Draft for consideration by the Policy Scrutiny and Audit Committee by jolinmilioncherie

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									Draft report for consideration by the Policy Scrutiny and Audit Committee on
11th March 2004

                                                                                 Agenda Item No.7

ANNUAL REPORT OF THE POLICY SCRUTINY AND AUDIT COMMITTEE 2003/04

To:                          County Council

Date:                        25th May 2004

From:                        Policy Scrutiny & Audit Committee

Electoral division(s):       All

Forward Plan ref:            N/a                                 Key decision:   No

Purpose:                     To report on the activities of the Policy Scrutiny & Audit
                             Committee in 2003/04.

Recommendation:              The Council is invited to discuss the Committee’s report




           Officer contact:                                       Member contact
Name:      Michael Brown                             Name:        Councillor Peter Downes
Post:      Democratic Services Team                  Position:    Chairman of Policy Scrutiny and
           Manager                                                Audit Committee
Email:     Michael.Brown@cambridgeshire.gov.uk       Email:       Peter.downes@cambridgeshire.gov.uk
Tel:       01223 717213                              Tel:         01480 398082




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1.    BACKGROUND

1.1   The Council’s Constitution (paragraph 6.04(c)) states that ‘Scrutiny
      Committees must report annually to full Council on their workings and make
      recommendations for future work programmes and amended working methods
      if appropriate’.

1.2   This is the third annual report from the Policy Scrutiny & Audit Committee
      following its establishment by the County Council on 19 th June 2001. The
      Committee comprises seven members (currently Councillors P J Downes
      (Chairman), J Broadway (Vice-Chairman), P D Gooden, S King, A R Mair,
      P A E Read and P Stroude. The Committee also acknowledges the
      contribution made by Councillors M Y Chapple and J L Huppert who were
      members of the Committee during part of 2003/04.

1.3   The Committee has met on nine occasions during 2003/04 (up from seven
      meetings in 2002/03). At each ordinary meeting, the Committee considers the
      ‘assessment’ of the last meeting and its forward work programme, and in
      particular the draft agenda for the following meeting.

1.4   The Committee differs from the three “Service” Scrutiny Committees in two
      respects. Firstly, the Committee also acts as the Council’s Audit Committee
      with responsibility for monitoring arrangements for securing probity and the
      proper administration of the Council’s finances and for oversight of the
      Council’s corporate governance. Secondly, the Committee is also responsible
      for the scrutiny of those functions which are corporate or cut across the terms
      of reference of other scrutiny committees.

2.    PERFORMANCE REVIEW

2.1   The Committee reviews the Council’s performance mainly through scrutiny of
      the Best Value Performance Indicators. This includes comparisons with
      performance in previous years, performance against targets set, and
      comparisons with performance of other Shire Counties. The Committee
      considers indicators for all services but relies on the “service” scrutiny
      committees to scrutinise performance in their individual areas.

2.2   A summary of performance in 2002/03 is attached as Appendix 1. The year
      2002/03 showed a general improvement and consolidation in performance
      across the County Council, particularly with regard to reducing the number of
      bottom quartile indicators. However, there are still some parts of service
      provision that are the cause of concern. Measures are being taken to address
      these areas. Additionally, increased monitoring of key indicators has occurred
      throughout the year and much more is planned for the future (through the work
      of the Improving Performance Group) to better enable early and co-ordinated
      remedial action to occur where necessary.

2.3   As in previous years, the Committee has scrutinised in particular those
      indicators where the Council’s performance was below par , where targets had


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      not been met, or where performance had deteriorated in comparison with the
      previous year.

2.4   The Committee previously has given particular attention to the Council’s
      performance in paying invoices promptly. The Council in 2000/01 only paid
      70% of undisputed invoices within 30 days - this performance was poor in
      comparison with other authorities. Performance in 2001/02 improved to 79%.
      Performance in the early part of 2002/03 was disappointing but, since the
      implementation of FAMIS and the central registration unit, performance has
      improved significantly and performance of 89.68 % was achieved over the
      year, just short of the 90% target. Performance during 2003/04 has been fairly
      consistent at around 94 – 95%. The Committee is pleased with the
      improvement and that it has been sustained. As a consequence the
      Committee has reduced the frequency with which it reviews performance
      against this indicator.

