Agenda and minutes

The Chair advised the Committee that there had been a change to the membership since the last meeting and welcomed Councillor Janette Williamson to the Audit and Governance Committee. The Chair placed on record her thanks to Councillor Pat Hackett for his contributions during his time on the Committee.

Apologies for absence were received from Councillors Baines, Williamson, Maher, and Sir Ron Watson.

There were no declarations of interest received for this meeting.

To consider the minutes of the last meeting held on 4 November 2020.

Monitoring Officer, Jill Coule provided an update on progress of the working group that was established at the September meeting to consider the process for dealing with complaints against members. The Committee were advised that the proposed process had also been considered at the Merseyside Heads of Legal group.

It was noted that since the working group had last met the Local Government Association had published guidance on members code of conduct. Consideration was being given to adopting a consistent code of conduct for all LCR members and whether a similar process to deal with complaints could be adopted. The Committee were assured that a report would be brought back in due course with the working group scheduled to meet again before the March Committee.

The Chair thanked Jill Coule for the update and asked Laura Williams, Head of Internal Audit, for further information on implementing the internal audit recommendations for the organisation’s bike scheme as requested at the last meeting. Laura Williams advised members that progress has been positive and the audit recommendation that was outstanding had since been implemented. It was reported that Internal Audit would monitor progress in the coming months to ensure the necessary measures were put in place.

RESOLVED that the minutes of the last meeting held on 4 November 2020 were agreed as an accurate record.

To consider a report of the Head of Internal Audit providing an overview of the internal audit work completed in respect of the Combined Authority in the third quarter of 2020-21, in accordance with the Internal Audit Plan 2020-21.

Laura Williams, Head of Internal Audit, provided an update on Internal Audit activities since the last meeting, noting that the Christmas Break had required Internal Audit to produce this report earlier than normal and as such progress had been made since the papers were published. The report highlighted four pieces of work that had been completed in section 2.1.

It was reported that significant audits had been undertaken on the corporate systems, with a particular focus on insurance claims which were given a moderate opinion. Members were reassured that the implementation dates for the recommendations set out in table 2 had been agreed since the papers were published. 

The report set out the findings from other pieces of work conducted in respect of LCRCA specific systems and Merseytravel specific systems. Members were asked to note the significant work and the moderate opinion for Operator of Last Resort.

Laura Williams explained that progress had been made towards completion of the audit plan and it was currently around 62% against a target of 70% with an expectation that Internal Audit would meet the target of 100% completion by the end of the year.

The report considered the impact of the pandemic and issues that had arisen in terms of providing a Head of Internal Audit Annual Opinion. It was reflected that Laura Williams expected to be in a position to provide an opinion due to the progress made in completing the plan.

Councillor Cameron asked for clarity on whether the bus alternative delivery model audit work had been withdrawn or postponed until the next year. Laura Williams explained that the impact of Covid-19 on bus patronage had changed the project timescales and so the timing of the Internal Audit work as it was agreed that deferring it for consideration at a later date would be more appropriate. Members were assured that Internal Audit remained involved in the project and that it would form part of the Audit Plan for 2021-22

RESOLVED: - That

(a)            the outcomes of the audit work undertaken during the period of the report be noted; and

(b)            the progress made in the delivery of the approved Internal Audit Plan in respect of the Combined Authority be noted.

To consider a report of the Internal Head of Audit providing an update in respect of managing the risk of fraud and corruption in the organisation.

Laura Williams, head of internal audit, presented a counter-fraud update which identified activity on managing fraud and corruption.

With regards to the organisations self-assessment against the CIPFA code of practice, it was reported that the LCRCA had attained 84% compliance with establishing a counter-fraud culture and managing the risk of fraud in the organisation. 

The report summarised Internal Audit’s planned practice fraud work which considered the quality and robustness of controls in the LCRCA and Merseytravel. It was noted that there had been no referrals or allegations of fraud to be considered by the Head of Internal Audit during this reporting period.

Section six of the report considered establishing an anti-fraud culture and focussed on training, fraud awareness and establishing a policy framework for staff and the public identifying how the LCRCA responded to significant issues. Councillor Whitley queried why only 22% of employees had undertaken the fraud awareness training and asked how this could be boosted. Laura Williams agreed that the completion of e-learning module had been low and it was a matter of constant attention for Internal Audit. Levels of uptake are planned to be monitored by HR’s e-learning software and discussions with Heads of Service and colleagues in Learning were underway to develop this and engender engagement.

It was agreed that Laura Williams provide an update at a future meeting

RESOLVED: That:-

(a)           the report be noted; and

(b)           the following Counter-fraud policies be approved:

·       Fraud, Bribery and Corruption Policy;

·       Bribery Policy;

·       Money Laundering Policy;

·       Confidential Reporting (Whistleblowing) Policy;

·       Surveillance Policy; and

·       Investigation Protocol.

To consider a report of the Head of Internal Audit providing an update in respect of the system of corporate risk management and the activity that has been undertaken in embedding this system during the third quarter of 2020-21.

Laura Williams, head of internal audit, provided an update on Risk Management focussing on the ongoing review of the Corporate Risk Register.

Members were informed that the Risk Register template had evolved to include from the Risk Management policy which was approved in September 2020.

Laura Williams explained that risks 2 and 11 had been merged due to their similarity and risk 13 had been updated to accommodate for wider risks around transport funding, travel behaviour and effects of the pandemic.

Section 3 of the report detailed the developments made in respect of Service Risk Registers and the ongoing work with Heads of Service and risks worsened by the pandemic such as cyber-attacks.

Councillor Cameron queried the format of the Risk Register which showed Transport Provider Liquidity to have a green RAG rating which suggested the risk had been mitigated in December 2020. Laura Williams explained that the RAG rating showed progress in respect of the outlined actions but that there was also a residual risk score in the table. Members were advised that for some risk the LCRCA had exhausted what it had the latitude to do and had controlled the risk to a good level whilst being cognisant that there was residual risk that was outside of the LCRCA’s control.

It was asked if the risk relating to operator of last resort related to the whole integrated travel network or if it related directly to rail and bus. Laura Williams advised members that the risk had originated as a Rail specific risk but as the pandemic had continued and lockdowns were enforced there were wider risks to consider. There was no specific duty for the LCRCA to act as operator of last resort for bus but issues with the bus network would cause challenges for the LCRCA. The report included narrative on potential changes to funding models and the LCRCA’s responsibilities in terms of providing a transport network.

Due to technical difficulties Martin McDonagh was unable to attend the meeting but he had asked that  concerns over how drops in patronage, the ongoing pandemic and recent flooding affected the Business Plan be raised and the Chair raised Brexit as another factor for consideration. Laura Williams explained that Directors would be reviewing  the impact of Brexit and reflecting this  the Risk Register. In terms of the impact of the pandemic, Building Back Better looked to support recovery in the city region and considered the social and economic impacts of the pandemic. With regards to patronage it was acknowledged that social distancing guidelines and government advice about public transport was affecting the network and could be impacted by the rollout of Covid-19 vaccines.

RESOLVED: That:-

(a)           the progress made in embedding the system of corporate risk management into the organisation be noted; and

(b)           the refreshed Corporate Risk Register be noted.