Agenda and minutes
Venue: Committee Room 3 - Town Hall, Mulberry Place, 5 Clove Crescent, London, E14 2BG. View directions
Contact: Farhana Zia, Democratic Services Tel: 020 7364 0842, E-mail: farhana.zia@towerhamlets.gov.uk
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DECLARATIONS OF DISCLOSABLE PECUNIARY INTEREST PDF 117 KB To note any declarations of interest made by Members, including those restricting Members from voting on the questions detailed in Section 106 of the Local Government Finance Act, 1992. See attached note from the Monitoring Officer.
Minutes: No declarations of disclosable pecuniary interest were made by the members.
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MINUTES OF THE PREVIOUS MEETING(S) PDF 267 KB To confirm the minutes of the Audit Committee held on 14th November 2019. Minutes: The minutes from the 14th November 2019 meeting were agreed and approved to be an accurate record of the meeting.
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DELOITTE ITEMS FOR CONSIDERATION Minutes: There were no Deloitte reports for consideration and as such Deloitte Auditors were not present for this meeting.
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TOWER HAMLETS ITEMS FOR CONSIDERATION |
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Internal Audit and Anti-Fraud Progress Report PDF 475 KB Additional documents:
Minutes: Mr Paul Rock, Head of Internal Audit, Fraud and Risk introduced this report stating that the report provided an update on the progress made against the delivery of the 2019/20 Annual Internal Audit Plan, as well as the current counter fraud performance and audits which have received limited assurance ratings.
Mr Rock referred to paragraph 3.1 and said the recruitment of two auditors was progressing well and he hoped the team would be at full strength soon. Mr Rock updated Members regarding the overall view of assurance to date and informed the Committee that 50% of audits has been finalised with either none or limited assurance and 50% had been finalised with substantial assurance.
Mr Rock said going forward the Committee would receive exception reports giving a better oversight of outstanding management actions from audits carried out. Regarding fraud investigations Mr Rock referred to paragraph 3.13 and said the Insurance Investigator was having a positive impact on the number of fraud cases identified and resolved.
In response to questions from Members the following was noted:
· In reference to paragraph 3.8, high and medium priority recommendations were currently followed up six months after the final reports had been issued. However, the team was looking to put in place a new follow up process whereby high priority recommendations would be followed up when they are due and medium priority recommendations would be followed up on a risk basis. · The overall view of assurance relates to data provided at paragraph 3.6. Fourteen audits have been completed of which seven have limited or no assurance and seven have substantial assurance.
The Chair, Councillor Whitehead stated that there was one limited assurance report in the agenda pack, relating to Children’s Social Care. Mr Richard Baldwin, Divisional Director for Children’s Social Care had been invited to the meeting but regrettably he could not attend. Mr Baldwin had provided a written update which had been circulated to the membership.
o ACTION: The Chair proposed and Members of the Committee AGREED Mr Baldwin should attend the next meeting of the Audit Committee to explain the remedial action taken in relation to the limited assurance report on Quality Assurance Systems in Children’s social care.
Notwithstanding this, the Chair was delighted to welcome Ms Karen Swift, Divisional Director for Housing and Regeneration who had been invited to the Committee to talk about the limited assurance relating to ‘Client Monitoring of Fire Safety in Residential Dwellings’. Mr Dan Jones, Divisional Director for Public Realm was also present to update Members regarding the limited assurance relating to ‘Management and Control of Electronic Parking Income’. The Chair clarified for Members that both the limited assurance reports were due to be discussed at the last meeting of the Committee, namely 14th November 2019, however as written responses had been received, this was an opportunity for Officers to update Members on the remedial action taken in areas which had achieved an limited assurance.
Client Monitoring of Fire Safety in Residential Dwellings Ms Karen ... view the full minutes text for item 4.1 |
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Internal Audit Charter PDF 237 KB Additional documents: Minutes: Mr Paul Rock, Head of Internal Audit, Fraud and Risk introduced the report stating that in accordance with the Public Sector Internal Audit Standards, the Council is required to produce an Internal Audit Charter. The charter sets out the purpose, authority and responsibility of the internal audit activity, which must be approved by the Audit Committee.
