Pwyllgor Llywodraethu ac Archwilio

• The presenting officer introduced the report as a national Audit Wales review examining how councils across Wales planned and managed their capital expenditure. • The purpose of the audit was to assess: • How effectively councils planned their capital programmes, • Whether decisions were based on robust and reliable information, • Whether councils were achieving value for money from capital investment. • The audit also considered the extent to which councillors were supported to scrutinise and oversee capital investment decisions, recognising the importance of governance and member challenge. • The report formed part of wider work aimed at identifying common strengths, weaknesses and opportunities for improvement across the sector, rather than targeting a single authority. • The findings were intended to support councils in strengthening their approach to long-term planning, governance and value for money in capital investment. • The Council’s management response to the national recommendations had been included within the agenda pack, and Audit Wales were required to confirm that the Council had properly considered the report and proposed appropriate actions. Management Response Form • The Head of Finance presented the Management Response Form. • Officers were pleased to see the report and that good practice in Powys had been used as an example. • Plans for improvement were provided in the form including strengthening the systematic use of transition data and ensuring projects were further developed for the Capital Oversight Board for Major Capital Schemes of over £500k. Points raised by the Panel: Responses received from Officers or Cabinet Members. Members queried the apparent inconsistency between a previously presented Audit Wales report recommending a 15‑year planning horizon and the current report referencing 10 years. The Council operated a 10‑year working capital programme, with a 5‑year published programme, but also applied whole‑life costing to projects. This ensured that planning extended beyond fixed timeframes and accounted for the full lifecycle of assets. Concern was raised about the lack of multi‑year funding certainty, late allocation of grants and the resulting pressure on councils to make short‑term or opportunistic investment decisions. A suggestion was made that the Council should strengthen its lobbying of Welsh Government, particularly through the WLGA and local Senedd Members. Officers confirmed that engagement with Welsh Government was already taking place through established finance networks and the WLGA. Ongoing dialogue and representation on these issues were already embedded. It was highlighted that capital investment should be more clearly aligned with corporate priorities, the well-being plan, and initiatives such as Sustainable Powys, including a focus on place‑based hubs. Officers confirmed that proposals submitted to the Capital Oversight Board were required to demonstrate alignment with corporate priorities and Sustainable Powys objectives. Further strengthening of place‑based alignment was acknowledged as an area for continued development. Members noted a significant variance between expected and actual capital receipts in the previous year and stressed the importance of realistic assumptions due to the impact on the capital budget. Officers advised that the Council did not rely on unrealised receipts when committing to the capital programme. However, capital receipts remained important to support funding, and expectations would continue to be managed carefully. It was suggested that the Council should build on its track record of sharing assets and working in partnership with other public bodies, particularly in developing future hub‑based services. Officers acknowledged the importance of partnership working and confirmed that alignment with strategic initiatives such as Sustainable Powys, including shared use of assets, formed part of ongoing planning considerations. Members noted that value for money needed to be demonstrated not only at the planning stage but throughout procurement, delivery and operational phases. The importance of comparing planned versus actual outcomes was highlighted. Officers accepted that while some evaluation currently took place, there was scope to strengthen post‑project evaluation. This had been reflected in the management response, including enhanced reporting to the Capital Oversight Board and improved learning from completed projects. Members raised concern around the timeliness and adequacy of training for councillors on capital planning and suggested adding training to the risk register and introducing targeted interim training ahead of the next election cycle. The Chair reinforced concerns that training had not been delivered as expected in previous years and emphasised the need for a structured programme without delay. Officers confirmed that training would not be delayed until 2027 and that a programme of training would be developed and delivered, including engagement with relevant officers to ensure it met committee needs. Committee noted the report and management response.