3.    EXTERNAL INSPECTION

3.1   The Council is subject to external audit by the District Audit Service although
      this will change to PricewaterhouseCoopers in 2004/05. The Committee has
      received the Annual Audit letter (copies of which were circulated to all
      members of Council in January) and has considered the response of the
      Cabinet to the recommendations contained within the letter.

3.2   The following key messages are made by the District Auditor in his annual
      letter:

      (a)   an unqualified opinion has been issued on the Council’s accounts
      (b)   the Best Value Performance Plan complied in all significant respects
            with statutory requirements. Improvements have been made in the
            accuracy of Best Value Performance Indicators
      (c)   overall, the Council manages its resources well but overspends in
            Social Services will impact on next years plans.
      (d)   the Council’s risk management strategy continues to be developed and
            will need to be fully integrated into the service planning, resource
            allocation and budgeting processes as soon as possible.
      (e)   working balances are held at relatively low levels
      (f)   the Council has proper arrangements to ensure standards of financial
            conduct, the prevention of fraud and corruption and for ensuring the
            legality of financial transactions. There have been temporary
            weaknesses in financial controls and performance following the
            introduction of new systems. Solutions have been introduced which will
            need to be monitored.




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3.3   The Committee has considered the Cabinet’s response to the following issues
      identified by the District Auditor:

      (a)   concerns about spending problems in Social Services
      (b)   the need to clarify organisational and governance arrangements
            relating to the integration of older peoples services.
      (c)   the Council’s ability to achieve its stated aim of value for money and to
            achieve “stretch” in the use of its resources and how this impacts on the
            Council’s improvement priorities.
      (d)   the need to strengthen the links between matching policy objectives
            and service demands within the resources available
      (e)   the need to address weaknesses in financial controls following the
            introduction of new systems.

3.4   The Committee has discussed the Cabinet’s response with the Leader of
      Council , Chief Executive and Director of Resources and is satisfied with the
      response although there are issues where further work is required to address
      the issues identified.

4.    BEST VALUE REVIEWS

4.1   No reports on Best Value reviews have been submitted to the Committee
      during the year. This reflects the contraction of the Best Value review
      programme to focus on fewer and more cross cutting reviews.

4.2   Arising from the Best Value Review of Communication and Consultation, the
      Committee considered that the resulting Action Plan needed to be seen in the
      context of a longer term strategy, perhaps over a five year period. The Head
      of Press and PR has advised (details to be inserted).

4.3   The Committee will be considering aspects of the Best Value Review of Social
      Inclusion later in the year.

5.    MEMBER LED REVIEWS

5.1   The Committee has not undertaken any in-depth member led reviews during
      2003/04. This reflects the substantial workload on the Committee and the
      need to accommodate the Committee’s existing on-going programme of
      review activity within existing member and officer resources.

6.    OTHER REVIEWS AND ISSUES DISCUSSED

6.1   The Committee has also considered the following matters:

      (a) Best Value Performance Plan 2003/04 - a number of changes to the text
      were suggested.




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(b) Business Continuity Planning – Members welcomed a report on systems
which were in place or were being developed to address appropriately
business continuity issues within the County and supported the development
of a business case to address risks associated with the Octagon computer
room.

(c) Budget Consultation - the Committee in July 2003 discussed
consultation arrangements on the Budget 2003/04 and proposed that the
principles covering the following areas should be applied to the Council’s
Budget consultation arrangements in future years:
     Representative of the population
     Informed public
     Balanced information should be presented
     Transparent and honest
     Consultations should include a deliberative element
     Combined consultations for County, District, Police and Fire authorities.

The Committee in January 2004 considered issues relating to the content and
process for production of the consultation leaflet on the Budget 2004/05, its
distribution and how feedback received would be handled. A number of
concerns and suggestions were made to the Leader of Council about the
leaflet.