Mr Rock asked Members to review and approve the Internal Audit Charter.
In response to questions from Members the following was noted:
· Mr Rock clarified the purpose of the Charter was to make clear the independent role, purpose and responsibility of Internal Audit and to ensure best practice. · Councillor Wood asked Mr Rock if he was aware of the recommendations put forward by the external peer review of the audit function; and a letter written to the Corporate Director for Resources in December 2017. o ACTION: Councillor Wood suggested that the Audit Committee be provided with an update on each recommendation and an explanation if they are not to be implemented. · The Chair recalled one of the recommendations was to invite the Chief Executive to a meeting of the Audit Committee, in order for him to comment upon the overall health and governance culture in the organisation. Members of the Committee concurred it would be apt to invite the Chief Executive to the next meeting. o ACTION: The Chair of the Audit Committee to invite the Chief Executive to the next meeting of the Audit Committee.
The Audit Committee RESOVLED to:
1. Review and approve the Internal Audit Charter.
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Risk Management Report 2019/20 - Q3 PDF 335 KB Additional documents:
Minutes: Mr Anthony Sotande-Peters, Interim Strategic Risk Advisor introduced this report stating that the purpose of the report was to inform members of the ways in which risks are identified and managed. The report provided a summary of risk activities over the third quarter 2019/20. Mr Sotande-Peters said there were 11 corporate risks on the corporate risk register, three of which were red rated, five were amber and three yellow.
In response to questions from Members the following was noted:
· With regard to the comment at paragraph 3.3, Members asked why actions were not followed up from Audit Committee meetings. Mr Rock responded stating changes had been made to take into account the request for Members to have an increased role in identifying risks for the corporate risk register. He said the Risk Strategy was to be reviewed and it would be timely for Members to get involved. o ACTION: Members requested training on risk management which explained how risks are identified for the corporate risk register and what happens to risks that do not make the register. o ACTION: Members agreed they’d like be sent the risk registers of each directorate and then going forward review, through a rolling programme, one Directorate register per committee meeting and invite the Corporate Director responsible to future meetings, for a deep dive session. · In reference to page 67 of the agenda and risk THB0001, the Chair asked why the narrative, in relation to preparing for leaving the European Union – i.e. Brexit had not been updated to reflect the current situation. Mr Rock accepted the summary for this risk required updating. The risk was being managed across the council. A significant amount of work was required to ensure risk owners took responsibility for their risks and control of risk was effective. · Members enquired why the Transformation programme was not on the corporate risk register. Mr Neville Murton responded saying the transformation programme was sub-divided into smaller projects and individual Directorates were responsible for managing the risk related to their area. Councillor Salva-Macallan said she would expect to see the risk to be higher up on the register as collectively it was a big risk for the Council. · Ms Charlotte Webster, independent person, enquired if risks are aggregated to show if risks are high, medium and low risks. Mr Rock said the organisation had not matured enough to allow for this type of risk management however he agreed this would be the direction of travel for the organisation. Risks such as the Veolia contract, the new Town Hall and ICT were on Directorate risk register.
The Audit Committee RESOLVED to:
1. Note the corporate risks and recommend changes and updates as necessary ensuring risks identified are those that could prevent the Council achieving its aims and objectives.
2. Where applicable, request risk owner(s) with risks requiring further scrutiny to provide a detailed update on the treatment and mitigation of their risk including impact on the corporate objectives at the next meeting. ... view the full minutes text for item 4.3 |
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Statement of Accounts 2018-19 - Progress Update PDF 258 KB Minutes: Mr Kevin Bartle, Interim Divisional Director for Finance, Procurement and Audit presented the progress report in relation to the external audit of the Council’s Statement of Accounts 2018/19.
