The committee noted the draft Statement of Accounts for 2023/24 and were told that the final version will be reviewed by them prior to consideration by the full council. The committee also noted the Annual Corporate Risk Report 2023/24 and the Corporate Self-Assessment Report 2023/24, and made a number of observations about each of them.

Audit Wales – Review of Performance Management Arrangements

Audit Wales presented their review of Merthyr Tydfil County Borough Council's performance management arrangements. The report¹ made four recommendations, all of which were accepted by the council.

The Council has recently strengthened its capacity which will directly address the recommendations within this report. A Director of Governance and Resources, Director of Finance and Policy and Performance Manager have all recently been appointed

The committee discussed the report and sought assurances that the council has the resources to implement its recommendations, and will continue to involve the committee in the process.

Audit Wales – Financial Sustainability Review

Audit Wales presented their financial sustainability review report² for the council. The report made two recommendations for the council to improve its financial sustainability:

• R1 To support its financial sustainability, the Council needs to:
  • 1.1 Have a medium to long term approach to its financial planning to reduce the unsustainable use of reserves;
  • 1.2 Model a range of assumptions over the medium term to strengthen the accuracy of its funding gap; and
  • 1.3 Develop a savings plan to identify how it will meet its funding gap.
• R2 To report on the impact of its financial approach, the Council should develop reporting arrangements to provide members with the impact of its financial position, savings plan and MTFP on local communities and delivery of its well-being objectives.

The council accepted both recommendations and assured the committee that work is underway to address them.

The committee sought clarification on a number of points including the details of the council's projected deficit for 25/26 and the reasons for recent high staff turnover in the accountancy department.

Annual Corporate Risk Report & Corporate Risk Register

The council presented their annual corporate risk report which included an analysis of the data contained in the council's Corporate Risk Register (CRR). The CRR³ contains the risks that the council sees as posing the greatest threat to its ability to deliver its services.

Councillor Sarah King reported that two new risks had been added to the CRR during 2023/24:

• A risk that the elimination of profit in children’s services by Welsh Government will lead to new legislation.
• A risk that the demand for Additional Learning Needs (ALN) support and the associated costs of transport will not be met by the council's budget.

The report also summarised recent feedback from internal audit and Audit Wales, in particular the recommendations made by internal audit for improving the council's risk management arrangements. In mitigation, Councillor King reported that the council has produced a management response to the internal audit, and has built the recommendations it contains into its wider plans for improving its corporate governance.

The committee sought assurance that the report would be presented to the full council for approval, which Councillor King confirmed would be the case.

Annual Complaints Report

The council presented their annual complaints report, which summarises the corporate, education and social services complaints received by the council during 2023/24.

Councillor Simon Jones reported that there has been a year on year increase in complaints with a total of 718 received this year compared to 678 last year. He noted that the number of corporate complaints received (596) has risen to almost 2.5 times the number received in 2017/18. However, he stressed that this increase is not necessarily a reflection on whether the Council’s complaints handling is effective, and noted that the number of complaints escalated to stage 2⁴ of the process remains consistently low.

“What is important to note is that figures demonstrate that information is readily available to residents to allow them to complain. … It is suggested that the public have become increasingly computer literate which without doubt makes the submission of complaints easier.”

The committee sought assurance that the council is taking steps to learn from the complaints it is receiving and discussed in detail the council's process for dealing with criminal allegations made in complaints.

Ombudsman Annual Letter

The council presented the annual letter it had received from the Public Services Ombudsman for Wales. The Ombudsman⁵ is responsible for investigating complaints about public services in Wales, including local councils.

The letter reported that while the number of complaints about local councils received by the Ombudsman has remained broadly consistent with last year, there has been a 17% increase in complaints about all other types of public body. It went on to state that during 2023/24, the Ombudsman investigated 14% of the complaints it had received about councils, a similar percentage to recent years.

Our information shows that local authorities are looking into more complaints than ever before and are using information from complaints to deliver better outcomes for the people of Wales

The letter made specific reference to Merthyr Tydfil County Borough Council, revealing that it had received 12 complaints about the council, down from 17 last year and 27 the year before. The letter stated that the Ombudsman had intervened in 21% of these complaints, a similar percentage to recent years.

The committee noted the content of the letter.

Draft Statement of Accounts

Councillor Craig Flynn introduced the council's draft statement of accounts for 2023/24.

He reported that the general fund revenue outturn for 2023/24 is a surplus of £3.092 million, which it is proposed be transferred to the council's Budget Reserve.

He also reported that the council's total capital expenditure for the year was £56.340 million, which was significantly lower than the planned capital programme of £69.119 million.

He highlighted the significant underspend on the council's Physical Regeneration Programmes, which was £5.227 million (32%) lower than its revised budget.

This MTFP has been prepared against a backdrop of increasing concerns about the financial sustainability of Welsh local authorities, with unprecedented increases in Council Tax and significant use of Earmarked Reserves across Wales required to set balanced budgets for 2024/25

He also described the significant capital expenditure incurred on two major school building projects: Pen Y Dre High School and Blessed Carlo Acutis Catholic School.

The committee noted the report.

Internal Audit - Progress against the Plan

The report detailed the progress made by internal audit against its annual plan.

Councillor Andrew Wathan reported that 12 planned audit reviews have been completed, which equates to a completion rate of 30%. He noted that nine of these audits had received an audit opinion⁶ of Substantial or Reasonable Assurance, and two had received an opinion of Limited Assurance.

Councillor Wathan provided a detailed explanation of the limited assurance opinion that had been given to the audit of the council’s officer termination process. The opinion was given because the audit identified four serious weaknesses in the process:

• There are no procedures in place for school staff to follow in the event of a termination
• There are delays in HR/Payroll Services being notified of terminations
• There are delays in updating the HR/Payroll system of terminations which could lead to salary overpayments and inaccurate information being held
• School user accounts i.e. Google and Hwb are not always being closed immediately following a termination

Councillor Joan Davies assured the committee that a follow-up audit would take place to verify that improvements had been made to the process.

The committee noted the report, and questioned Councillor Wathan on the impact of staff availability on internal audit's ability to complete its plan.

Internal Audit Recommendations

The committee discussed a report detailing the status of internal audit’s recommendations.

Councillor Davies reported that 49 recommendations had been made following the conclusion of audits during 2024/25. 38 of these had been implemented, and 11 have a future target date for implementation.

She also reported that 5 recommendations from audits undertaken in previous years were overdue. All of these relate to recommendations made following an audit of the security and access to council buildings that was undertaken in 2023/24.

Councillor Davies assured the committee that they would receive an update on the status of these overdue recommendations at their next meeting.

The committee noted the report.

Governance & Audit Committee Forward Work Programme

The committee approved its forward work programme for 2024/25.