The Director of Resources presented a report to update Members on the proposed Action Plan in relation to the Governance Review undertaken by the External Auditor, Deloitte.
The Councils Governance arrangements were based on the Society of Local Authority Chief Executives (SOLACE) and the Chartered Institute of Public Finance and Accountancy (CIPFA) advice. Deloitte submitted a report to the Audit and Governance Committee on 25 March 2014 outlining a series of recommendations to strengthen the Councils Governance arrangements. An Action Plan in response to the Auditors recommendations was attached to the submitted report.
The Director of Resources provided an explanation of the recommendations, the actions to be taken to address the issues, and the timescales for implementation.
The Technical Officers and Information Governance Groups had been reviewed and a new Council Scheme of Delegation had been approved at the Annual Council meeting on 14 May 2014.
New Governance arrangements had been implemented to assist with greater involvement and collaboration across the Leadership Team. The Leadership Team met fortnightly and senior officers would ensure they had a clear Forward Work Programme to facilitate the early identification of issues requiring financial and other input.
The current arrangements for the role of the Section 151 Officer did not comply with the SOLACE/CIPFA Statement. However, Council business items would be dealt with by the Leadership Team, of which the Chief Finance Officer was an active member. The Chief Finance Officer would record and document the content of feedback in relation to revised Corporate Executive Management Team arrangements as necessary. A quarterly meeting would be held to consider the approach between the Chief Executive and the Executive Director, Commercial and Corporate Services. These arrangements would satisfy the SOLACE/CIPFA Statement.
As recommended by the External Auditor, a new Corporate Affairs and Audit Committee had been established. Arrangements would be made to appoint two Independent Members to the Committee via open advertisement.
In relation to the management of the Councils Estates, an operational plan to meet strategic direction, agreed by the Corporate Executive Management Team, would be developed in partnership with Deloitte. The Estates Strategy would be aligned to the Councils overall Strategic Plan and set out the rationale for asset disposals with a clear set of criteria for an offer to be accepted, as well as documenting mechanisms for accepting offers that did not meet the criteria, where there was an alternative reason for accepting the offer.
A review of the Finance function would be undertaken to produce a service specification outlining key service deliverables to ensure corporate compliance with legislative requirements and to support budget holders and managers. The new structure had been agreed within the Change Programme.
The current budget monitoring system facilitated the production of a high level monthly report on key issues where spend was compared against budget. Consideration was underway in respect of a new finance system to replace SAP which would enable reports to be produced online within two weeks of the quarter end.
The Auditor had recommended that the Council should undertake an analysis of the value of debt not collected after twelve months which was recovered before twenty four months had passed since the invoice date. In addition, the Councils provisioning and debt write-off policy should be reconsidered in light of the analysis. However, the Director of Resources confirmed that bad debt was already reviewed on a regular basis and was only written off as a last resort, for example when it was uneconomical to recover it, when a debtor was bankrupt or could not be traced. Bad debt provision had been reviewed as part of the 2013/2014 final accounts and a review of the policy had been undertaken. An update report would be produced following completion of the Final Accounts in August 2014.
Middlesbrough Managers needed to have sufficient knowledge and expertise to use the new accounting system and operate an effective budget monitoring process. A full training and needs analysis and training programme would be developed as part of the implementation programme for the new system. In addition a review of all Human Resource, Finance and Procurement processes would be undertaken to ensure they complied with, and supported the Middlesbrough Manager.
The Director of Resources confirmed that he had regular scheduled meetings with the Head of Internal Audit. In respect of a regular private meeting between the Corporate Affairs and Audit Committee and both the Internal and External Auditors, this would be built into the Governance arrangements following clarification on the legal implications of such meetings in terms of how the Local Authority operated.
AGREED as follows that:
1. The proposed Action Plan in relation to the Governance Review was endorsed by the Corporate Affairs and Audit Committee.
2. An update on the Action Plan would be presented to the Corporate Affairs and Audit Committee at a future meeting.