Audit and Risk Committee minutes – July 2024

ARC members present:

Neil Prior (NP) – Chair

Samina Ali (SA)

John-Mark Frost (JMF)

Guests:

John Maddock (JMa) TIAA

Lucy Dean (LD) Azets – Item 2 only

Apologies:

Andrea Gale

Ben Summers

Myra Hunt

CDPS staff:

Harriet Green (HG) – CEO

Lisa Hobbs (LH) – Item 6 only

Phillipa Knowles (PK)

Kath Morgan (KM)

Secretariat:

Jon Morris (JM)

The meeting opened at 15:30.

1.3. The Chair welcomed Members to the meeting. Apologies for absence were received from Andrea Gale and Ben Summers. JMF had notified the Chair that he was detained, and as such the Chair noted a quorum had not yet been achieved. As such, until JMF joined the meeting, no decisions could be made.

1.4. The Chair proposed that in JMF’s absence, the Committee could discuss the People Strategy (Item 6.0) and make recommendations. An amended Strategy could then be returned to the Committee for approval at the October meeting.

6.1. Members welcomed LH, Interim People Lead, to her first ARC meeting, introduced themselves and gave her the opportunity to describe her background.

6.2. LH presented the draft people strategy, noting CDPS’s rapid growth over the last year. She noted the comments made prior to the meeting and invited any additional comments from the committee members.

6.3. The committee felt this represented a good starting point but felt that it read more as giving the current situation rather than a forward look or target. They recommended including what CDPS is looking to achieve and how we measure objectives, impacts and outcomes. Given her background in HR, SA offered support in development.

ACTION: LH and SA to collaborate on iterating the People Strategy.

6.4. Further discussion was around the importance of the inclusion of staff development, noting that individuals have their own training budgets, but how do we manage talent? The committee explained the 10:80:10 model of 10% low, 80% stable and 10% exceptional performers in an organisation. How do we manage the exceptional performers in the organisation, and how do we manage secondments to widen staff outlook, further to the discussion at the July 2024 Board meeting, The committee reiterated the value in staff broadening their experience across the public sector through secondments. 

6.5. Committee members emphasised the importance of staff surveys, especially pushing for high completion rates and allowing staff to complete in an honest and constructive manner. They also recommended examining the onboarding experience given the importance of first impressions for new starters.

6.6. The committee addressed the retention and pay offer, acknowledging that the public sector often pays less than the private sector. They asked how CDPS plans to retain people whose values align with the public sector, noting that the public sector attracts people who are usually motivated to see wider societal improvement. They asked if it was possible to expand the role of Apprenticeships in the strategy?

6.7. Committee members commented that it was encouraging to see the regular dialogue of quarterly performance reviews. They felt this was important as the feedback would never be a surprise for staff, and gives the opportunity for regular guidance and development.

6.8. PK commented that workforce planning was high on CDPS’s operational radar – particularly succession planning and staff development. Our new HR system gives the opportunity to perform a monthly pulse survey to take a snapshot of how staff are feeling. She enforced that CDPS has a high number of staff who are here because they believe in our mission, and that the organisation aims to be flexible and accommodating, which is reflected back in staffs’ attitude.

6.9. Further recommendations from committee members were: Expanding the use of mentoring & coaching to encourage staff’s ownership of their own development. Considering setting up a light-touch alumni network for staff who move on from CDPS to other parts of the public sector. The need to keep monitoring our approaches and develop our policies to maintain engagement and satisfaction of staff.

NP recommended reviewing the topics explored in The 21st Century Public Servant, published by the University of Birmingham.

ACTION: LH to make amendments to the People Strategy and return to ARC in October.

5.1. JM proposed discussing this item ahead of JMF’s arrival as there was no decision needed. NP and SA were in agreement.

5.2. JM described the review of CDPS’s insurance provision for 2024-25, which is due by 2 August. As per ARC’s ToR, the Committee should review the corporate insurance provision at least every three years, which is now due. Given that CDPS is so close to renewal, JM sought agreement to provide insurance details via correspondence before the October ARC meeting.

5.3. ARC members accepted this proposal and requested an explainer document and insurance benchmarking from two or three other ALBs to help them make an informed review.

ACTION: JM to provide full details of CDPS’s insurance provision, along with explainer and benchmarking, to ARC members via correspondence before October 2024 ARC meeting.

7.1. As the Internal Audit updates are for scrutiny rather than decision, the Committee felt it appropriate to consider these in JMF’s absence. The Chair also noted that JMF had provided notes to him on these papers ahead of the meeting.

7.2. JMa presented the Summary Internal Controls Assurance paper and invited questions and comments from members from the committee.

7.3. Committee members had no additional comments or questions on this paper. JM confirmed that all ARC members now had access to the TIAA portal, and therefore were able to access Client Briefing Notes and reports directly rather than waiting for the SICA publication.

JMF joined the meeting.

7.4. The Chair noted that with JMF, a quorum had now been achieved for the Committee.

7.5. JMa presented the Business Continuity (BC) Audit report and invited questions and comments from members from the committee.

7.6. Committee members and the CEO were keen to roll out BC training and test the Plan as soon as possible. JM confirmed that whilst the closure date was the end of Q3, this was an absolute deadline, but that efforts would be made by the Ops team to work through the training and trial through Q2. JM confirmed the BC Plan, and Disaster Recover and Crisis Comms Plans were now in place, and could be shared with the Board for review immediately.

