Agenda item

The Chief Internal Auditor introduced the report on limited opinions explaining that the Governance and Audit Committee had invited Service Managers and Heads of Service to provide an update on progress. The Committee had the option to accept the assurances provided which will be verified with a follow up report as included in the Audit Plan or if explanations from the Managers are not accepted, then the Committee can raise concerns with the Chief Officer and SLT to escalate their concerns.

1.            Concessionary Travel:

i)              Hardship payments totalling over £46k had been claimed from Welsh Government which had not been invoiced for by the operators or paid over to them: The Passenger Transport Unit Manager explained that the report is focused on a Local Government Concessionary Travel Scheme funded by the Welsh Government. During the pandemic Welsh Government agreed that operators were to be paid at pre-pandemic levels to provide sustainability of bus services. At time of the audit these payments were being paid to the operators. The limited opinion regarding payments of £46,000 being claimed from Bus Emergency Scheme 2 (BES2) but not paid out links into other grant funding schemes. The money to be repaid was from English corporate operators who were going to sign up to the BES2 scheme, but they had funding from the Department for Transport instead.  This was added to the claim as it was close to the end of the financial year (unknown if they would apply) and the money was repaid to the Welsh Government in full.  The issue won’t recur as, from 1^st August 2022, Welsh Government has returned to actual claims not historic. The money had been accrued before for this financial year and now it has been paid back to Welsh Government at Quarter 4.

ii)             Quarterly Claims: The Passenger Transport Unit manager explained that there has been an issue with signing off forms to send to Welsh Government at the end of the quarter with a deadline of the 20^th of the following month.  This allows little time to receive details from the operators and return the form. Addressing the comment that they were submitted without the signature of the s151 Officer, this was confirmed as correct as these were draft reports. The audit process is that the finance team checks to make sure the ledger agrees with the return.  The return can then be signed by the s151 Officer. Previously, it was only the final return that was returned to Welsh Government with signature by the s151 Officer. The quarterly returns were signed by the Head of Service. An e mail from Welsh Government explained that the 20th day of the following month for the submission of concessionary fare claim forms was chosen as half of the authorities submitted either a final or a draft version of the claim form within that timescale but Welsh Government understood that when the operators return the information affects when an authority can submit a final signed form. There is an issue obtaining invoices from corporate operators.  Ticket machines information is provided so claim forms can be submitted but the invoices can come from a central office causing delays.

iii)        The Grant terms and conditions letter: The Passenger Transport Unit Manager explained that the grant letter has been received late from Welsh Government due to its internal sign off processes.  The example was quoted of the 2022/23 concessionary fares and Bus Services Support Grant (BSSG) award letters dated 30^th August have only just been released.

iv)           Internal guidance documents and procedures to ensure the scheme was administered within Welsh Government expectations: The Passenger Transport Unit Manager explained that such guidance would be in place within a month.

v)            Operators claims not supported by Smartcard data:  It was explained that there was a problem with two operators that didn’t have the ticket machine data due to being in the process of transferring to different systems. That has now been rectified and the ticket machines return 98% swipe rate. English operators run into Wales and none of the ticket machines are compatible with Welsh Smartcard data. Welsh Government is aware and has agreed to accept a spreadsheet from those companies instead of the Smartcard data

vi)           Dates for submission of claims from operators have not been set, resulting in these being regularly received late: It was explained that dates have been set. It is up to the operators to submit the claims. The claims often come from a centralised office or volunteer staff and can be delayed

vii)             Monthly reports are available to help identify potential fraudulent behaviour: The Passenger Transport Unit Manager explained that there was a problem when Welsh Government’s supplier changed from ACT to Fujitsu and since then, the reports have arrived in zipped format and can’t be opened. This has been investigated with SRS and Fujitsu to try and open the reports.  The reports show how many people have used their cards over ten times or use them very frequently over a short period of time to enable checks and monitoring of vehicles. It is hoped to resolve this before the end of November.  The Chair was surprised that zipped files could not be opened. It was responded that other authorities have the same issue.

viii)         The Authority does not have a programme in place for inspectors to board vehicles which are used to carry concessionary passenger for spot checks on processes and the number of passengers carried: It was explained that work is underway on resuming checks but resources are limited.

ix)           Minor errors were identified in two of the historic figures used within the 2021/22 Quarter 1 BES2 calculations: This has been rectified.

x)            Overall claim balances relating to the first two quarters of 2020/21 had not been settled or recorded in the financial ledger system: Payments were changed by Welsh Government. During Covid, authorities were given interim payments to replace quarterly payments in arrears to make sure there was cash flow. These were reconciled at year end. When quarter 1 and quarter 2 were checked, they wouldn’t have been reconciled at that point but would be reconciled at year end.

The Chair thanked the Passenger Transport Unit Manager for the explanations and noted the dependency on third parties in some cases which has affected the ability to act on audit recommendations.  Questions from Committee Members were invited:

·         A Member asked about the potential for operators to defraud the system and if it would be worthwhile appointing someone to monitor this. It was confirmed that the information collected is useful e.g. it was detected that an operator had swiped the card multiple times. This was reported to Welsh Government.

·         A Member queried why the grants letters are sent to the Chief Executive and it was clarified that Welsh Government had been asked to send the letters to officers as well in future.  The Officer was asked if there were barriers to progress. It was reiterated that meeting the deadline of the 20^th of the month is very difficult and this is acknowledged by Welsh Government. A draft, unsigned form is submitted and it shouldn’t be expected that the S151officer signs an unchecked form.

The Chief Internal Auditor raised the formal acceptance of grants not being           returned to WG within the 21-day deadline. Assurance was provided that the deadline will be met going forward.  The form will be sent to officers to ensure that it gets signed off within the 21-day deadline.