· The Audit Wales Officer presented the Annual Audit Plan for 2026–27, setting out the programme of audit work to be undertaken at Powys County Council during the year. · The plan was being developed through a structured, risk‑based approach, which would continue to be reviewed and adapted throughout the year as risks evolved. · Members were advised that all audit work is carried out in accordance with the Code of Audit Practice, ensuring compliance with professional and statutory requirements. · The plan comprised two principal elements: o Financial audit work, focused primarily on the 2025–26 statement of accounts and associated returns; o Performance audit work, reviewing how the Council uses resources, manages risks and delivers services. · Financial audit activity would include: o Auditing the Council’s accounts and pension fund accounts; o Reviewing key risk areas such as management override, pension liabilities, asset valuations, senior officer remuneration and related party transactions; o Certification of grant claims and statutory returns. · The audit timetable was outlined, noting that: o Draft accounts were expected earlier than usual (mid‑June); o Audit completion was planned for September 2026. · Performance audit work would focus on: o Counter fraud arrangements; o A review of highways services; o Ongoing monitoring and follow‑up of previous recommendations. · Members were informed of a change in audit team personnel, with a rotation of staff in line with ethical standards, although continuity would be maintained. Points raised by the Panel: Responses received from Officers or Cabinet Members. Did both Audit Wales and Council officers have sufficient resources in place to meet the earlier deadlines for the financial audit. Audit Wales confirmed the work was built into their plans. Delivery depended on timely receipt of high‑quality draft accounts and supporting working papers. It was noted that the Council had a strong track record in meeting deadlines. The Head of Finance confirmed confidence in meeting deadlines and that additional attention had been given due to the change in financial systems. The Chair sought assurance from officers as to whether the scope and scale of the audit plan was appropriate and sufficient. Officers confirmed that from a financial perspective, the plan covered all expected areas, though some detailed work sat behind the high‑level summary presented. It was suggested that further detail would be helpful regarding the timing of follow‑up audits. Audit Wales Officers added that the performance audit element, set out on pages 14 to 16, comprised three main components within the Auditor General’s wider statutory responsibilities and was delivered in accordance with the Code of Audit Practice. Firstly, work was undertaken on counter‑fraud to review the Council’s arrangements for preventing, detecting and responding to fraud and error, reflecting ongoing risks and the expectation of robust controls. Secondly, a review of highway services was proposed, focusing on how the Council managed these services, utilised resources, and planned and delivered them in a sustainable manner, drawing on themes identified earlier. Thirdly, monitoring and follow‑up activity was undertaken to track progress against previous recommendations, noting the volume issued in recent years and the importance of ensuring that improvements were implemented, embedded and sustained. In terms of timescales, monitoring activity was ongoing throughout the year and informed the risk assessment process. Decisions on specific follow‑up work were taken in consultation with officers as the year progressed, while general monitoring continued routinely. Committee noted the report and emphasised the importance of maintaining oversight of follow‑up activity and delivery of audit work.

· The Assistant Director of SWAP Internal Audit presented the Quarter 3 Internal Audit Report. · It was reported that: o Internal Audit was on track to substantially deliver the annual audit plan. o Based on current audit outcomes, it was anticipated that a ‘reasonable assurance’ opinion would be issued at year end. · One area of concern was identified (relating to a high school), which would be reported in detail to a future meeting; however, no significant or material high‑risk issues had been identified. · Performance in respect of implementing audit actions was highlighted: o 95.4% of actions were either completed or not yet due; o Fewer than 5% of actions were overdue, based on a rolling 24‑month period. · A system improvement was also reported: the introduction of automated monthly notifications to Heads of Service regarding outstanding and overdue actions. This would reduce administrative tracking by Internal Audit and improve the timeliness and accuracy of data. · Client feedback remained positive, with internal audit work rated 98% satisfactory. Points raised by the Panel: Responses received from Officers or Cabinet Members. Members noted that while overall satisfaction was high, the score for audit scope was lower (83%) and queried whether there were lessons to be learned. The officer confirmed that lessons were routinely drawn from the feedback process. The lower score was likely attributable to a single dissatisfied respondent, with the majority of feedback remaining positive. It was explained that dissatisfaction had related to communication and scope clarity, and in some cases coincided with an unfavourable audit outcome. Officers confirmed that the issue had been reviewed and that improvements were being implemented, with ongoing monitoring of trends. A Member suggested that satisfaction percentages should be accompanied by the number of respondents, to provide clearer context and interpretation. The officer agreed with this suggestion and confirmed that response numbers could be included in future reports to improve transparency. ACTION Concern was raised that the report described a “sound system of governance, risk management and control”, despite: • a high number of total audit actions; • the presence of fundamental and important findings. The officer clarified that the overall assurance was a professional judgement, based on experience and the wider organisational context. It was explained that, within a large and complex organisation, control weaknesses would be expected, and the key consideration was whether they were sufficiently serious to threaten the achievement of organisational objectives. The absence of any significant or high‑risk issues being reported to the Committee during the year supported the conclusion that systems were generally sound. The opinion therefore reflected both quantitative data and qualitative assessment of risk and impact. Powys Officers assured the Committee that there had been a significant improvement in outstanding actions, which had reduced to a stable level of around 5%. The position was regularly reported to the Senior Leadership Team to ensure continued awareness and outstanding actions were also subject to scrutiny by the Committee. The introduction of new developments through Octro, including monthly emails to Heads of Service, was welcomed. This was expected to improve visibility, support more timely updates, and help ensure that outstanding actions were effectively managed. Overall, this was considered a positive development for the future.

