MINUTES OF A MEETING OF THE AUDIT PANEL HELD AT COUNTY HALL, NEWPORT, ISLE OF WIGHT ON WEDNESDAY, 16 FEBRUARY 2005 COMMENCING AT 10.05 AM

 

Present :

 

Mr M J Cunningham (Chairman), Mr J F Howe, Mr P D Joyce, Mr R C Richards, Mr I R Stephens, Mr R A Sutton (deputising for the Labour Vacancy)

 

Apologies :

 

Mrs M J Lloyd

 

Also Present (Non Voting) :

 

Mr A C Bartlett, Mr J A Bowker, Mr R G Mazillius

 

 

14.              MINUTES

 

The Minutes of the meeting held on 21 October 2004 were agreed.

 

15.              DECLARATIONS OF INTEREST

 

There were no declarations at this time.

 

16.              ANNUAL AUDIT AND INSPECTION LETTER 2004

 

The Audit Manager for the Audit Commission reminded members that the Annual Audit and Inspection Letter had been presented to the Executive on 9 February 2005.  This covered the Accounts, Inspections, CPA and the Fire and Rescue Service.

 

There had been an improvement in three CPA areas from the previous year with progress also being shown in the reconfiguration of Social Care and Children’s Services.  Improvements to Housing Benefits and Environmental Services were positive outcomes.  Although the Council’s education provision was satisfactory attainment was variable and there was insufficient progress in raising educational standards.

 

The Council was opening its horizons from medium to longer term strategies and engaging with both the public and partners.  The review of Corporate Priorities meant that difficult choices would have to be made and there was some concern as to whether the Council had the capacity to deliver those priorities.

 

Progress with the modernisation of the Fire and Rescue Service was assessed as poor at two verification stages.  The area had lacked attention, although the Council had now begun to address the issue there was still a lot of work to be done.

 

A people management strategy which included diversity, flexible working and women into management had been developed and although the Audit Commission had recognised good practice they believed there was still a long way to go.

 

The Accounts had been closed earlier than was needed and the Audit Commission had issued an unqualified opinion, however there were some major errors and inconsistencies in the capital accounts.  The Council’s financial position was secure in the short term but a review of base line budgets was needed to ensure that service costs were reasonable.

 

Homelessness and housing inspection in 2004 had judged the service as having excellent prospects, but there was a need to ensure the momentum was not lost because the Head of Service had left.  Planning had been judged as fair but with good prospects.  Housing Benefits were hailed as a success but there were underlying systems issues. 

 

6 key messages were highlighted :

 

·                       Identify key priorities over the medium term, stay focussed and ensure the organisation was not overwhelmed by trying to tackle too much too quickly.

 

·                       Critically challenged whether the Council had the capacity and range of management skills needed to progress its change and improvement agenda.

 

·                       Sustain the drive towards creating a performance management culture across the whole of the organisation.

 

·                       Achieve a greater integration of medium term financial planning into the Council’s performance framework.

 

·                       Maintain the focus on identifying and tackling areas of underachievement and service priority.

 

·                       Significant progress was required to modernise the Fire and Rescue Service.

 

Members believed the Council were moving forward very little and it appeared that most other authorities had moved up at least one area in the last refresh round.  They questioned why the Council did not appear to have the capacity to move forward.  The Audit Manager indicated that there had been some improvement in 3 service areas during 2004 but not enough to take the Council up to the next base.  He also advised the Panel that the CPA process was to be changed in 2006 with different criteria and scoring systems being used.

 

There was some discussion in relation to the base budget and how the Council were to achieve a proper base budget exercise.  It was seen as an area that the Council should be devoting attention to as it was a top priority and key action point.

 

Members debated the cost and use of consultants throughout the Council and were advised that the Council should be able demonstrate value received.  A project to review the use of consultants was in the Audit Plan.

 

The Panel believed that wider use of Best Value Performance Indicators could be used to drive performance up, if monitored on a regular basis.  The Council seemed to have difficulties in producing accurate data and what data was produced was not used.  It should also be made clear to Heads of Service that poor performance against BVPIs could impact on their performance pay.

 

Members recalled that a business case had been put forward for Document Image Processing (DIP) whereby the Strategic Director of Environment Services had indicated that because there would be a reduction in revenue the budget would be top sliced.  The Strategic Director of Environment Services should be asked if any savings had been made and if not the reasons for this.

 

RECOMMENDATIONS TO THE EXECUTIVE :

 

(a)             A Star Chamber of members to be set up to investigate any poor performance by Heads of Service against BVPIs making it clear that poor performance could impact of their performance pay.

 

(b)              An investigation should be undertaken into capacity issues surrounding the Finance Department, in order to produce accurate finance data in a timely manner.

 

(c)             Capacity building throughout the Authority should be reviewed, including the use of Strategic Partnering and other options, at the earliest opportunity.

 

ACTION TO BE TAKEN BY THE STRATEGIC DIRECTOR OF ENVIRONMENT SERVICES :

 

A report be submitted to the Audit Panel on the implementation of the DIP project and savings achieved both in terms of financial and staff resources.

