To receive a special report from the Director of Resources.

The Committee considered the Section 151 Officer’s special report regarding the financial governance arrangements within the ICT and Customer Services division. The report referred to a recent audit investigation into travel and subsistence expenses within the division together with a review on the use of contractors which has been recently drawn to a close.

The report summarised the key issues of concern in relation to the financial governance arrangements within ICT and Customer Services, it outlined the actions taken and planned by senior management to address the issues identified, described the potential implications for the Council’s corporate financial standing and reputation, and recommended an action plan to demonstrate a strong corporate response to the issues identified in the report.

The Committee was further informed that Cabinet had received the report at its meeting on 20th September 2007 and had agreed the recommendations and action plan set out in the report.

A copy of the Director of Resources presentation is attached to these Minutes.

The Chief Executive made reference to Cabinet and its recent response which is to ensure that the review of the situation is conducted independently. With this in mind, Cabinet had agreed to request the Local Government Association (LGA) to undertake the selection of an independent party to conduct the review for this Council.

The Leader of the Council stated that the Committee would be notified of the person nominated by the LGA to conduct the review but referred to the fact that if it became necessary the LGA offered to address Members on an appropriate approach to such a review. He indicated that whilst it would not be appropriate to circulate the Terms of Reference for the independent review he had agreed that the Terms of Reference be made available to the Chair of the Audit and Corporate Governance Committee and he would be willing to discuss with the Chair possible amendments. He emphasised that the Terms of Reference would ultimately have to be negotiated with the independent appointee to undertake the review and he was asking Mr McLaughlin as the Council’s Monitoring Officer to undertake the role. The Committee was informed that the review would be thorough and full with employees being encouraged to give statements. It was emphasised however, that personal identification of employees giving such statements would be confidential and not passed on to Members.

The Chairman of the Committee assured Members that the Leader would be keeping him updated of the timetable of the review and its processes and there would also be additional meetings of the Audit and Corporate Governance Committee called on 19th October, 16th November and 21st December 2007 with appropriate update reports. The Chairman also noted Member’s concerns regarding the possible implication of officers during the review process and that the officers would take due regard of such issues when reports are prepared for the Committee.

The Chief Executive assured the Committee that all employees of ICT had been reassured of their freedom of actions and views in respect of the forthcoming review.

The Head of Legal and Democratic Services informed Members that the police were currently reviewing the internal audit working papers with a view to deciding whether there was a need for police action.

A Member referred to the ICT Scrutiny Review carried out in 2006 and suggested that some elements of it would give some guidance to the independent investigation, It was noted that the Herefordshire Connects programme was outside this scrutiny review investigation. The Chairman of the Committee assured the Member that the Independent Investigator’s attention would be drawn to the document referred to by the Member.

Bearing in mind the contents, Members queried whether a Member should sit on the Hereford Connects Project Board as an observer. Following discussion, this suggestion was withdrawn. It was also put forward that the Audit Services manager should be in attendance .

The Chief Executive reminded the Committee that two key officers, the Audit Services Manager and the Head of Legal and Democratic Services were in attendance at meetings in respect of the Herefordshire Connects Programme and report appropriately. The Head of Legal and Democratic Services stated that it was important to distinguish between the Managerial role that properly belonged to officers of the Council and the role of Audit.

With reference to a Member’s enquiry on several issues relating to payments pending within the Action Plan, the Committee was informed that the Employees Code on the various issues was being reviewed.

The Director of Resources informed the Committee that senior officers and key Managers claims in relation to travel and subsistence were currently being investigated and that it was not viewed by management as a consistent problem throughout the Service.

The Chairman of the Committee informed Members that all employees had been reminded of their responsibilities regarding the Code of Conduct for Employees.

The Audit Services Manager reminded the Committee that a Travel and Subsistence review was in the Audit Plan, which had been approved in April 2007 by the Audit and Corporate Governance Committee, and that this Plan had been brought forward in the light of the current situation.

Members expressed their sincere appreciation to the Director of Resources and her team for the way in which the situation has been approached and currently being managed.

The Chairman stated that it was important that the officers and Members were circumspect with regard to the report before them and that the officers should be congratulated in this respect.

RESOLVED:            that

(i)                 implementation of the recovery plan as detailed and attached to the special report is prioritised in line with the timetable indicated within it;

(ii)        the dates for additional meetings of this Committee to take place on 19th October, 16th November and 21st December 2007 to receive updates with regard to the special investigation.  

(iii)             the Director of Corporate and Customer Services to urgently complete the re-assessment of the Community Network Up grade contract she has initiated; and

(iv)             finance governance compliance testing is prioritised in line with the timetable indicated within it;