• The presenting officer introduced a minor amendment to the Council’s Whistleblowing Policy, arising from recent legislative changes under the Employment Rights Act. • The specific amendment related to the recognition of sexual harassment as a protected disclosure, which required inclusion within the policy. This had been incorporated within the relevant section of the policy (section 1.3). • The officer further advised that additional legal obligations would come into force in October 2026. These would require organisations to take all reasonable steps to prevent sexual harassment in the workplace. • Work was already underway to prepare for these changes, including drafting a new supporting policy and developing training arrangements to ensure compliance by the implementation date. Points raised by the Panel: Responses received from Officers or Cabinet Members. Committee queried whether the document should be presented solely as a policy, noting that it currently combined both policy and procedural elements. It was suggested that the procedural content could be separated into a standalone document; or alternatively, the document could simply be referred to as a policy, rather than “policy and procedure”. The officer advised that it was common practice to include procedural steps within policy documents to ensure clarity for users on how to report concerns. It was acknowledged, however, that the document could be restructured for clarity, including clearer separation of policy and procedure sections if required. The officer indicated that the title could be amended to reflect a simpler “policy” designation.

• The Head of Finance introduced the Value for Money (VfM) Report, noting that it had been in development for a considerable period and this was the first formal version presented to the Committee. • It was emphasised that the report represented an initial step in strengthening the Council’s approach to demonstrating value for money, rather than a fully mature framework. • The purpose of the report was to: · Begin to bring together key information to support better scrutiny and decision-making; · Improve the Council’s ability to evidence value for money; and · Support ongoing evaluation of financial and service performance. The report drew on several core elements, including: · Financial performance; · Risk information; and · Benchmarking data, where available. It was acknowledged that the approach remained evolving, with further development required to: · Enhance the quality and breadth of data; · Strengthen analysis; and · Improve how value for money was demonstrated across the organisation and used as evidence by Scrutiny Committees in their examination of policy development, and strategic and operational performance Members were advised that future iterations of the report would aim to provide more robust and comprehensive information to better support governance and scrutiny functions. Points raised by the Panel: Responses received from Officers or Cabinet Members. Members acknowledged the report represented a first step and an evolving process. However, they expressed concern that the report appeared to focus on documenting processes and demonstrating value for money, rather than evaluating effectiveness. It was suggested that greater emphasis should be placed on assessing outcomes, with particular reference to complaints data, as residents were considered key indicators of value for money. It was proposed that analysis could work retrospectively from complaints to identify areas where processes could be improved to enhance value for money. The Cabinet Member for a Greener Powys noted that Point 4 provided examples demonstrating value for money in implementing measures to address climate change and support nature. The Chief Executive recognised that the paper was process heavy but directed the committee to the appendices where some examples of Value for Money were demonstrated.

· It was confirmed that the previously agreed action had been progressed, and that safeguarding performance had improved since the last report. · Children’s Services had submitted a comprehensive response to Welsh Government, via the Regional Safeguarding Board, on the review’s recommendations. The Board agreed that a further progress update would be provided in due course. · The report also included updates on safeguarding within education, including mandatory training, and ongoing work relating to volunteers and their inclusion within management systems. Regular updates from Adults’, Children’s and Housing services were also provided. · Following previous feedback from the Committee, the report had been expanded to include more detailed narrative, data and supporting evidence. Feedback on this revised approach was invited. Committee noted the report.

