Audit and Risk Committee minutes – January 2024

The Chair welcomed members to the meeting. Apologies for absence were received from Andrea Gale. The Chair noted a quorum had been achieved.

Members welcomed Michaella Henderson, Governance Officer, CDPS to her first ARC (the ‘Committee’) meeting.

The ARC approved the minutes of the meeting held on 18 October 2023 as a true and accurate record.

The action log was received, and members noted the progress on actions and the actions that had been closed. There were no matters arising not dealt with elsewhere on the agenda.

The ARC agreed to defer the cost of living pay proposals for staff 2023 to 2024 agenda item to the in-camera session to ensure clear separation between ARC and staff members and to agree the minute of record post meeting.

Post meeting

ARC noted CDPS was proposing a 5% cost of living payment to be awarded for 2023 to 2024 for pay bands TS to EB1, backdated to 1 April 2023 (or start date, whichever was the later) to be paid in January.

Approved.

Additionally, we would like to offer a 1% non-consolidated cost of living award for 2023 to 2024 backdated to 1 April 2023 (or start date, whichever is later) to also be paid in January.

Not approved.

This decision followed a lengthy discussion and was made in the context of wider public sector cuts and the optics of a central body receiving a discretionary further pay award when many front-line public services are cutting staff numbers and having to lay people off. We felt that the 5% award was appropriate, but the further 1% non-consolidated award was not.

CEOs 

ARC noted CDPS was proposing a 5.5% cost of living award for 2023 to 2024, backdated to 1 April 2023 in line with the Senior Civil Service award.  ARC would need to consider this for affordability and recommend to the Chair of the Board who would review the CEOs’ performance and recommend the pay award to the Minister for their approval. This would be unlikely to take place in time for the January payroll, so ARC would look to implement in February or March 2024, dependant on the Minister’s availability.

There was discussion around the proposal for the CEO's to receive 0.5% more than other staff, and a question was raised about whether CDPS, as an arm's length body, was actually able to qualify for the Senior Civil Service award as set by the Senior Salaries Review Body, and therefore there was debate over whether the CEOs should receive an award in-line with the rest of the organisation at 5%, or the proposed 5.5%.

In line with our policy, ARC decided to outline the two options for the CEO pay award to the Chair for their review and decision for recommendation to the Minister for their approval.

Members received the finance report for quarter ending December 2023.

It was noted that Welsh Government funding had been reduced from £4.9m to £4.794m for the period 1 April 2023 to 31 March 2024 awarded in the form of quarterly drawdown based on written applications showing evidence of cash needs and that as of 30 December 2023 the total grant funding drawdown was £3.308M. MH noted that the budget cut had been modelled and was manageable. Members noted that the new First Minister would inevitably have their own initiatives they wish to develop once they take office. Members further noted that if the downward budget trend continued there could be uncertainty around proposed 2024 to 2025 initiatives.

Members noted the Q3 spend, Q4 projected spends and year to date (YTD) figures. LD explained that the £1.8M Q4 projected spend was higher than previous quarters because of projects already underway with contractor costs to be incurred and invoices to be received in January for those projects. LD noted the majority of costs were in line with predictions with a focus on reducing contractor spend and recruiting permanent staff.

Since the report had been issued, LD drew members attention to the predictive costs for technology for Welsh Government domains of £25,000 which would not be committed to this financial quarter. The report forecasted an unallocated spend of £38,078, which with the £25,000 clawed back from Q4 would give a total of £63,078 which is permissible in the 2% carryover.

Action

It was agreed a breakdown of ‘other costs’ under each departments YTD and forecast figures would be provided in the finance report in future.

Members expressed gratitude for the well-structured financial report.

JMF inquired about the budget preparation process for the 2024 to 2025 budget and governance and members noted the budget would go to CDPS Board for approval and adoption on 6 March 2024.

BS queried how the 2024 to 2025 projects were chosen and whether would be completed by year end to ensure expenditure would be reported in the right financial year. MH noted that project selection was based on the backlog which went through the prioritisation process and that there was a roadmap for expenditure that was being considered but noted that budget reductions with partner organisations could impact deliverability of some projects.

NP noted the themes of declining funds and greater scrutiny on public services means that CDPS would need to be able to demonstrate impact.

Members noted the update on transitioning the CDPS finance function in-house.

Members resolved to:

• Approve the CDPS finance report December 2023.
• Note the finance function update.

Members received the internal audit update providing members with an update on the emerging governance, risk and internal control related issues and the progress of work at CDPS as at 16 January 2024, together with the assurance review of project management arrangements and internal audit recommendations tracker.

JM presented a summary of the internal audit update report.

Action

JM to provide members with access to the TIAA portal.

Members noted the assurance review of project management arrangements report.

Action

Analysis supporting the statement that the move to employ the core user-centred design unit was demonstrated value for money to be provided to members.

Members noted the internal audit recommendations tracker.

Action

Risk appetite statement to come back to the ARC for noting.

Members resolved to note the internal audit update, assurance review of project management arrangements, and internal audit tracker.

Members received the Risk Register and covering report setting out additional requested information on Risks 11 and 14 and asking members to consider several questions ahead of the Board away day on 28 February 2024 to assist in the planning of the risk discussion session.

PK presented a summary of the report and Risk Register.

Members noted the challenges around gathering evidence of impact both in the short term and long term and the lack of systematic approach to gathering data.  PK reported that CDPS had employed an information architect to map data and improve understanding of impact. MH noted that with the overarching reset of the public sector budget in Wales, it could give public bodies an opportunity to ask Welsh Government to redraft their remit letters based on the funding challenges that they face, and that PK would be raising that point with the partnership team.

SA suggested CDPS could look at evaluating projects using a theory of change framework to measure impact and value and to demonstrate value for money.

Members discussed Risks 11 and 14 and the wider risk strategy in greater detail, agreeing to discuss further at the board away day.

JMF made several suggestions as to matters CDPS could consider in terms of risk including whether the ARC was receiving enough in terms of assurance, whether the MI pack was measuring the correct indicators, whether the communications report was a strong enough measure of risk and whether current engagement was sufficient to encourage people to work through the risk process.

Members resolved to note the report and Risk Register.

Members received the draft Board Assurance Framework and JM introduced the report.

The Board Assurance Framework was approved pending some minor points JMF would pick up with JM.

Members received the report updating them on the progress made since the last ARC meeting in recruiting a financial advisor to support ARC activities.

JM noted that six CVs had been received from candidates in regard to the role.

JMF offered to support in the selection process.

Members resolved to note the report.

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

There were no new items identified in the fraud register for discussion and consideration by the ARC.

Members were invited to suggest future agenda items to PK.

There being no further business the meeting closed.

The ARC noted the next scheduled meeting would take place on 24 April 2024 2pm to 4pm.

In-camera session between ARC members and JM. No CDPS staff attended, and the discussion was not minuted.