To approve as a correct record the minutes of the meeting held on 28 September 2021.

Decision

To approve the minutes of the meeting held on 28 September 2021 as a correct record.

The Committee considered the report of the External Auditors (Mazars) which set out progress towards completion of the annual external audit.  The completion had been delayed further than anticipated due to ongoing queries and technical issues with HM Treasury software still awaiting resolution as well as a technical issue related to the submission of the Council’s Whole of Government Accounts (WGA).

The report set out a detailed summary of the external audit activity position to date, highlighting good progress in some key areas. It also provided information on the two main areas causing the majority of delays; namely,  audit of the valuation of land, buildings and investment properties; work on cash balances, and; the consolidation of the Council’s Group Financial Statements. The valuation of land, buildings and investment properties was described as the most significant area of external audit awaiting completion, and because of ongoing unresolved queries and complexities around accounting estimates, had been classified as a significant audit risk.  Mazars reported good and close liaison with the Council’s Finance team, however delays relating to these elements had resulted in Mazars being unable to conclude their audit by the end of November 2021, as originally planned. Work would however progress as quickly as possible .

With regard to the non-compliant WGA submission, the Committee explored the underlying reasons for the delayed external audit completion. Members were advised that this was due to a mis-posting error in the Council’s Published Accounts, which had been influenced by a number of factors, and were outlined in the meeting by the Deputy City Treasurer.  The error had been swiftly identified and rectified by the Council’s Finance team who were in the process of finalising the relevant documentation to form part of the evidence base to assist the completion of external audit activity. A Member sought assurance that there was no underlying systemic issue that could potentially lead to repeated issues of this nature.  Noting the subtle differences in terms of process and procedure across local government entities, the Deputy City Treasurer gave assurance that this was not the case, however a review focussing on learning points and quality assurance measures for year-end submission processes was a priority.

The Committee was assured that there were no sanctions associated with the late submission.  The intention was to complete the external audit in time for the January 2022 meeting and the need to call an additional meeting of the Audit Committee was felt to be extremely unlikely due to the frequent cycle of scheduled meetings.

Decision

To note the report.

The report of the Deputy Chief Executive and City Treasurer is enclosed.

The Committee considered a report of the Deputy Chief Executive and City Treasurer which presented Treasury Management activities of the Council during the first six months of 2021-22.

The report presented information which outlined:

• The portfolio position as at 30th September 2021:
• An overview of economic conditions 2021-22 to date
• Public Works Loans Board (PWLB) Consultation
• Treasury borrowing in 2021-22 to date including temporary borrowing and Salix borrowing
• Compliance with Prudential Indicators and Treasury Limits
• Investment Strategy for 2021-22 to date
• Temporary Borrowing and Investment for 2021-22 to date
• CIPFA Consultation on Prudential and Treasury Management Codes of Practice
• Concluding comments

The Deputy City Treasurer introduced the report with a focus on the report’s key headlines. There was a discussion around the balance between capital spend and borrowing and how these contrasting elements are weighted and balanced, as well as inflationary considerations. The Deputy City Treasurer described the complex and interlinked arrangements in place that underpin treasury management decisions  and gave assurance that the Council takes an extremely prudent and measured approach such that the Council’s considerable capital ambition was felt to be affordable with adequate headroom in the budget for its sizable programme . The Committee subsequently resolved to receive training on these aspects in their annual training event.

Decision

1.         To note the report

2.         To agree that the Committee’s annual training event scheduled for December 2021 shall include information on governance arrangements  and procedural considerations for Treasury Management and the Council’s Investment Strategy.

The report of the Head of Audit and Risk Management is attached.

The Committee considered a report of the Head of Audit and Risk Management  which presented the annual programme of audit work designed to raise standards of governance, risk management and internal control across the Council which would culminate in the Annual Head of Internal Audit Opinion and an Annual Assurance report. The report provided an update on progress of the agreed audit plan 2021/22; additional work assigned to the audit service and copies of the audit opinions issued in the period May to October 2021. It was highlighted that progress on the previous period had been included in the Annual Audit Opinion paper presented to the Committee in June 2021.