(d) Delivery of the Council’s Capital Programme – The Committee
reviewed the current arrangements and has asked to receive annually
information on the Council’s performance in delivering projects to cost and
time, including national comparisons.

(e) Email and Virus Incidents –Members were satisfied that lessons had
been learnt from various email and virus incidents in 2003 and were
reasonably assured that appropriate action was being taken to address the
issues identified.

(f) Annual Report on Complaints and Representations 2002/03 –
Clarification was sought on a number of issues in the report, particularly areas
where complaints had increased.

(g) Prospects – Corporate Plan 2004-08 –The Committee whilst being
supportive of the overall thrust and direction of the draft document, was
concerned that it was incomplete in the way in which it presented the Council’s
financial position and the choices open to the Council.

(h) People Strategy and Workforce Development - Areas followed up by
the Committee included sickness absence, recruitment and retention and staff
turnover, reasons for leaving the Council cited by staff at exit interviews, the
staff survey and action taken in response, and the Council’s policy on age
discrimination in employment.




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      i) Implications of the Disability Discrimination Act – the implications of the
      Act and the Council’s preparedness to meet its requirements were examined

7.    CALL-IN

7.1   During the year the Committee called–in the Cabinet decision to authorise the
      recovery of debts owed to the Council by the Shire Hall Club, leading to the
      eventual winding up of the Club. Having heard the views of all parties, the
      Committee was satisfied that in the circumstances the Cabinet decision was
      not unreasonable and therefore did not ask Cabinet to re-consider. The
      Committee did, however, emphasise to Cabinet the importance of providing
      appropriate facilities for staff on the Shire Hall site.

7.2   It should be noted that a number of issues are referred to the Committee as
      part of the Committee’s work programme, thus obviating the need for
      subsequent call-in (e.g. the Council’s response to the District Auditor’s Audit
      Letter).

8.    BUDGET SCRUTINY

8.1   There were changes in the way in which the Budget 2004/05 was scrutinised.
      As part of these arrangements the Committee scrutinised in July 2003 the
      Continuation Budget for 2004/05 (i.e. a roll forward of the 2003/04 Budget to
      2004/05 but not reflecting any reductions or growth. Part of this exercise
      involved assigning responsibility for the scrutiny of parts of the Resources
      budget to individual members of the Committee. These members discussed
      the relevant budget with the officer outside of the meeting and reported back
      on their findings. This process allowed more detailed examination of the
      budgets than would otherwise have been possible. Issues highlighted by
      members as part of this process included:

      (a)    the increasing revenue cost of the Council’s capital programme, which
             led the Committee to support Cabinet proposals for half of capital
             receipts received in 2004/05 to be used to redeem debt.
      (b)    the impact of anticipated changes to European Union Agricultural policy
             on the ability of the County Farms Estate to generate revenue
             surpluses to support the Council’s expenditure. Although the £1.9m
             revenue contribution is secure for 2004/05, the longer term ability of the
             Estate to generate this level of surplus is in some doubt.

8.2   The Committee in February 2004 scrutinised the original Cabinet proposals for
      the Budget 2004/05 based on a 6% Council tax increase. A further meeting
      was held on 15th February 2004 was held to scrutinise the revised
      recommendations which reflected the agreement with the Department for
      Education and Science on the size of the Schools Budget. Two reports to
      Council summarised the Committee’s views.

8.3   The Committee will be contributing its views to the review of the Council’s
      Budget/MTSP process at its next meeting.



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9.    CORPORATE GOVERNANCE AND AUDIT COMMITTEE
      RESPONSIBILITIES

9.1   The terms of reference of the Committee also include responsibility for acting
      as the Council’s Audit Committee. The Committee has considered an annual
      report of Internal Audit for 2002/03 and receives quarterly progress reports on
      key issues arising out of Internal Audit activity. Members have asked to
      officers to follow up issues arising from these reports.

