVID-19 pandemic. Rather than remove items from the Plan, the HoIA had adjusted the target achievement rate to 60% based on the estimated available resources for the remainder of the year. It was proposed that the work not carried out during 2020/21 would roll forward and comprise the majority of the 2021/22 Plan, therefore effectively forming the basis of a 2 year plan.
  • The HoIA was confident that the target of 100% would be met in terms of completed core financial system audits.
  • The Internal Audit Charter (Appendix 2 of the report) included no changes; however it had been reviewed by the HoIA and he believed that it was still appropriate.
  • The HoIA outlined that the current remote / homeworking arrangements may cause some minor issues around carrying out some audits where records were physical / paper based as opposed to electronically available. Therefore it was possible that some aspects of these audits could be delayed until an appropriate time.


12.2    Councillor Evans lost connection for part of the debate and was therefore unable to cast a vote regarding the Committee’s decision. Cllr Evans did not return to the meeting.


12.3    The Audit Committee approved the approach taken in developing the draft 2020/21 Internal Audit Plan.


Date and Time of Next Meeting - 07/10/2020 / Dyddiad ac Amser y Cyfarfod Nesaf - 07/10/2020


13.1    The next meeting is scheduled to take place on 7 October 2020.


13.2    The Chair thanked all members and officers for their conduct and contributions during the meeting, which was the first ever meeting of the Audit Committee to be held remotely. The Chair personally thanked the SBSO1 and SBSO2 for their support in preparing for the meeting.


13.3    The meeting closed at 11.07am.


Audit Decisions - 10 June 2020 pdf icon PDF 267 KB