The report discussed:

• The delivery of the Audit Programme
• Resourcing and Plan
• An overview of  activity in Children’s Services and Education  including School Financial Health Checks, Supporting Families, Client Financial Services – Appointeeships
• An overview of activity in the Corporate Core, including Information Governance, ICT, Core Systems, Estate Services Review, Grant Certifications, Our Town Hall – Management of Work Package Delivery and Payments and Capital Programmes
• An overview of activity in Neighbourhoods; including Growth and Development, Highways Compensation Events Review and  Avro Hollows
• An overview of activity in Procurement, Contracts and Commissioning (PCC) Waivers and Contract Extensions, Supplier Relief and Supplier Due Diligence
• Counter-Fraud and Investigations audit activity, including Proactive and Reactive Corporate Cases
• Information concerning Investigations relating to Business Grants, Council Tax Reduction Scheme and Housing Tenancy

There was a discussion about the limited assurance rating reported in relation to Schools Financial Health Checks and the challenges these presented in terms of segregation of duties, given that there is no requirement to prescribe financial or business management roles across the schools sector. The report indicated that COVID related pressures had likely contributed to instances of lapse and non-compliance in key areas, acknowledging that segregation of duties could present a significant challenge for smaller entities.  The Committee discussed the importance of robust governance processes and the crucial role of governing bodies in maintaining oversight of School Financial Value assessments.  The Head of Audit and Risk Management advised that whilst the exercise had highlighted areas of focus the matter was predominantly confined to smaller schools in response to COVID pressures.  In addition to ongoing dialogue and sessions on how to identify and reduce fraud and irregularity, best practice in data handling and data protection with schools sector representatives, an exercise was being considered in conjunction with the Schools Finance team to develop a framework to strengthen governance processes around procurement activity where the greatest risk was felt to exist.  Discussions turned to the role of Section 151 Officer and the Director of Education concerning powers to intervene where necessary.  There was emphasis on the importance of early detection, help and support to raise awareness about the requirements as a preferred course of action in light of the disruption caused by removal of delegations where serious governance concerns exist.  The outsourcing of HR services (including payroll services) was also discussed as an  ...  view the full minutes text for item 35.

The report of the Head of Audit and Risk Management is attached.

The Committee considered a report of the Head of Audit and Risk management which summarised the current implementation position and arrangements for monitoring and reporting internal and external audit recommendations. 

The report included information on:

• The standard process for follow up of management actions on high-risk recommendations
• Current Implementation Position, including a summary of Outstanding Recommendations (over 12 months), concerning  mental health casework, Transitions and Section 106 agreements; and
• A summary Significant / Critical Overdue Recommendations (less than 3 months)
• A complete list of recommendations, including Management responses and updates/opinions for each were included as appendices.

The Head of Audit and Risk Management introduced the report with emphasis to there being just three overdue recommendations that required completion, adding that those individual responses were expected as part of the completion of ongoing audit activity in early 2022.

A member stressed the importance of having officers present at the meeting to provide an explanation for delays with implementation, as this was an important part of the assurance and follow up process for the committee.

A member queried the text listed  under ‘update / opinion’  in response to changed requirements for the implementation of Permanence Planning Meetings (page 92) such that timescales are no longer required and they are now conducted as and when required.  Noting that the matter related to a practise issue, and that further discussion may potentially fall within the remit of either the Children and Young People Scrutiny Committee, the Corporate Parenting Panel or Manchester’s Safeguarding Partnership, the Head of Audit and Risk Management  agreed to discuss the matter with the Director of Education to explore the most appropriate route to consider the response.

There was discussion about recommendations made in respect of Section 106 agreements. Noting the appointment of a new Director as well as  a dedicated officer and taking into account the length of time the matter was overdue, a member commented that more information on the management and administration, with a particular focus on historic agreements was necessary. The Committee was invited to note that an annual update report on Section 106 agreements was planned for submission to the December 2021 meeting of the Resources and Governance Scrutiny Committee, the scope of which would be amended to include some narrative on unspent funds.