·         A Member said there the lack of clarity over whether the recommendations are accepted or not and understanding where third parties are involved. It was enquired if other authorities have the same concerns.  The Chief Internal Auditor said it was difficult to confirm the position of other authorities, but they work to the same terms and conditions.  The audit process identified the expected controls that should be in place for concessionary travel.  The scope is agreed with the Service Manager who is expected to provide the appropriate information to enable an audit against the procedures and policies. Some strengths and weaknesses were identified, and the weaknesses far outweighed the strengths hence the unfavourable opinion. By way of comparison, the Passenger Transport Unit Manager stated that half of the other authorities get their claims in on time so there is a difference there.

·         A Member suggested a review of the processes that aren’t in place mid-next financial year so they can be changed or improved.  The Chief Internal Auditor explained that in normal circumstances, a limited opinion would be followed up. There was a delay in finalising this report so a follow up review is not included in the 2022/23 Audit Plan but it will be added to Quarter 1 for 2023/24 to ensure the recommendations have been acted upon and there are improvements in the system to report back to committee.

The Chair thanked the officer for attending to provide explanations.   Some continuing control weaknesses are evident, but the wider situation is understood. The Committee will look forward to receiving further updates in due course

2.            Fleet Health and Safety and Driver Management: The Head of Decarbonisation, Transport and Support Services welcomed the opportunity to offer some explanation and context in relation to the limited audit opinion, noting that some of the recommendations were not agreed at the time of the report.  It was explained that, at the time of the report, all budgets relating to Fleet, Health and Safety and Management were devolved to individual service areas and it was contended that there were no levers available to make adjustments to address the report’s recommendations.

i.              There was no central management of the Health and Safety of Fleet and Driver Management within the Authority: It was explained that the fleet team budgets have now been centralised, the recommendation is agreed and is in progress. New information is available from starter and termination forms to identify to the transport team those new staff who are required to drive and those who have left their role. A new Accident Investigation and Training Officer undertakes driver induction and assesses ability to undertake a role. A Utilisation Officer post is to be recruited. Work is in progress on documentation and overall, good progress has been made.

ii.             Lack of Policies and Procedures: These are in development. Some policies and procedures lie within the remit of Fleet. The Drug and Alcohol testing procedure is being worked on by the Training Manager who is working on the policy. A draft drivers’ handbook is subject to consultation. It is planned to present a Vehicle Tracker Policy to Joint Advisory Group (JAG) in November to progress its adoption.

iii.            Training documentation was incomplete: At the time of the audit individual service areas training records were not kept. All the training undertaken is now recorded on a spreadsheet to be uploaded to the new training portal when introduced. Individual records are not recorded for more job specific training e.g. chainsaw training. Managers will be expected to upload that data to the new training system when operational.

iv.           There was no Accident Policy or formal guideline in place.  At the time of the report, accident reporting was managed by the insurance team and there was a procedure in place. Accidents must now be notified to the Accident Investigation and Training Officer to investigate and if necessary, arrange or instigate disciplinary action.

v.             The reason for vehicle trackers and information usage was not clearly defined and documented: A Vehicle Tracker Policy will be presented to JAG in November prior to its adoption and implementation. A tracker system is installed on every vehicle to provide data on vehicle utilisation to begin to reduce the fleet. This is an important part of the decarbonisation agenda. Routes can be identified to explore opportunities to share vehicles and investigate the most suitable vehicles for purpose.  Trackers can assist where there are queries from the public e.g. alleging drivers travel at excess speed.

vi.           Quartix (vehicle tracker) user list was not regularly reviewed: This has now been resolved. New starters and terminations are notified. The system is monitored on a quarterly basis to make sure that those who need access to Quartix have access. Those who don’t need it will be removed from the list.

vii.          Policy on speeding: This is contained within the Vehicle Tracker Policy and in the new handbooks to be distributed shortly. Details of how the information will be used and expectations of drivers (and their managers in ensuring compliance) with not just speeding but all highway code regulations and legislation will be included.

·         A Member asked about the policy on drugs and alcohol, and the criteria on speeding.  It was explained that this data would be retrospective based on information from a tracker. The Drug and Alcohol Policy was not developed by the transport team. It is a corporate policy yet to be finalised.  It is possible testing would be done at the base if there was cause for concern.  The authority has an obligation to report any speeding incidences to the traffic commissioner.  Service Managers are expected to advise all colleagues regarding speeding.  If there are repeat incidences, tracker data can support the disciplinary. Process.

·         The Member asked if retrospective speeding records are admissible to other authorities, how speed can be tracked and how that could apply to the driver’s employment. The trackers provide live data, but someone would need to review the data; there are no alerts. A new officer will undertake checks against the tracker systems and then advise individual managers if drivers exceed the speed limit. It is planned to use the tracking data to inform us of utilisation of the vehicles rather than driver behaviour but confirmed that the data can be used to support investigations into poor driver behaviour/persistent speeding.  The data can also be used to safeguard drivers to verify or refute complaints from members of the public. 

·         A Member asked if there were any barriers preventing progress.  It was explained that the centralisation of the budget has enabled progress on the audit recommendations.  Weaknesses are transferring to strengths.  It is hoped that there are no delays in ensuring the new policies and procedures are approved. When approved, data will be utilised more effectively to facilitate transition to net zero vehicles.

·         A Member asked if the Fleet Team had been reviewed.  The team has grown by two officers (Accident Investigation and Training Officer and Utilisations Officer) with both roles anticipated to enhance the service provided. 

The Chief Internal Auditor welcomed the comprehensive feedback and assurance provided. The follow-up review is included in the Audit Plan for 2022/23 (Quarter 2/4).

The Committee was content with the feedback provided.