9.2   The Committee itself asked for further reports on the following significant
      issues:

      (a) Debt recovery arrangements in Social Services –Members have
      expressed concern that normal debt recovery arrangements in Social services
      were suspended in 2002/03 resulting the level of debt aged 6 months or more
      increasing from £628K in February 2002 to £927k in August 2003 leading to
      higher levels of debt write-offs and a loss of income to the Council. The
      Committee will be monitoring the effectiveness of the revised arrangements to
      collect debt. The level of debt as at March 2004 is £xxxx(TBA). Members
      were also concerned that payments due to the Council from Excelcare were
      recovered.

      (b) Social Services Budgetary Control Inquiry - The Committee has
      questioned Councillor Pegram on the outcome of his inquiry into the late
      identification of a substantial overspend in Social Services at the end of
      2002/03. The Committee welcomes the report and its recommendations and
      will be looking to Cabinet to ensure that they are delivered. Members are
      concerned that the report did not recognise the role of Cabinet and Cabinet
      members in setting appropriate budgets and monitoring expenditure. The
      Committee will be discussing these concerns with the Cabinet member for
      Social Services at our May meeting.

      (c) Bank reconciliations using FAMIS – Members were concerned that
      FAMIS was unable to undertake the reconciliation of the Council’s accounts
      for a period during 2002/03 and 2003/04. The Committee is pleased to note
      that this fundamental control process is now operating satisfactorily.

9.3   The Committee has commented on the Audit Commission Audit and
      Inspection Plan for 2003/04 and Internal Audit Plan for 2004/05. These Plans
      set out areas which are to be examined and how resources are to be
      deployed. At a time when the Council is investing heavily in IT systems, the
      Committee remains of the view that the level of resources available to conduct
      computer audits is inadequate to address the risks in this area. The Leader of
      Council is aware of these concerns. but, in the context of the Council’s
      financial resources, the Leader considers that the level of risk is acceptable.

9.4   Responsibility for the oversight of the Council’s corporate governance was
      added to the Committee’s remit in February 2003. The Committee has
      considered the outcome of a review of the Council’s corporate governance in


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        2002/03 and on the methodology for reviewing the Council’s Corporate
        governance in future years. The Committee endorsed proposed statements
        and internal financial control for inclusion within the Statement of Accounts
        2002/03.

10.     OPERATION OF THE COMMITTEE

10.1    As referred to in last years report, one of the issues facing the Committee is
        the substantial body of corporate activity which falls within the Committee’s
        remit. There are also opportunities for the Committee to become involved in
        the scrutiny of cross cutting activities such as the community strategies and
        crime and disorder. Although the number of meetings of the Committee held
        in 2003/04 increased to nine, there was still little or no capacity available to
        scrutinize these issues.

10.2    The Scrutiny Management Committee has referred to the need for scrutiny
        committees to prioritize their work programmes so as to avoid increasing the
        number of meetings. The Committee will be looking at ways of
        accommodating these cross cutting activities within its future work.

10.3    The Committee thanks the Leader of Council for his attendance at a number of
        meetings and for his full, frank and honest response to issues raised by the
        Committee. The Committee would also like to thank the Chief Executive,
        Director of Resources and their staff for attending various meetings to present
        reports and to Policy and Review and Democratic Services staff who have
        supported the Committee.

                                                          Councillor P Downes (Chairman)
                                                          Councillor J Broadway
                                                          Councillor P D Gooden
                                                          Councillor S King
                                                          Councillor A R Mair
                                                          Councillor P A E Read
                                                          Councillor P Stroude




BIBLIOGRAPHY

Source Documents                                                      Location

Agenda and assessments of the Policy Scrutiny and Audit               Room 114
Committee 22rd May 2003 – 11th March 2004                             Shire Hall
                                                                      Cambridge

\\CCCS010\userslocal\aa055\Desktop\ccl0405-psac.doc




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                                                                       APPENDIX 1

  Extract from report to the Committee on 8th January 2004 on Council
  performance in 2002/03


