Agenda item

Report of the Corporate Director for Finance and Resources

Councillor Audra Wynter, Portfolio Holder for Finance and HR, Ross Brown, Corporate Director for Finance and Resources, and Shabana Kausar, Director of Finance, presented the report on the Council’s Financial Improvement Plan (FIP) activity undertaken to the end of August 2023 and the planned activities to the end of October 2023. The following information was highlighted:

(a)  since the last report to the Committee, progress has been made on the following key activities:

·  the finalising of the statutory accounts for 2019/20 – 2021/22;

·  internal recharges and reallocations of policy;

·  the development of the Financial Accountabilities Framework;

·  Establishment Control;

·  FIP actions mapped on the EY remediation project;

(b)  the Council now has its draft 2019/20 Statutory Accounts ready for external audit certification and will have draft set of accounts for 2020/21 ready for audit by September in line with the IAB instructions (please read Minute 35 for further details);

(c)  a draft recharge framework document containing guidance on the definitions of a recharge, reallocation and apportionment has been produced. A master document has also been produced to ensure that each recharge or reallocation has a clear rationale, includes overheads only where appropriate, is agreed by both parties and correctly coded;

(d)  the draft Financial Accountabilities Framework will act as a guide for officers to the key roles and responsibilities that support excellent financial management within the Council, helping officers in understanding their roles and how they support others. It is based on the widely used RACI (Responsible, Accountable, Consulted and Informed) methodology;

(e)  PwC LLP work for the Establishment Control project chaired by the Director of HR and EDI is due to complete at the end of September. The project is a key activity in supporting delivery of the HR improvement Plan and aligns to the FIP;

(f)  PwC LLP have been commissioned for a 12-week period to support the Council to get to a single version of the truth in relation to their staffing baseline. This is critical to understand the true baseline position for transformation. This work focuses on three key areas:

·  a reconciliation of the establishment baseline across all Council service areas to get a single version of the truth;

·  simplifying and communicating processes that are associated with changes to establishment to enable changes to happen in a more timely and accurate manner;

·  developing and rolling out a dashboard to support Budget Holders with establishment reporting and monitoring;

(g)  work is ongoing to ensure that data going into the Oracle Fusion system is accurate;

(h)  at the end of August 2023, all 39 remediation activities identified for the Financial Controls Remediation Project have agreed controls in place. 38% have been fully implemented including training and monitoring by the first week of September with 62% in process of being implemented over September and expected to be fully implemented by the end of the first week of October; 

(i)  Additional activities in Appendix 1a are included and implemented since last reported in July;

During the discussion and in response to questions from the Committee, the following points were raised:

(j)  there is a detailed communications strategy for each of the implemented actions for the FIP to instruct officers in these processes;

(k)  all remediation activities of the Financial Controls Remediation Project will be implemented by the next progress report in November;

(l)  EY’s work with the Finance Team ends today. ‘Health check’ Key Performance Indicators (KPIs) have been designed by EY to be embedded within our processes. Post-implementation activity has also been agreed with guidance from EY;

(m)the capacity of the Finance Team to manage finance controls is always a risk. The key to maintaining a high standard for the financial control environment is to how best to administer and report within the capacity that the Council’s Finance Team possesses including through automated processes;

(n)  the overseeing of the system of the new controls will be led by the Finance Team. These are the basic controls and long-term and permanent solutions will be sought to improve the financial control environment;

(o)  no money has been misallocated. The financial controls improvement activity is not for identifying fraud or mismanagement; it is for strengthening the Council’s own financial processes and adhering to best practice;

(p)  there is no related increase for the Council, to the cost of the use of Oracle Fusion which is shared with Leicestershire County Council through the East Midlands Shared Service (EMSS);

(q)  there should be no reason as to why deadlines within the FIP should not be met. Officers are working very hard to meet the IAB’s requirements and meet the objectives of the financial control environment. The Council faces challenges in its finances partly due to general context of local government finance.

Resolved to note the report.