Agenda and minutes

          Apologies for absence were received on behalf of Councillor Graham Morgan and Independent Member, Jean Gleave.

            There were no declarations of interest submitted.

To consider the minutes of the meeting of the Committee held on 29 September 2022.

The minutes of the previous meeting held on 29 September 2022 were approved as an accurate record. 

To consider a report of the Executive Director of Corporate Services and the Portfolio Holder for Policy, Resources and Reform.  

Louise Outram, Deputy Monitoring Officer and Deputy Legal Chief Officer, stated that this report advised Members of changes to the Terms of Reference for this Committee that the Combined Authority had made at one of its recent meetings.

It was proposed to incorporate Merseytravel into the scope of the Committee’s Terms of Reference. Merseytravel was deemed to be an officer of the Combined Authority and it had had alternative audit committee arrangements but the Combined Authority had determined that this Committee should have oversight of Merseytravel matters.  

RESOLVED – That the contents of the report and the revised terms of reference as agreed by the Combined Authority be noted.

To consider the report of the Head of Internal Audit.

Laura Williams, Head of Internal Audit, advised that this was the regular report that the Committee received in respect of the work of the Internal Audit section as at Quarter Three of 2022/23.

As outlined in the report the work that had been completed within that period supplied the Committee with the relevant assurances. The Committee should note that there had been five pieces of audit work completed in the period and the details of that were provided within the report. It should also be noted that the work in terms of following up on implementation of previous recommendations continued and summaries of that were also provided in the report.

RESOLVED- That the report be noted.

To consider the report of the Head of Internal Audit.

Laura Williams, Head of Internal Audit, stated that this report updated on the annual fraud activities during the year and was a summary and culmination of the work that had been undertaken during the year in respect of prevention, detection and deterrent of fraud, bribery and corruption.

She highlighted a number of further points as follows:

(1)            The reflection within the Annual Self-Assessment around managing the risk of fraud in local government and the increase in the compliance with that document from 40% last year to around 80% this year which was mainly due to the fact that an extensive fraud awareness campaign had taken place over the last year and also the revision and update of the Fraud, Bribery and Corruption Strategy and the addition of many details which helped in terms of compliance with the guidance.

(2)            Also included within the report were various details in terms of the proactive and reactive Internal Audit work that had been undertaken during the last year and the remaining items of the Counter Fraud Protocols had also been reviewed but there were no changes made and were presented simply for information. 

(3)            The only item not presented in the suite of protocols was the Anti-Money Laundering Protocol. Some audit work had been undertaken recently in that area and the opportunity was taken to do a more fundamental review which unfortunately had not as yet been concluded and therefore it would be brought to the next meeting.

Councillor David Burgess-Joyce noted that a lot of excellent work had taken place around this and fraud awareness was very useful. His concern was around whistle-blowers and the fact that procedures had been put in place to make them feel more comfortable about coming forward. He asked if further consideration could be given to making whistle-blowers feel even more comfortable so that coming forward would not jeopardise their own careers and wellbeing.

Laura Williams responded that the Fraud, Bribery and Corruption Strategy was owned by the Chief Executive and Directors and which set out that there was a zero approach to fraud and that all reasonable steps would be taken to ensure that fraud was prevented, detected and deterred. She thought that was very important in terms of setting the tone corporately and the culture around fraud. One of the main routes by which the organisation could be made aware of fraud was through whistle-blowers. It was therefore very important that through reviewing and looking at the Whistle-blowing Policy on an annual basis, making sure that staff were aware of the provisions within the policy and also by completing their Fraud Awareness training, that confidence was built up within the provisions of the policy to protect staff if they felt that they wanted to come forward with a concern. It was also about encouraging them that if they did come forward that that concern would be welcomed. She thought that there was a number of ways that could be done such as through the Fraud  ...  view the full minutes text for item 27.

To consider the report of the Head of Internal Audit.

Laura Williams, Head of Internal Audit, presented a report which provided an update in respect of the system of corporate risk management and the activity that had been undertaken in continuing to embed this system during the third quarter of 2022-23.