ACTION: JM to share BCP, DRP and CCP with all Board members.

7.7. In response to queries from members, JM confirmed the makeup of the Crisis Management Team (CMT) as SLT members with their Seniors as delegates, and that each CMT members’ contact details were included in the plan, including personal contact details. JM also confirmed that the BCP details that the Comms Lead should brief the Chair of the Board as soon as a Crisis is declared, then work on a brief for all Board members to keep them updated on the situation in case they are approached.

7.8. Members noted the Internal Audit Recommendations Tracker and raised no concerns on any positions.

LD joined the meeting.

2.1. LD gave an update on CDPS’s financial position based on communications received from WG on 23 July regarding the company’s carry forward in excess of 2% from 2023-24. These changes were not expected subsequent to the publication of the Finance Report, which was produced in good faith, and described the impact of the changes on the financial position of the company.

2.2. LD presented the Finance Report for quarter ending June 2024 and invited questions or comments from members.

2.3. Members commended the balance between figures and explanation. The ARC members suggested an extra dimension which would help them would be the inclusion of a section to report to flag any upcoming issues ahead of them arising. This would allow a degree of financial horizon scanning and allows NEDs to provide support, if needed.

2.4. The Committee noted a small concern in the report regarding the aversion to billable works, especially with consideration of potential future funding cuts. They felt that exploring billable work may help to make CDPS a more financially resilient organisation.

2.5. HG noted several pieces outside the approved Operational plan and Roadmap which WG have asked CDPS to undertake with no additional funds available. She stated that it is important to understand the opportunity cost in this extra work, and emphasised the importance of transparency in this process. ARC members confirmed they would support CDPS in information gathering and justifications for possible additional funds from WG.

2.6. HG explained that there will be reductions in some budgets over the coming quarter, including the scaled down presence at the National Eisteddfod, which will give an underspend on this budget line. Our presence at the Eisteddfod will likely reduce due to current political situation and lack of availability of Ministers. Any underspend will be reallocated as appropriate to other priorities in the business.

2.7. ARC members approved the adoption of the Q1 Finance update.

LD left the meeting

1.3. The ARC approved the minutes of the meeting held on 24 April 2024 as a true and accurate record.

1.4. The action log was received, and Members noted the progress on actions and the actions that had been closed. Members noted the below for update in that Log:

• Action ARC24-017 was not needed and can be removed;
• If an item has been delayed and has a new target date, could these be marked as “Delayed” rather than “On Track”; and,
• Clarification on 202310-4. PK confirmed that the finance audit had been completed, but this action was still open as the governance narrative was still in draft.

1.5. Members confirmed that there were no items to be discussed which were not represented on the agenda.

2.1. The ARC agreed to defer the decision regarding Cost of Living Pay Proposals for Staff to the end of the meeting, after Staff members had left the session and to agree the minute of record post meeting.

2.2. PK outlined an update from WG that had been communicated after the publication of the paper. She explained that with high public interest in public sector pay, the Cabinet is keen to deploy a co-ordinated approach to pay awards. WG outlined to us that is was up to the CEO to decide whether to proceed with the pay award in August or delay. WG are content for ARC members to discuss the level of award, but noted that the application of this may be delayed. The Chair requested that PK outline the new information in writing.

ACTION: PK to share updated advice on CoL pay award timescales and the coordinated approach by Ministers.

2.3. Members requested an indicative timescale to return their decision. PK replied that CDPS’s pay cycle requires changes to be submitted for calculation in the first week of each month, so if the Committee did not reach consensus by the first week in August, a decision by the end of August was acceptable.

4.1. JM introduced an amended version of the Risk Appetite Statement which had been updated based on comments from Board members on 10 July.

4.2. JM thanked JMF for the comments he had made prior to the meeting regarding slight amendments to the wording for Risk Response. These changes will be made before publication.

4.3. JM addressed the comments made by members ahead of the meeting regarding the statement:

“Under no circumstances, for instance, will we put at risk the safety of staff, or uncontrolled financial loss in excess of £100.”

This comment reflects the fact that as CDPS is using public funds, uncontrolled losses must be minimised. This should not inhibit CDPS in working in an agile fashion and “failing fast”, but should show that we are conscious in taking considered risks.

4.4. The Committee decided to accept the Risk Appetite Statement for adoption subject to the minor changes agreed between JM and JMF.

ACTION: JM to update and publish the Risk Appetite Statement to live.

8.1. There were no instances of departure from normal procurement policy and guidance to bring to the attention of the ARC members this quarter.

9.1. There were no new items identified in the Fraud Register for discussion and consideration by the ARC.

10.1. Members were invited to suggest future agenda items to PK.

11.1. The Committee acknowledged that this was NP’s final meeting, and that he is standing down from his position as NED and Chair of ARC after three years of service on 16 August.

11.2. As the post of ARC Chair may not be vacant due to their responsibilities to the company, the committee agreed to confer with the Board’s Chair and each other to select a new Chair prior to 16 August.

11.3. All Committee members and CDPS staff present thanked NP for his dedication to CDPS over the last three years, noting the positive impact he has made both in Board and subcommittee.

12.1. Due to time constraints, the in-camera session for Q1 did not take place.

The meeting closed at 17:15.