• The Portfolio Holder for Customers, Digital and Community Services presented the report. • It was clarified that the report related solely to corporate complaints and excluded those concerning social care, information rights and whistleblowing. • Members were reminded that a new recording system had been introduced from April 2025 to capture lessons learned and actions, with the aim of reducing repeat complaints. • Complaints had increased by 8%, rising from 820 to 884, with no single identifiable cause; some services had seen reductions, whilst others had experienced increases. • Complaints were being managed effectively and in line with Council policy, and the lessons learned approach had strengthened understanding of customer expectations and supported service improvement. • Looking ahead, it was advised that a review of the corporate complaints process would be undertaken, with a focus on moving from a reactive to a proactive approach, to improve outcomes and strengthen public trust in line with the Council’s corporate objectives. Points raised by the Panel: Responses received from Officers or Cabinet Members. Regarding Appendix 5, lessons learned, the committee queried whether the lessons learned presented in bar chart 1 were further broken down into categories in bar chart 2. Committee requested more context around lessons learned, controls implications and deadlines to address lessons learned. A balance had been sought within the report between its purpose of presenting complaints across all council services at a high level and including detailed information on each individual case. While numerous examples existed, it was accepted that further detail could be helpful and could be provided on request. Assurance was given that work had been undertaken to strengthen the process by which services input data on lessons learnt. Consequently, consideration had been given to introducing more structured input methods, such as pre-populated selectable text, to improve consistency and enable more comprehensive data collection. It was confirmed that this feedback would be taken forward and reflected in future reports. Committee acknowledged the detail in the report and requested assurance around procedure when processes were not followed to understand any potential resulting control complications. The Portfolio Holder for Customers, Digital and Community Services agreed that this could be done. Committee suggested that section 6.2 of the report could be presented as an action plan with timescales for improvements and changes. The Portfolio Holder for Customers, Digital and Community Services agreed that this could be done. It was noted that, following the strengthening of processes and improved data capture, it would be possible to benchmark against previous data to assess how effectively the system was operating in reducing complaints. This would enable clearer identification of the underlying causes and key themes of complaints, as well as comparisons across reporting periods. It was anticipated that, where lessons learnt had been effectively implemented across services, a reduction in complaints within those areas would be evidenced. It was confirmed that future reports would include greater detail, and that the feedback provided would be considered. Committee requested more explanation around the ‘recommendations not to be implemented’ noted on page 279 of the agenda. Not all actions recommended by the investigating officer could or would ultimately be taken forward. A review of the reports identified several instances where proposed actions had not been implemented, illustrating that such decisions rested with the service. Committee noted the report.

· The officer presented the Quarter 4 Regulatory Tracker Update, providing an overview of progress against regulatory recommendations issued by external bodies, including Audit Wales and the Ombudsman positioned as at the end of Quarter 4 (end of March). · Overall progress was positive, with the majority of actions either completed or on track. · The quarterly summary identified a total of 36 recommendations, including both open items and those closed during the quarter. · 8 new recommendations were received, all from Audit Wales, relating to the audit on Sustainable Powys and the Council’s governance arrangements; of these, 4 had been completed within the quarter and four remained on track. · A total of 25 recommendations remained open, of which 19 were on track and six were off track, with further details provided within the report. · 11 recommendations were completed during the quarter, with detailed information set out on pages 287–288. · Overall, governance arrangements remained strong, supported by clear oversight from the Senior Leadership Team and corporate tracking processes. No comments or queries raised, and the Committee noted the report.

• Officers presented a risk deep dive relating to Risk WO0021, focusing on recruitment and retention challenges within the Council. • The report outlined: • The nature and extent of workforce pressures affecting service delivery; • The underlying causes, including labour market conditions and competition for skills; and • the controls and mitigation measures currently in place to manage the risk. • It was explained that recruitment and retention remained a significant strategic risk, with potential impacts on service continuity, performance and the Council’s capacity to deliver its priorities. • The deep dive aimed to provide the Committee with greater assurance and understanding of how the risk was being managed across the organisation, including any planned improvements. Points raised by the Panel: Responses received from Officers or Cabinet Members. Members asked whether there was scope to expand the use of secondments into the Council, noting that these could bring new perspectives and mitigate challenges associated with geographic remoteness. Committee also proposed greater collaboration with other local authorities, particularly in sharing specialist roles for hard‑to‑fill posts. Concern was raised regarding the future impact of artificial intelligence (AI) on workforce planning, including the need to identify roles that may be affected and to consider retraining opportunities. The officer confirmed that digital transformation, including AI, was a key component of the five‑year workforce planning process. It was explained that services were already considering how technology could improve efficiency, impact staffing requirements and create new roles and opportunities. The importance of reskilling and training staff to adapt to changing roles was recognised and incorporated into strategic planning. Members queried whether the current risk framing sufficiently captured the need to recruit and retain staff, and to ensure they remained motivated, healthy and able to perform effectively. The officer acknowledged the point and confirmed that, although not explicitly stated in the risk definition, the People Strategy addressed the full employee lifecycle, from recruitment through to exit. It was emphasised that the Council actively considered staff wellbeing, engagement and motivation, including through staff surveys. It was noted that employee satisfaction directly influenced productivity and service delivery and was therefore an integral part of the Council’s approach to retention. Concern was raised around limited progress in food standards-related risks, referencing earlier reports and identifying this as a potentially significant risk area. The officer confirmed that issues in this area had been identified and were being addressed with the relevant service. Whilst specific details were not immediately available, it was confirmed that the matter would be taken away for further consideration and follow‑up. Committee raised a strategic concern regarding the balance between promoting internal talent and bringing in external candidates, particularly at senior leadership level. It was noted that, whilst internal promotion was valuable, there was a need to ensure fresh perspectives, constructive challenge and new ideas were introduced into the organisation. The Chief Executive confirmed that all senior posts were openly advertised to the external market, ensuring opportunities to attract new talent. To address the need for fresh perspectives, the Council: • Provided external mentoring and coaching for senior leaders; • Engaged in peer support and “critical friend” arrangements with other authorities; • Utilised secondments and external collaboration, particularly in areas such as education. It was emphasised that the organisation actively undertook external benchmarking and horizon scanning across local government and beyond to ensure continued improvement.

