Agenda item

            At its meeting in January 2010, the Committee had requested that Internal Audit review part of the Wi-Fi project and the Head of Internal Audit report its findings back to the Committee.  The Head of Internal Audit presented his report, carried out in accordance with the remit set by the Committee and approved by the Chair of Audit Committee, including his conclusions in relation to the loan security, compliance with the Council's treasury management policy, profit-sharing arrangements, compliance with EU Directive: Article 87, value for money, and lessons learnt from the process in relation to the openness of the decision-making process.

            Councillor Nick Martin advised that he did not accept the report, and considered that it was very difficult for an Internal Audit review to adequately audit such a decision of the Authority.  He suggested that there should be a freestanding external review of the loan arrangements, due diligence carried out in respect of the company and its Directors, the security of the loan, adherence to the treasury management policy and the measures used to demonstrate value for money.

            The Chief Executive confirmed that the organisation culture was one of openness and transparency and that the Head of Internal Audit had been given unfettered access to all parties and documents to carry out his review and to draw his own conclusions.  The Leader of the Council confirmed that this internal audit was completely independent, as was the case for all reviews, and noted that the review had confirmed that the arrangements were appropriate.  He acknowledged that it was important to learn lessons to enable the Council to continue to develop innovative projects, whilst accommodating greater cross-party pre-decision discussions.

            Councillor Des Moffatt confirmed that the Head of Internal Audit’s report included the additional information requested in respect of the process but indicated that he would support an external auditor examining in detail the decisions made, including whether the contract was competitive.  At the request of the Leader, Councillor Moffatt advised the Committee of his reasons for questioning the decisions made in relation to the Wi-Fi Project and the decision-making process.

            Councillor Steve Allsopp suggested that if this was to be the forerunner of a range of new initiatives that the Council would undertake, that it was important to learn the lessons from the exercise and to build upon the issues presented in the report.  The Cabinet Member for Resources supported the need to learn from the process.

            It was noted that the Director of Law and Democratic Services had been asked by the Corporate Governance Working Party and the Scrutiny Committee to bring back a report on augmenting the Council's processes for managing the transition of innovative commercial projects with private sector partners, from inception to the approval and implementation of a project, to enable greater member discussion and involvement.   The Leader emphasised that the audit report and the examination of the process by the Scrutiny Committee had showed that due process had been followed and he stated that the decision was made in good faith for the benefit of Swindon, but that he was happy to work on a cross-party basis to develop a better process to deal with similar proposals in future.  The Chair of Audit Committee confirmed that, if he was still Chair in the new municipal year, he would like to be involved in the Corporate Governance Review Group’s consideration of this report.  The Chief Executive agreed that in moving forward the Council would need to ensure that it had access to officer skills to work in innovative ways with the private sector.

            Mr Peter Smith of the Audit Commission, the Council's External Auditors, confirmed that the value of the project was not sufficient to be material to the Council's accounts.  He commented that the Council could request the Audit Commission to carry out Advice and Assistance work but that this was aimed at improvement rather than reviewing historical decisions of the Council.  Such an application would be subject to assessment in accordance with strict criteria to ensure that there was no conflict of interest with the Audit Commission’s statutory role.

            Resolved – 1) That the Audit Committee note the report of the Head of Internal Audit dated 9^th April 2010 in respect of concerns raised at Audit Committee in relation to Wi-Fi.

2) That it be confirmed that the scope of the Internal Audit as requested by the Committee had been addressed in the report.

            3) That the Director of Law and Democratic Services be requested to submit his report on future decision-making in relation to the Council's engagement in innovative activities as soon as possible, preferably within 3 months from the start of the new municipal year