In the period the team had facilitated the Executive Leadership Team to review the Corporate Risk Register the details of which had been presented in the report. It was noted that there had not been any significant changes made but a number of actions had been closed and it was now about looking at the next phase of actions particularly around the resilience risk and what that might look like moving forward. The aim was to continually sharpen up those actions in respect of how the organisation responded to the identified risks and to make sure that those risks were being dealt with appropriately.

It was also noted that within the report there was an update in terms of the other activities that had been and were being undertaken in continuing to embed that system of risk management. Key to this was facilitating those review sessions with the Executive Leadership Team but also in the development of a Risk Management Skills training package the first one of which had taken place in October and had been well received.

The other area that had been notable was that within the organisation a very successful risk group had been developed which had identified a couple of the key or common risks across the organisation. The group had been used as an opportunity to identify those risks and to think about what the organisational response to those risks should be and to convene some short- life task and finish groups to develop some approaches to them. A couple of examples had been included in the report particularly around the supply chain issues the organisation was facing.

Councillor Mike Wharton referred to the risk around resilience where the residual risk was high at 20 but there was a RAG rating in green which he did not understand given that this was a really important risk for the organisation. The control measures were listed but they did not appear to be having a great impact on the residual risk and he asked if he could have an explanation on that.

Laura Williams replied that in terms of the RAG rating it related to the progress in terms of the actions. Some good progress had been made in respect of the actions and a number had been closed or were in the process of being completed. As previously mentioned there was a need to take a fresh look as although a number of actions had been completed there would still be new actions that would need to be to identified to address this risk. It was difficult to explain the impact of controls until they had been tested and obviously there had been some live examples over the years which had tested our resilience as  ...  view the full minutes text for item 28.

To consider the report of the Executive Director for Corporate Services.

Sarah Johnston, Assistant Director of Finance, presented a report which built on a previous audit update given to the Committee in September 2022 which demonstrated the progress which was being made against the annual external audit. The report outlined the timescales for the production and audit of the accounts and at paragraphs 3.3 and 3.4 it noted that whilst the audit had progressed well and was substantially complete there were a couple of areas outstanding. There was a national issue around infrastructure assets which meant that the audit could not be completed until there was a practical solution to this issue which was likely to be in the New Year. The other issue to note was that the Value for Money assessment had been decoupled from the main audit opinion so again that would be delivered later in the year. This meant that the accounts would come back to the Committee at a later point when all of those issues had been resolved.

Mark Dalton, Director – Public Services, Mazars, confirmed that the report would be taken as read but he took the opportunity to highlight a number of key points. He referred to page 297 of the agenda where the Committee would be pleased to note that subject to the limited outstanding work it was anticipated that a clean unqualified opinion would be issued on the financial statements. The accounts that had been presented for audit were of a good quality and only a few minor amendments had been identified through the audit process. The misstatements included one that remained unadjusted, and the Committee would be asked through the Letter of Representation to confirm that they were content with Management’s position not to adjust the accounts. He confirmed that the External Auditors were content with Management’s position, but it was up to the Committee to confirm that that was the case.

As had been highlighted in the covering report there were two main areas of work that remained outstanding which did prevent signing off the accounts at this time. There was a sector-wide technical issue in relation to accounting for infrastructure assets which was not expected to be resolved until the end of December and also the late receipt of assurance from the Pension Fund auditors which had only been received on Friday. Both of those issues were outside of Management and External Audit control and other than those two main factors the Financial Statements Audit was substantially complete for the Combined Authority and Merseytravel. It had been highlighted that the Value for Money work was not being reported at this time consistent with the discretion from the NAO and that would be reported within the next couple of months or early in the New Year. He thanked the Finance Team for a good set of accounts and also for the assistance provided throughout the audit.

Dawn Watson, Mazars, took the Committee through some of the detail in the audit completion report.

Councillor David Burgess-Joyce referred to page 299  ...  view the full minutes text for item 29.