The Executive Director will report on matters within the Strategic Risk Register relating to highways.
The Committee received a presentation from Mr P Castle (Service Director Environment and Transport) on issues relating to the Highways and Transportation Service identified within the Internal Audit Quarterly Report 2017/18 submitted to the meeting of this Committee held on the 6th December, 2017. Also in attendance were Councillor Miller (Cabinet Spokesperson for Place) and Mr M Gladstone (Executive Director Place).
The Committee was informed that in relation to the 2016/17 Highways and Transportation Final Accounts, the controllable budget was £12m. The Service was structured into 5 main areas. All core accounts had delivered an out-turn position within the budget forecast with the exception of the Construction Service which showed a significant swing.
As a result of this, an Internal Audit of the Service had been commissioned in April 2017. In the interim, corrective management actions had commenced in May 2017 with the Audit report and recommendations being submitted to the Senior Management Team in September, 2017. Those recommendations related, amongst other things, largely to the use of Sub Contractors including related financial and procurement processes. It was pointed out that in the process of agreeing the final report, senior officers of the Service had responded to specific recommendations by identifying relevant management actions and agreeing responsible managers and timescales for implementation. In addition, progress on those recommendations was reviewed regularly with ‘mock year end’ sessions being held at the end of every quarter to ensure that progress was being maintained and that budgets were still on track.
The Service Director commented on the progress of each of the five main themes highlighted as well as on other general issues identified as follows:
· Funding/Budget Setting
· Developing Works Programme
· Close Out
In relation to the Action Plan Progress, 86% of the 28 recommendations were either in progress or had been completed. The focus had been on
· improving financial controls and ensuring that costs/income was reconciled monthly
· updating SoR values in SAP
· detailing the construction programme for the rest of the year
· looking forward to plan the next Financial Year
· in terms of the Key Deliverables there had been:
o an SoR refresh
o Regional Benchmarking
o Account closedowns
It was reported that the Transformation Team was fully engaged and a detailed programme of delivery had been agreed. It was anticipated that a draft report would be submitted in March 2018.
In conclusion, the Service Director commented that the Audit Review had clearly highlighted areas for improvement. There was commitment across the Service to address the audit recommendations, additional capacity had been secured through the Transformation Team and there was a higher level of financial forecasting confidence for 2017/18.
In the ensuing discussion, the following matters were raised:
· Reference was made to the reasons for the significant swing from the forecast and how this occurred and to the lessons learned from the mistakes. Particular reference was made in this respect to the financial controls that were in place and to the work that had been undertaken in relation to budgetary controls and governance
· The majority of the recommendation would be complete by the end of the financial year although some may roll over to the following year
· In response to specific questioning, an assurance was given that procedures and processes were now in place to ensure that there was no recurrence but there was also a recognition that, given the type of work involved, there could always be unforeseen issues arising.
· Financial awareness was being addressed and appropriate training had also been put in place for all those involved
· The Service Director Finance confirmed that he had commissioned the audit review and he confirmed that no weaknesses within the control environment had been identified. The control environment was fit for purpose and the issues that had occurred related to compliance. These matters were being addressed. In response to further questioning he commented that the overspend had been rolled up into the overall underspend by the Council
· It was not believed that there were any systematic problems, the issue had been related to a focus on delivery rather than on financial management and control and these matters had now been addressed. It was anticipated that the outcome for the current financial year would corroborate what had been reported and that procedures and processes now in place would prevent an overspend on quarter four
Members of the Committee thanked the Service Director (Environment and Transport) for his presentation together with the Cabinet Spokesperson (Place) and the Executive Director (Place) for attending the meeting. They were pleased to note the action taken to address issues and the confidence expressed that such problems would not occur again now that appropriate procedures and processes were in place.