To enable the committee to consider the findings of an internal audit report on the project management of the refurbishment of Blueschool House and the main issues arising and to provide assurance that action has been taken where necessary.

The chief finance officer introduced the report. The internal audit report had confirmed that officers had not followed set procedures and that consequently the council could not be certain that value for money had been achieved in the project to refurbish Blueschool House. The chief finance officer apologised for the failings that had been exposed.

The report made 13 recommendations. The management team had fully accepted the findings of the report and the recommendations made. The chief finance officer ran through each of the recommendations and noted that action planned in response to each action including the development of new policies and procedures, updating existing policies and procedures or reinforce policies and procedures through training.

The committee thanked the internal auditor for their work and noted that the report was clear and easy to follow. The committee expressed concern and disappointment at the conclusions. In summary the committee queried:

·         whether the culture of the organisation was a contributory factor;

·         where pressure had come from to deliver the project to a particular timescale;

·         whether this was a one-off or whether other projects could be relied upon to deliver good value;

·         how to restore trust and confidence in officers and the council as a whole;

·         what oversight was in place for decisions delegated to officers;

·         how and why the accommodation programme board was dissolved without a replacement project board for the Blueschool House project being put in place; and

·         whether a peer review process might be beneficial

It was noted that an independently led HR investigation was ongoing and that an internal control improvement board had been established to oversee the implementation of the recommendations in the audit report.

The chief executive made a statement in which he:

·         apologised unreservedly for what had taken place

·         accepted all the recommendations made by the auditors

·         noted the importance of having confidence and trust in officers and emphasised that the council’s 1200 employees should not all be cast in the same light following the report which had found a very small number of employees had breached council policy and procedure

·         asserted that the majority of projects were delivered on time and on budget

·         stated that there had been some pressure on timescales for the project but this was not unusual and not an excuse for failure to follow procedures

·         stated that the decision as to whether disciplinary action should be taken against any officers involved would be taken once the HR investigation was completed, and in compliance with the council’s HR policies.

The chief finance officer confirmed that where bespoke delegations were made to named officers or posts these were not subject to further delegation. Other delegations which related to operational or proper officer responsibilities attached to senior posts were subject to delegation according to the published schemes of delegation.

The chairman of the committee noted that the audit report was very clear and that the recommendations had been accepted in full by the management board. Following the implementation of the recommendations the internal auditor would carry out a further review and a report would be brought to the audit and governance committee in January 2018 setting out the progress made. The chairman requested that the chief executive attend this meeting to provide further reassurance and feedback. The option for a peer review of the directorate was acknowledged. The audit and governance committee would consider the findings of this report when reviewing the constitution of the council and consider any recommendations on strengthening the contract procedure rules.

In response to a question from a member of the committee the chief finance officer confirmed that he had been made aware of concerns about the Blueschool House project shortly after his arrival at the council in the middle of March 2017. A report had been brought to the committee in May 2017 with a recommendation to commission a full investigation. Action had been taken immediately that the seriousness of the issues had been identified.

In response to a query the chief executive stated that the report had not identified inadequate capacity within the council but had identified that there was a skills requirement to be addressed. The council had made external appointments to leadership roles in the property team and was now also fully staffed in the finance team.

It was proposed that a working group of the audit and governance committee be established to work alongside the internal control improvement board. The membership of the group was agreed as being councillors Newman, Chappell and Harvey and the terms of reference were agreed as:

1.    to act as a reference group for the internal control improvement board

2.    to gain assurance that actions were appropriate and in proportion to the risk, and were being implemented in a timely fashion.

RESOLVED

that

(a)  the committee identified further recommendations it wished to make to strengthen capital project management and control specifically:

                      (i)      that the management board consider a peer review of the economy, communities and corporate directorate with a specific focus on the issues raised by the audit report;

                     (ii)     a working group be established with membership and terms of reference as set out in the meeting;

(b)  a further report be provided in January 2018 on progress re agreed actions; and

(c)  when the project board has implemented the recommendations SWAP be invited to carry out a further review to report back to the committee.