Decision

1.         To note the report.

2.         To request that the Head of Audit and Risk Management liaises with the Director of Education to explore the most appropriate route to consider changes to the frequency of Planning Permanence Meetings.

The report of the Deputy Chief Executive and City Treasurer is attached.

The Committee received a report of the Deputy Chief Executive and City Treasurer which provided an update on the partnerships that had received a ‘Reasonable’ or ‘Limited’ rating under the Council’s comprehensive governance assurance process called the Register of Significant Partnerships (RSP), in line with the established procedure.  The Committee was invited to comment and note the progress made to improve governance arrangements for the partnerships detailed in the report

The report provided information on:

• The background and context of the assurance process
• An update on partnership governance arrangements for those with a Reasonable or Limited Governance Strength Rating over the last six months; and
• A summary of next steps, with particular reference to a planned restructure to the annual assessment form, revised Terms of Reference as well as the proposal to review the composition of the officer working group  ahead of the 2022 review.

In response to a question about potential financial implications associated with the winding up of Manchester Working Limited, the Head of PMO: Commercial Governance & Directorate Support informed the committee that an imminent review had been scheduled to establish and agree an appropriate timeline and action plan.  Therefore in the next scheduled update to the committee a clearer picture of any emerging risks would be provided.

A similar question was asked in respect of National Car Parks Manchester Limited Joint Venture (JV).  The Head of PMO: Commercial Governance & Directorate Support explained that the JV was in the process of being wound up, with a timeline for completion estimated  within 3-6 months in light of complexities around the agreement itself.  She added that officers were aware of potential financial challenges linked to certain elements of outstanding liabilities that were associated with the dilapidation of  car park conditions. More detail  would be provided in the next scheduled update to committee and confirmed that the partnership would remain on the Register  until members are fully assured  about the processes around that.

In response to a question about SHOUT TMO, the Head of PMO: Commercial Governance & Directorate Support gave assurance that all aspects of the transition of listed activities with Northwards had been successful and would be incorporated into regular monitoring activity that sits with the Council.  She added that, the winding up of Northwards itself was anticipated for a Spring 2022 completion date.

In response to the update on Manchester Health and Care Commissioning (MHCC),  a member commented on the and diversity of health needs across the city, and the challenges this could present in how health, public health and social care services are provided across Manchester’s wards.  She stressed the importance of ensuring that all the appropriate checks and balances were in place to effectively audit the delivery of such services across the city.

Decision

To note the report.

Councillor Robinson declared a personal interest as a tenant of Solutions for Brunswick (S4B)

The report of the Deputy Chief Executive and City Treasurer is attached.

The Committee considered a report of the Deputy Chief Executive and City Treasurer which set out proposals for the appointment of the City Council’s external auditor for the five-year period from 2023/24 in line with the requirements that are set out in Section 7 of the Local Audit and Accountability Act (2014).  The report highlighted that the Council’s current auditor contract with Mazars LLP has run from 2017 and would expire on completion of the 2022/23 audit.

Three options were available in terms of the approach to secure an appointment:

Option 1 - to run a local procurement;

Option 2 - to procure in partnership with other authorities; or

Option 3 - to opt into a national arrangement. 

The Head of Audit and Risk Management introduced the report with a focus on the options available to the Council, highlighting that the matter was ultimately a Full Council decision, but that Audit committee’s input formed a crucial element in the decision. Options had been assessed and the preferred solution was to again opt into the national procurement process run by Public Sector Audit Appointments Limited (PSAA) and supported by the Local Government Association (LGA).  He recapped the main downside to the preferred option as reducing the Council’s influence over aspects such as social value due to limited influence in the national process.  He highlighted the recommendation that the Chair of the committee writes to the Public Sector Audit Appointments Limited (PSAA) about the widely acknowledged factors at play that have contributed to delays and to concerns over audit quality as referenced in the Redmond Review and outlined in the report.

