Mr Will Tuckley, Chief Executive introduced the report stating plans had been drawn up in response to the Independent Review of the 2018/19 year-end closure of accounts. Mr Tuckley said it was heartening to hear from Deloitte’s the progress which had been made and thanked Mr Bartle and his team for their continued efforts in producing the 2018/19 and 2019/20 set of accounts, which were appended to the supplement agenda.

Mr Tuckley said clearly there had been huge difficulties experienced in relation to the accounts which were unacceptable and disappointing. He said the 2020/21 accounts were progressing well and significant improvements had been made to processes and procedures plus the recruitment of additional staff.

Mr Tuckley said the report by Mr Worth had led to a detailed improvement plan being developed which was phased into immediate improvements and those which would take a longer time to achieve. He said the Grant Thornton report from June 2018 and the CIPFA report from 2017 were also attached for information. Mr Tuckley said it was clear the issues highlighted in the previous reports were still issues that the Council needed to address. Mr Tuckley commented that several internal audit reports had stated that not enough progress had been made regarding key governance issues including the Grant Thornton review which was commissioned by a former Corporate Director of Resources. He said this report had neither been to the Corporate Leadership Team (CLT) board or to the Executive i.e. Council or Cabinet or indeed the Audit Committee. Mr Tuckley said clearly this ought to have been the case. He said the recommendations within these reports plus the recent report looking at the year-end accounts had been worked into an improvement plan with the assistance of Internal Audit. He said the improvement plan was designed to ensure there was a sustainable and focussed attention to the key governance issues that had been highlighted in the reports. He said issues such as the declarations of officer interests, issues relating to hospitality registers and policy reviews that go towards the core set of ethics and culture of the council plus the implementation of internal audit recommendations and application of risk management had been discussed by the CLT board in recent weeks.

Mr Tuckley said work relating to the financial recovery had been prioritised as well as the governance issues that had been highlighted in the reports. Mr Tuckley said there was a strong commitment across the council to address this and said he believed progress had been made, especially regarding the 2020/21 accounts. In relation to the previous reports Mr Tuckley said he was at a loss as to why the reports had not been made available to the CLT Board or Executive and said he had investigated the passage of the reports. He said the reports had not been to the Resources Directorate’s DLT (Directorate Leadership Team) board either and other than stating the facts, he could not add anything further to this.

Lastly, Mr Tuckley said the Council had made a journey of improvement and this ought to be contextualised. He said the Council had come out of intervention and overall had made good progress on the trajectory of improvement. He said this had been recognised by third parties such as the MHCLG, by peer reviews and the Investors in People accreditation scheme. Mr Tuckley said the progress had not been linear with some services areas digressing and others improving; for example, the finance reorganisation had not gone as well as was intended, in terms of performance and as such there was a refocussed attention to get this right. Mr Tuckley said the improvement plan was part of a wider set of improvement initiatives that the Council was taking forward, and he hoped there would be a continued trajectory of improvement, overtime.

In response to questions and comments from Members the following was noted:

• The Chief Executive, Mr Tuckley clarified the CIPFA report was also commissioned by the former Corporate Director for Resources. He said the report looked in detail at the financial functions of the council, with a heatmap showing areas for significant improvement and areas of good performance. He said it was clear the report was produced but did not follow the normal governance arrangements both for officer and member scrutiny of the report. He said the weaknesses identified in the report need to be fed into the improvement plan if the Council was to progress and strengthen its finance processes and procedures. Mr Tuckley added that he believed some of the areas identified were being addressed by the former Resources Director however the report ought to have been shared widely and exposed at the time. Mr Tuckley said this applied to the Grant Thornton report too.

