Audit and Governance Committee Minutes

Audit and Governance Committee Minutes

Thursday 7 March 2013
10:00 a.m.
Oberhausen Room,Town Hall, Middlesbrough

Attendance Details

P Khan (in the Chair), Harvey, C Hobson, Loughborough, Taylor, McPartland (as substitute for Councillor Junier)

B Baldam, P Clark, J Coxon, S Fletcher, H Fowler, S Harker, I Hope and J Wilson
Apologies for absence:
were submitted on behalf of Councillor L Junier
Declarations of interest:

There were no declarations of interest at this point in the meeting.

Item Number Item/Resolution

The minutes of the meeting of the Audit and Governance Committee held on 7 February 2013 were taken as read and approved as a correct record. 


At the last meeting of the Audit and Governance Committee on 7 February 2013, the Senior Scrutiny Officer presented a report outlining concerns raised by the Tees Valley Audit and Assurance Service (TVAAS) in respect of a Microsoft Access database system used for processing payments to foster carers. A number of concerns were highlighted in the Auditor’s Report and only limited assurance was given. Management had failed to act on the agreed recommendations contained in the Audit Report that was issued in August 2012.


Service representatives from Wellbeing, Care and Learning attended the meeting of the Audit and Governance Committee held on 7 February 2013 and provided an explanation as to why the recommendations from the Audit Report had not been implemented.


Following the information received at the 7 February 2012 meeting, Panel Members agreed that the item be deferred for further consideration and the attendance of representatives from the Council’s IT Service was required at today’s meeting.


The Corporate Programme Manager explained that on taking up his present post in January 2012 he had undertaken a review of a number of schemes including the Foster Carers’ Payment Module. In March 2012 the Foster Carers’ Payment Module was added to the Corporate Risk Register. The key issue was that the Payment Module was a database that was not managed and existed on a single PC. If the database failed, the information would be lost and there was a risk that Foster Carers would not be paid.


When the Audit Report was received in August 2012, work had been implemented in conjunction with Mouchel to produce a database which would be a managed solution, with the cost being met by the Council. Unfortunately, due to the secondment of the Corporate Programme Manager, this work had not been completed.


In the meantime, as reported at the last meeting, Children’s Services representatives had attended a demonstration of an IT system called CHARMS that provided a variety of applications, including a payment system for foster carers. The purchase of the CHARMS system would be funded by DfE. The CHARMS system was now being tested by Mouchel and it was anticipated that it would be implemented by August 2013.


It was confirmed that as a medium-term solution, Mouchel had trained three people to maintain and support the current Foster Carers’ Payment Module in order to alleviate the risk that it failed.


Several Members voiced their concern at the potential risks posed to the authority and possible impacts on foster carers and children due to the non-implementation of the SWIFT Foster Carers’ Payment Module for several years. Members also expressed their dissatisfaction that a Priority One recommendation made by Internal Audit in August 2012 had not been implemented within the required one-month timescale.


AGREED as follows that:


1. The Audit and Governance Committee were satisfied with the medium term solution in place for the continued operation of the Foster Carers’ Payment Module.


2. Service Representatives would provide an update to the Audit and Governance Committee on the implementation of the CHARMS system in August 2013.



Due to the unavoidable absence of the External Auditor at the meeting, Members agreed to defer this item to the next meeting.


AGREED that Agenda Item 5 - Certification of Claims and Returns 2011/2012 Annual Report - be deferred to the next meeting of the Audit and Governane Committee.

12/28 AUDIT PLAN 2013/2014

The Audit Manager presented a report seeking the comments of the Audit and Governance Committee on the draft Internal Audit Plan 2013/2014. The Audit Plan was based on a number of factors, the main influences being the Council’s Change Programme, together with the Corporate and Directorate Risk Registers. The Plan was designed to provide the Audit and Governance Committee with assurance that the Council’s framework of internal control was adequate and effective and thereby supported the Committee’s review of the Annual Governance Statement.


Consultation on the Plan was ongoing and had included the Chief Executive, Directors of Neighbourhood and Communities and Wellbeing, Care and Learning, Heads of Service at relevant management team meetings, the Deputy Director of Resources and the Performance Manager. Once the consultation exercise had been completed a final version of the Plan, incorporating any revisions considered appropriate, would be brought back to the Audit and Governance Committee for formal approval. Progress against the Plan would then be reported to Members by the Audit Manager throughout the financial year.


From 2013/2014, increased focus would be given to internal audit work supporting the Council’s Change Programme, which set out how the Council would look in 2018.


The proposed annual Internal Audit Plan for 2013/2014 was detailed in Appendix 1 to the submitted report. It set out how internal audit resources would be deployed between a number of internal control compliance reviews, counter fraud and financial systems. The Council faced significant financial challenges in the years ahead and would lose just under £73 million from its budget over a period of five years. As a result, the Council had devised an extensive series of efficiency savings and budget and service reductions. The draft Audit Plan included a category of work that was specifically linked to supporting the Change Programme, in order to support the Council in meeting the financial challenges.


The Audit Plan was flexible to enable a response to any management requests, changes in priorities or new and emerging risks that occurred throughout the year.


As the Council’s internal audit service was provided by a shared service arrangement, a service agreement had been documented between the two Councils and included a number of performance measures. It was proposed that, for 2013/2014 onwards, additional performance measures would be introduced and monitored to ensure that audits were completed on time. Progress against the performance measures would be provided to the Audit and Governance Committee throughout the financial year.


In relation to the proposed Counter Fraud audits it was queried why an external firm had been used to identify duplicate payments made. The Deputy Director of Resources explained that the firm was employed on a 'no recovery, no fee' basis and had been recommended by other Local Authorities. The firm would identify duplicate payments, chase up the payments and claim a percentage of the money they recovered. The majority of the money was recovered from credits on invoices that had not been re-claimed. It was a twelve week project and as part of the contract, the firm would put forward some recommendations on areas for the Council to look at going forward.


As a result of the Council’s reduced spending, it was queried whether the amount spend on auditing would reduced. It was explained that audit was about providing assurance that risks were being managed appropriately. Therefore if a Service was halved it did not necessarily mean that the audit work would be halved.  However, it was possible that the number of audit days would reduce in future.


AGREED as follows:

1. that the draft Audit Plan 2013/2014 was received and noted.
2. a copy of the final Audit Plan 2013/2014 would be presented to the Audit and Governance Committee for approval at a future meeting.

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