 

17.              ANNUAL PLAN FOR INTERNAL AUDIT

 

The Audit Panel were advised that this was the second year of the 3 year Audit Plan which had been agreed in July 2004.  There was some discussion with regard to Supporting People as it was understood that central funding was to be reduced.  The ODPM believed the Government were being over generous and had found a huge disparity in unit costs across the country and intended to make the scheme more cost effective.

 

Members debated the frequency of audits undertaken within high schools.  There was some question as to whether 6 years was too long a period between in depth inspections.  Although it was possible for the inspections to be moved to every 3 years another function would probably be lost.  It was believed the system was robust enough and an annual inspection was more than adequate.

 

There was potential scope for looking at more partnership working.  The Chief Internal Auditor advised members that a major review on partnerships had been undertaken 18 months ago but had been unsuccessful in driving it forward.  84 recommendations had been made with a register of partnerships also being suggested.

 

With regard to Safer Communities members were not sure that 10 days would be enough time in which to undertake such a large piece of work.  The Panel were advised that Internal Audit were currently working with Safer Communities on their governance arrangements and it was anticipated that a full risk assessment would be undertaken during 2006.

 

Members asked for a report to be brought to the Audit Panel on how the partnering contract was working, if there had been any improvements and what savings were being made.

 

ACTION TO BE TAKEN BY THE CHIEF INTERNAL AUDITOR :

 

(a)        The Annual Audit Plan for 2005/06 be approved.

 

(b)               That Safe Routes to School and Partnerships be priorities for the Audit Teams work, with Safer Communities having more time allotted to it.

 

(c)               The Internal Audit regime of all Island schools be looked at and comparative studies with other authorities be carried out.

 

(d)               The Audit report on Partnerships be considered by the Partnerships Task Group.

 

(e)               Members of the Audit Panel to be invited to attend the Partnerships Task Group.

 

(f)                 The Monitoring Officer be invited to attend the Partnerships Task Group and to give an update on the Council’s Partnerships.

 

(g)               The report on the Partnering Contract to be brought back to the Audit Panel.

 

18.              INTERNAL AUDIT PROGRESS REPORT

 

Members were given an update on the projects that had been completed since 2004. Additionally the draft performance indicators for Internal Audit had also been produced.

 

With reference to the Best Value Performance Indicators (BVPIs) members believed there was a need to find out what the barriers were to getting the BVPIs reported.  There was a need to challenge the process as members felt they should understand where any difficulties were being experienced.

 

Members believed it would be useful for the Performance Indicator Co-ordinators (PICs) to attend a meeting of the Audit Panel.  There was some discussion as to whether the PICs should be invited to attend the meeting before the BVPIs had been produced for 2005 or wait until after.  Before was believed to be more useful as it would stress the importance of the data and show how it would affect the decision making process of the authority.  There was a need to look at over, as well as under, performance as it would give a wider picture. 

 

The Chief Internal Auditor advised members that there were a number of data collection officers in small establishments around the Island who were never told how the data fitted into the Council’s overall performance management arrangements and what the consequences were if incorrect information was utilised. 

 

The draft Indicators for the Proportion of Annual Audit Plan completed was set at 70% for 2005/06.  The Panel thought that this target was on the low side and suggested that the target be set at 80% for 2005/06.  The Audit Panel discussed the proportion of recommendations accepted by the Executive as it appeared to be very rare that any of these were reported. There was some concern as to the staffing levels within internal audit and Members were advised that the Plan had been based around the resources that were available.  There were insufficient resources to undertake the full range of activities normally expected.  Benchmarking data suggested that an equivalent authority would have 10 staff.  The Isle of Wight were approximately 30% below baseline standard.  Internal Audit could not currently resource any value for money studies although audit sections within other authorities were still doing that and were able to deliver real cash savings.  

 

The Audit Manager for the Audit Commission advised that the Council’s shortfall in Audit resources had been identified.  The Panel sought clarification of the Audit Commission’s view on the level of risk to the Council through having insufficient resources for audit purposes.  The Audit Manager indicated that he would look for full achievement of the Audit Plan, if it was not reached then that was an issue of concern due to the risks involved.  Members believed that staffing levels should be brought up to a level comparable with the comparative family group, 

 

The Audit Panel agreed with the Audit Letter and fully supported their comments on capacity issues within Internal Audit.

 

RECOMMENDATION TO THE EXECUTIVE :

 

The comments in the Audit Commissions Annual Audit and Inspection Letter relating to capacity issues within Internal Audit needs to be urgently addressed through the appointment of additional staff to reach the number employed by other comparative authorities in the Council’s family group.

 

ACTION TO BE TAKEN BY THE HEAD OF SELECT COMMITTEE AND REVIEW TEAM AND CHIEF INTERNAL AUDITOR :

 

A special meeting of the Audit Panel be arranged, with Performance Indicator Co-ordinators being invited, to discuss the process involved in the compilation of information used in connection with Best Value Performance Indicators.

 

 

 

 

CHAIRMAN