Agenda item

A joint report of the Chief Executive, Director of Finance and Director of Legal and Governance Services was presented to provide the Committee with information in relation to the planned reporting arrangements for delivery of the action plan that was agreed by Council on 18 September 2023, in response to 11 statutory recommendations made by the Council’s External Auditors Ernst & Young LLP (EY), exercising their powers under Section 24, Schedule 7(2) of the Local Audit and Accountability Act 2014.

The agreed recommendations and supporting action plan that was agreed by Council on 18 September 2023 was attached at Appendix 1 to the submitted report. 

Progress against the action plan would be reported to the Audit Committee as a standing item until delivery of all actions was complete.  Progress would also be reported to the Independent Improvement Advisory Board (IIAB) that had been established to oversee delivery of the Council’s Corporate Governance Improvement Plan, as set out in the report to Council on 18 September 2023 that outlined phase three of the Corporate Governance Improvement Plan.

The Chair of the IIAB and the Council’s three statutory officers would also meet regularly with both the External Auditor and the Department of Levelling Up, Housing and Committees in separate meetings to discuss the Board’s independent view of the Council’s progress against both the Section 24 action plan and phase three of the Corporate Governance improvement Plan.  Progress against the CGIP would be reported as a standing item to each ordinary meeting of full Council to maintain Member visibility.

Since the report was approved by Council on 18 September 2023, two actions had been completed in line with their target dates as follows:

1.         A review of all existing purchasing cards had been completed. A process was in place for reducing the number of cards across the business and mandatory training had been developed for cardholders identified moving forward.  Training for the initial cohort would be complete by November 2023 and then there would be a rolling programme of training aligned with the assignment of cards going forward.

2.         Pre-2021 ‘open’ exemptions had been identified and a full analysis of would be reported to the Audit Committee in December within the

annual assurance report on Procurement activity.

The first meeting of the Independent Improvement Advisory Board (IIAB) had taken place on 2 October 2023 and another meeting was scheduled for November.  It was confirmed that a note of actions points had been made rather than recorded minutes.  This point was queried by Members as it had been stated at a recent Council meeting that minutes would be kept of IIAB meetings.   The Monitoring Officer confirmed the question had been raised at Council and agreed that this position would be corrected.

The first meeting had set the scene for the IIAB to understand Middlesbrough Council and discussion had also taken place regarding engagement with Members.  An informal two-way conversation with Members was envisaged as well as the formal process, and this was high up on the IIAB’s agenda.

The IIAB had been created by the Head of Paid Service following discussions with the Department for Levelling Up, Housing and Communities (DLUHC) and the External Auditor, EY, and was required as part of the Council’s improvement journey.  The appointments were made by the Head of Paid Service, with the costs approved by Council.

It was noted that approximately £750,000 was spent per month on purchasing cards and as part of a review the number of cards in use had been reduced and more transactions were now going through the purchasing system.  The Head of Procurement would be presenting a report to the next Audit Committee meeting which would provide further detail on the review.  It was highlighted that use of purchasing cards had been reviewed previously, and it was explained that given the Council’s current financial position, spending had to be restricted.  In some cases VAT on transactions had not been recouped.

It was clarified that the mandatory Elearning would be delivered initially and then on a cyclical basis to ensure that new employees would be included.

The target dates for action in the report would have a detailed delivery plan and timeline and the Audit Committee would receive regular updates. 

Regarding Middlesbrough Development Company (MDC), the Chair requested that the audited accounts, when prepared, were submitted to the Audit Committee for information.  It was confirmed there were currently two Board Members and the Liquidators would appoint any further Board Members required as part of the Company wind-up process.

AGREED as follows that the:

1.         information provided was received and noted.

2.         proposed monitoring arrangements were approved.

3.         audited accounts for Middlesbrough Development Company (MDC)  would be      submitted to the Audit Committee for information when available.

4.         Monitoring Officer would ascertain the minuting arrangements in relation to           IIAB meetings and the process for the appointment of its Members.