Summary of Performance in 2002/03

  1.1. Number and percentage of indicators or parts of indicators in Top, middle and
       bottom quartiles
       Comparison with other   2001/02 No of             2002/03 No of
       County Councils,        indicators and            indicators and
       Indicators within:      percentage                percentage
       Top Quartile                         22 (27%)                 20 (26%)
       Middle Quartiles                     39 (48%)                 42 (55%)
       Bottom Quartile                      20 (25%)                 14 (18%)
     Note: top quartile is defined as best quartile for performance


  1.2. Number and percentage of indicators or parts of indicators that have moved
       through the quartiles
                                                2002/03 No of indicators
                                                and percentage
       Indicators that have moved up one or                        11 (14%)
       more quartiles
       Indicators that have remained in the                        54 (71%)
       same quartile
       Indicators that have moved down one or                      11 (14%)
       more quartiles


  1.3. The above tables give an overview of Cambridgeshire County Council’s
       performance for those indicators for which a quartile position is appropriate.
       It does not, however, include details of cost and expenditure indicators as
       interpretation of financial indicators is more complex whereby, for example, a
       reduction in costs could be measured as an improvement or deterioration.
       However, Appendix A does show the quartile positions for these indicators to
       provide a context for consideration of the non-financial indicators.
  1.4. The non-financial indicators show some movement towards the centre since
       2001/2002, with a smaller number of indicators being in the top or bottom
       quartiles and a greater number being in the middle quartiles, although it is
       encouraging to note that there is more movement out of bottom quartile than
       out of top. It should be noted that some of this movement can be accounted
       for by the introduction of new or the deletion of old Best Value Performance
       Indicators.




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1.5. Three of the indicators which reported deterioration in quartile position also
     fell within the lowest quartile range:
      BV163: Adoptions of children looked after for 6 months or more
      BV165: The percentage of pedestrian crossings with facilities for
       disabled people (change of definition)
      BV170a: The number of visits to/usage of museums per 1,000
       population
1.6. Although three indicators fell within the lowest quartile band and witnessed a
     deterioration in quartile position since the previous year, three indicators saw
     an improvement in their quartile position and fell within the top quartile:
      BV176: The number of domestic violence refuge places per 10,000
       population which are provided or supported by the authority
      BV96: Condition of principal roads
      Part of BV99: Two-wheeled motor vehicle users Killed or Seriously
       Injured




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                                                            APPENDIX 2

POLICY SCRUTINY AND AUDIT COMMITTEE 2003/04

Summary of Items Discussed

22/5/03

Corporate Governance
Internal audit Progress Report
Best Value Performance Plan 2003/04
Business Continuity Planning
MTSP 2004/07 Process

3/7/03

MTSP 2004/07 Scrutiny
Budget Consultation

4/9/03

Scrutiny of Continuation Budget 2004/05
Audit Commission Annual Audit and Inspection Plan 2003/04
Social Services Debt Management
Internal Audit Annual Report
Internal Audit Progress Report

24/9/03

Scrutiny of Continuation Budget 2004/05
Review of the Delivery of the Capital Programme
Email and Virus Incidents
Annual Report on Complaints and Representations 2002/03

6/11/03

Prospects Corporate Plan 2004-08
Workforce Development Update
Implications of the Disability Discrimination Act

8/1/04

Budget Consultation 2004/05
Internal Audit Progress Report
Social Services Debt Management
Best Value Performance Indicators 2002/03
Scrutiny of Continuation Budget 2004/05




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2/2/04

Budget scrutiny 2004/05
Annual Audit Letter 2002/03
Social Services Budgetary Control Inquiry
Shire Hall Club – Call-in of Cabinet Decision

16/2/04

Budget Scrutiny 2004/05

11/3/04

Internal Audit Plan 2004/05
Audit Commission review of Probity in Partnerships
People Strategy Update -
MTSP 2004-07 Review of Process
Continuity Budgets 2004/05 - Impact of EU Agricultural Policy on County Farms
Estate Revenue Contribution




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