Having duly considered the report, the Committee agreed the recommendation to support Option 3 (the national arrangement) with the suggestion that the extent to which social value weightings may be included could nevertheless be explored with the external auditor allocated.  The Committee also endorsed the proposal that the Chair writes to Public Sector Audit Appointments Limited (PSAA) to seek assurance that their planned process for procurement and contract management is designed to address, as far as possible, the risks and issues evident in current external audit arrangements. 

Decision

1.    To support the preferred approach to opt into the sector-led option through Public Sector Audit Appointments Limited (PSAA) in respect of the appointment of external auditors to principal local government and police bodies for five financial years from 1 April 2023.

2.  To endorse the proposal that the Chair shall write to Public Sector Audit Appointments Limited (PSAA) to seek assurance that their planned process for procurement and contract management is designed to address, as far as possible, the risks and issues evident in current external audit arrangements.

The report of the Director of Policy, Performance and Reform is attached.

The Committee considered a report of the Deputy Chief Executive and City Treasurer which presented the Council’s annual performance for 2020/21 in respect of the management of corporate and social care complaints, Councillor and MP enquiries, as well as information requests

The report provided information and key messages on:

• An overview of complaints and enquiries management - a similar global number of complaints was received (c2100) in comparison to the previous year  with the majority of complaints having been received in the last quarter 
• Performance Management of:

1)    Stage one and Stage Two Corporate Complaints - a fall (from 74%- 58%) in the timeliness in of completion of Stage 1 complaints was reported.  There was however a reduction in number of complaints that were escalated from Stage 1 to Stage 2

2)    Councillor and MP enquiries, including response rates

3)    Social Care Complaints: a six-fold increase in social care complaints was reported

4)    General Data Protection Regulation (GDPR) andFreedom of Information Act requests (FOIA) requests – a 40% increase in volume was reported

5)    Local Government Ombudsman – there had been an increase in volume  from 20 to 37 in the year, with a fall in the number of complaints upheld by the Ombudsman.

6)    Praise – 380 instances of praise were received.

The introduced the main headlines of the report, highlighting the impact of the pandemic on changes to service delivery, redeployments factors, as well as the impact of new and additional priorities which inevitably affected the amount of time available for officers to respond to complaints.  The implementation of the new complaints monitoring system (Infreemation) and the initial transition to the new system had also impacted on timeliness of responses due to issues accessing the data. 

There was a discussion about the difference between service requests and formal complaints.  The Director of Policy, Performance and Reform explained that whilst service requests are logged on a separate system, repeated requests from a given resident are dealt with as a complaint and picked up by the Complaints team in the usual way and were therefore included in the performance data.

Discussions moved to how the data gathered on complaints is analysed with specific reference service delivery, business planning and priorities and ultimately how it informs the Audit Plan. The Director of Policy, Performance and Reform described the role of the Complaints team, including Complaints Managers and their significant role in helping to identify increases in areas of complaint, reductions in timeliness of responding to complaints in consultation with Service Managers. Where serious allegations existed (eg fraud, misconduct etc) these are  shared with  the relevant department for further action, however discussions around areas of particular focus for Audit Planning activity are agreed at senior officer level between the Director of Policy, Performance and Reform and the Head of Audit and Risk Management.

A member suggested that future complaints reports to committee should include additional information from each directorate setting out how complaints are dealt with  in reference  ...  view the full minutes text for item 39.

The Committee noted the absence of the Deputy Chief Executive and City Treasurer, at the meeting due to her attendance at an investiture ceremony at Buckingham Palace for the OBE awarded to her in 2020 by Her Majesty, Queen Elizabeth II.  The investiture ceremony had been unavoidably delayed by COVID restrictions.  The Committee acknowledged Carol Culley’s hard work and unwavering dedication to her role and welcomed the recognition of her extraordinary contribution to Manchester and its residents.

Decision

To congratulate the Deputy Chief Executive and City Treasurer (Carol Culley) on the receipt of her OBE in recognition of her hard work, unwavering dedication and the extraordinary contribution she has made to Manchester and its residents.