Agenda item

We received a report in order to update Members on the progress of Unsatisfactory / Unsound audit opinions issued since 2012/13 by the Internal Audit team.

It was recommended that the Audit Committee note the improvements made by service areas following the original Unsatisfactory / Unsound audit opinions issued, or if the Audit Committee are concerned about any of the audit opinions issued or lack of improvement made after the follow up audit review, consideration be given to calling in the operational manager and the Head of Service to provide justification for lack of progress and hold them to account for future improvements.

We heard that numbers of unsatisfactory opinions remained relatively low but there were areas requiring attention.  In 2014/15 there was an increase to 6 unsatisfactory opinions, 2 of which had been previously brought to Audit Committee.

There had been a range of problems identified in the audit of the Passenger Transport Unit, including budgetary control, procurement of vehicles and maintenance contracts, pricing of private hire agreements and debt recovery.  It was noted that the Passenger Transport Manager had previously addressed the Committee regarding the procurement of vehicles, and it was suggested that Internal Audit would return to assess if recommendations made by the Committee had been taken on board as part of their follow-up work.  A Member highlighted that invoices were not being despatched in an appropriate time.  The Head of Operations advised that the standing debt issue had been addressed and the department now operated on a ‘pay before the service is delivered’ basis.

The Chairman suggested that it may be appropriate for the Committee to invite the Officers to provide assurance at a future date.  The Head of Operations confirmed that he could arrange for a further report to be provided.

A Member highlighted that passenger transport was an external commercial service in competition with the private sector and it was important to consider that the service did not have to think about obtaining finance and cash flow.  It was a concern that going forward the service could be competing with private sector companies and could therefore be putting sound companies out of business.

The Chair concluded that the PTU would be invited to provide an account of action taken as a result of internal audit recommendations. (ACTION – RH/RC).

The Internal Audit Manager advised that another area of concern had been the Procurement function.  At the time of the review the links between departments and the Strategic Procurement Team were variable.  A procurement fitness check carried out by KPMG had given Monmouthshire County Council a procurement maturity score of 31%.  It was noted that the Council was operating with a low level of procurement staff, and that the 5 year Procurement Strategy expired at the end of 2013.

The Strategic Procurement Manager advised the Committee that the following improvement steps had been taken:

• Service Improvement Plan addressed issues
• Creating additional resilience in devolved procurement areas
• Meetings held on a bi-monthly basis
• Working towards a new procurement strategy to take forward to 2019/20
• Creating buyers guides
• Creating contract forward plans

Members felt that Cabinet should take responsibility for the lack of staff in the procurement area.  More staff on the team would save the Council money and was therefore a false economy. The Cabinet Member explained that the Council were in collaboration with the Welsh Purchasing Consortium, and had been in collaborations with other Local Authorities to expand on resilience.

The Head of Property Services advised the Committee that since the commencement of the report, the Strategic Procurement Manager had created a business plan incorporating all the recommendation alluded to in the report.  A key feature of delivering the recommendation was to establish a Procurement Network which had been in place since January 2015.  It was felt that a core of 2, along with the procurement network, provided the optimum performance.

Members suggested that the recommendation of the Committee be that the Audit Committee note the improvements made by service areas following the original Unsatisfactory / Unsound audit opinions issued and that the Audit Committee had concerns about some of the audit opinions issued or lack of improvement made after the follow up audit review.  Consideration be given that we call in the Operational Manager and the Head of Service to provide justification for lack of progress and

hold them to account for future improvements.

It was agreed that Officers would be invited to provide assurances to the Committee that recommendations were being actioned.

The Audit Manager advised the Committee that Llandogo Primary School was now going through a closure process and hence, unlike the other areas covered in this report, no follow-up work would be undertaken there.  The Llandogo audit had noted that Governors at the time had not confirmed the budget and issues had been raised with dinner money income.  It was explained that the dinner money debt would have transferred with the pupil, to another school.

Work carried out at the start of the audit had satisfied internal audit that nothing untoward had been going on and no money had been disappearing.

We were advised that the operation of the Monmouthshire Enterprises development fund was deemed inappropriate and in breach of the Authority’s previous Financial Regulations (in place at the time the Fund was established). The Fund is now only used for limited purposes – collecting income on behalf of the residual ME services and reimbursing MCC budgets for relevant costs.  However, a final decision was required on the winding up of the Fund and the redistribution of remaining balances to ongoing services.

Members commended Internal Audit for raising the issues.  We heard that the development fund had been set up by a middle level manager.  Financial irregularities had been picked up during the disciplinary process involving this former employee.  Members suggested the matter should be brought to Committee on pink papers and considered it important for Officers to be invited to explain further.  It was agreed that Julie Boothroyd and Ceri York of Adult Services be invited to a future meeting for a full and frank discussion.