• In relation to Officer DPI’s, the Chair Councillor Whitehead said this had been raised several times at previous Audit Committee meetings and asked why managers were failing to ensure DPI’s were up to date and correct. Mr Tuckley said this was particularly disappointing especially as substantial progress had been made previously, with a 95% return rate. He said initially the council didn’t have an electronic system in place and as such this involved a considerable amount of manual work to collate the information. He said the infrastructure to enable DPI inputs had been resolved but work was required to embed the completion and review of DPI’s within the culture of the organisation. He said one of the issues had been the system’s failure to preserve the previous year’s declaration and for staff to simply confirm it was correct. He said this was a technicality, but staff needed to be conscious of knowing and keeping up to date their DPI declarations.
• Councillor Wood stated that it was clear improvements had been made but the starting point, for some of the issues unearthed in the reports, was perhaps far worse than originally thought. He recommended that the Council invite external organisations and/or auditors to review the actual progress made when appropriate. Mr Tuckley thanked Councillor Wood for his suggestion and said the Council needed to become a self-aware organisation, where it could spot things and be conscious of that. He said he believed this was happening and said a peer review in the autumn was scheduled to take place.
• Mr Tuckley said it was vital that the Council learnt from the weaknesses that have been identified, within the finance and accounting structures. He drew parallel to the work done in Children Services and said the Council needed to be careful not to rest on its laurels and get to a place where it was continuing to strive for improvement in services, by being more self-aware.
• Councillor Edgar commented that he welcomed the publication of the two reports and the improvement plan. He said it was vital to justify the cost relating to the recruitment of staff and resources allocated to solving the problems faced within the accounting and finance function especially given the pressures on budgets elsewhere in the Council.
• Mr Tuckley stated that he did not wish to give the impression that upgrading to a new accounting system, with the replacement of Agresso, would solve the issues identified within the reports. He said the Council had to prioritise other areas such as the Mosaic and Customer Relationship systems and as a result this had had an impact on other systems which required replacement. He said the Finance Improvement Team plan was to implement changes to Agresso, with a reset but phase two of the improvement plan would look at the other options available.
• Councillor Francis asked if the Grant Thornton and CIPFA reports would be reported to the Overview and Scrutiny Committee. He asked when the reports had come to the attention of senior officers. Mr Tuckley said the reports had recently come to the attention of senior officers and the CLT board. He explained the Grant Thornton report had been commissioned in 2017 and reported in 2018 and went through a different route of reporting. He said some of the preliminary findings had been discussed briefly however the report did not follow the governance process of being reported to the CLT Board, the Executive and the Audit Committee. Mr Tuckley said he believed the Grant Thornton report’s remit was slightly different to the CIFPA report in that it drew together whole streams of activity that was and should have been occurring in relation to finance. He said the report had been reviewed and a wide breadth of activity had been addressed. In relation to the report being presented to the Overview and Scrutiny Committee, Mr Tuckley stated he would attend a future meeting of the Committee.

Mr Kevin Bartle, Interim Corporate Director of Resources and Section 151 Officer addressed the Committee and highlighted the ongoing improvements that had been made, since the development of the improvement plan. He said some of the recommendations from the reports discussed had been delivered, whilst others would take time to implement. He said his focus had been on the completion of the 2018/19 and 2019/20 accounts, which was a corporate priority and as such he was pleased these had been presented to the Committee, in draft format at the meeting. He said the improvement plan had been phased into phases one and two, to ensure the quick wins could happen before March 2021 and for the long-term changes to occur in phase two.

Ms Marion Kelly, the Improvement Plan Programme Director, then presented the key changes that had been made. She referred Members to sections A and B of the report, on pages 70-71 of the agenda and said changes had been made in terms of the leadership, resourcing and planning as well as to systems and processes in place. She gave an example of this and said CLT had agreed for finance officers to place an ‘out of office’ message for a two- week period in early April, so that they could solely concentrate on delivering the accounts. She said communication between everyone was clear and the progress made had been reported to the CLT Board and Chief Executive. She said specific training had been provided to finance officers and the timetable for closedown had been fully reviewed, with a council wide communication plan that directly channels Agresso users highlighting the accounts and the actions that are needed, so that budget holders and finance administrators can effectively monitor activity. She said one of the successes had been the rollover process, which should take place at the end of each financial year, had been completed for the first time, since the Agresso system had been implemented back in 2013. Ms Kelly said it was now possible to interrogate the trial balance sheet for each year independently, which is a significant improvement. She continued to say there were still many challenges to overcome, however the leadership, governance and communication was clear and with a phased approach improvement was being achieved.

In response to questions and comments from Members the following was noted:

• Councillor Wood thanked the Finance Improvement Team for its work and said it was clear the improvements being made were in a transition phase. He gave an example of the Fixed Asset register being in Excel and asked how the completion of the transition would be reported. Mr Bartle responded saying it was crucial for the Finance Improvement team to keep members abreast of the changes being made and said the Finance Improvement Board, which he chaired, would continue to meet regularly and report improvements to the CLT Board and the Audit Committee. Mr Bartle said they would also attend Executive meetings to do the same.
• Councillor Francis expressed his concern in relation to the Grant Thornton report and said he wanted to understand why this report had not been in the public domain prior to the meeting. He said he felt Members ought to have sight of this beforehand and to enable them to comment and input into the Improvement Plan. He reiterated that the Overview and Scrutiny Committee should be notified of this and that the Committee ought to examine this further. 

The Chair thanked officers for their presentation.

The Audit Committee RESOVLED to:

1. Review the actions set out in the detailed improvement plan for Phase 1 of the improvement plan;
2. Note the resource plan for Phase 1;
3. Note the proposed content of Phase 2; and
4. Note the recommendations, current position and improvement plans related to the Grant Thornton and CIPFA reports.