Internal Audit Working Group • The Group had met on the 20th of May and received an update on the Action Tracker and examined the follow up on the schools mandatory training and the overtime audits. Capital Working Group • The Working Group made comment on the Council’s public consultation exercise of rural estate which was positively received. Following this, the Working Group was asked to comment on some consultancy work. Those comments were forwarded to the leader and the leader had requested that them to be incorporated in a paper through the democratic process to the Economy Residents and Communities committee.

• No comments were raised by Committee.

• The Portfolio Holder apologised for the late submission of the report, explaining that it had been considered by informal Cabinet but had missed the publication deadline due to timing constraints and the pre‑election period. • It was reported that, at the end of Quarter 3, there were 11 non‑confidential risks, detailed in the appendix alongside mitigating actions. • The Committee was advised that no changes had occurred to risk probability or impact ratings during the reporting period, with officers available to respond to any questions. Points raised by the Panel: Responses received from Officers or Cabinet Members. A number of risks were above the defined risk tolerance, several of which carried major or severe impacts. It was noted that the report was three months old, and clarification was sought on whether there had been any updates or progress and whether there were any barriers preventing action on these high‑level risks. Officers explained that these were strategic risks, which by their nature were often high‑scoring. It was confirmed that the Council had recently approved its risk appetite framework, and that further work was ongoing to embed this within monitoring processes. Risks could legitimately sit outside of appetite, provided they were understood and actively managed. It was emphasised that risks were regularly reviewed between reporting periods, and that the report represented only a snapshot in time. Clarification was provided that risk scores had not materially changed in the subsequent quarter; risks in the highest quadrant were flagged for visibility but required individual assessment against risk appetite; new system functionality (including risk appetite alignment and target setting) would support improved monitoring and assurance. Members expressed concern that risks assessed as almost certain with major impact should be subject to urgent attention and prioritisation. Officers confirmed that mitigating actions were in place, although the nature of some risks meant that they could not be quickly reduced. It was clarified that risks such as climate and nature emergencies inherently carried high scores and were long-term in nature, making rapid reduction unrealistic. The Portfolio Holder further explained that these risks involved significant complexity and external dependencies, including long‑term investment requirements. For example, achieving net zero would require substantial capital investment and extended timeframes, with revised targets already agreed. As a result, such risks would persist at a high level for some time, despite ongoing mitigation. It was suggested that a separate, more detailed discussion or workshop could be arranged outside of the current meeting to explore the issues raised in greater depth, aid better understand and “unpack” the complexities around strategic risks (particularly larger, external or global risks), and consider how such risks should realistically be assessed and managed, given the Council’s limited ability to influence them. ACTION

RESOLVED to exclude the public for the following item of business on the grounds that there would be disclosure to them of exempt information under category 3 of The Local Authorities (Access to Information) (Variation) (Wales) Order 2007). The Monitoring Officer has determined that category 3 of the Access to Information Procedure Rules applies to the following item. His view on the public interest test (having taken account of the provisions of Rule 14.8 of the Council's Access to Information Rules) was that to make this information public would disclose information relating to the financial or business affairs of any particular person (including the authority holding that information). These factors in his view outweigh the public interest in disclosing this information. Members are asked to consider these factors when determining the public interest test, which they must decide when considering excluding the public from this part of the meeting.