Mr Bartle made clear to Members the report dealt with the present situation regarding the accounts and was seeking workable solutions to put right the issues rather than looking to criticise individuals or previous practices at the Council.
Mr Bartle said he was hugely disappointed the Accounts for 2018/19 were not in a state to be signed off, as he had hoped, for the January meeting.
He said regular meetings had taken place between the Cabinet Member for Resources, Councillor Candida Ronald and the Chair of the Audit Committee, Councillor Val Whitehead to update them with the progress made. Mr Bartle said going forward it was vital to prepare the Council for future final accounts preparation so that the new processes he was setting up become the norm for staff.
Mr Bartle drew attention to paragraph 3.3 and said a further matter had come to light which required significant work. The entries for school balances did not match correctly with the Accounts, so team members had spent a considerable amount of time to discover the reasons for the discrepancies. He said staff had to unpick, cross reference and reconcile each entry. Mr Bartle said there was a danger that the previous year’s accounts for 2017/18 could be reopened, however he hoped that it would not come to this.
Mr Bartle made reference to paragraph 3.4 onwards and provided an update regarding each area.
Mr Bartle answered a number of questions from Members relating to the significant items outstanding. In response to answers provided Members noted the following:
· The issues relating to school balances concerned schools that had become academies. However there could still be a risk to the General Fund. Mr Bartle said a judgment would need to be made on if a prior year adjustment could be made or if the previous accounts for 2017/18 would require reopening. He said schools would also need to be informed. · Mr Bartle reassured Members there was no financial penalty for the late production of the accounts but there was reputational risk. He said whilst the accounts are very late, there were many other authorities in similar situations. The Ministry of Housing, Communities and Local Government (MHCLG) are aware that approximately one third of local authorities are late with their 2018/19 accounts. Reasons for lateness vary from the shortened timetable to produce the Accounts, resourcing issues and the change in external auditors. · In response to Councillor Francis suggestion the matter be referred to Full Council for a further debate, Mr Bartle reassured Members that in his view, it is unlikely that there would be direct intervention from Government. His view was that the worst case scenario was the external auditors issuing a ‘Report in the Public Interest’ which could raise concerns, although he thought its issue was unlikely.
The Chair thanked Mr Bartle for his ... view the full minutes text for item 4.4 |
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Additional documents:
Minutes: Mr Kevin Bartle, Interim Divisional Director for Finance, Procurement and Audit firstly apologised for the late production of the report. He said this had been for a number of reasons but was mainly due to the impact of the 2018/19 accounts not yet being completed which had ‘knocked on’ to the production of the Treasury Management Strategy Statement
Mr Bartle highlighted the key points of the Treasury Management strategy and referred Members to paragraph 3.20 which outlined the main change to the strategy. Mr Bartle said the Council and its treasury management advisors, Arlingclose had agreed to use a slightly different methodology for selecting counterparties to invest with. The council would use credit ratings provided by Fitch, Moodys and Standard & Poors to derive its selections. He said this would give treasury management staff the ability to invest more efficiently given the new approach but it would not make investing more risky
In response to questions from Members the following was noted:
· Mr Bartle confirmed using the credit agencies’ ratings would mean that if the credit rating changed for an investment, treasury management staff would have the authority to pull out of the investment. There would continue to be an upper limit on all investment types. · In response to if there would be penalties for early withdrawal from deposits, Mr Bartle confirmed there would be · Councillor Wood asked what control process was in place, when loans were made to charities. Page 36, supplement agenda. He said grants are considered by the Cabinet’s Grants Determination Sub-Committee but what happens to loans? Mr Neville Murton, Corporate Director for Resources responded stating the charity would need to make a business case and must satisfy the criteria when applying for a loan. However there was no reporting process in place for this to be referred to a committee. Ms Asmat Hussain, Corporate Director for Governance added this would be an officer decision and would be published on the Council’s website. · Councillor Francis enquired if the Audit Committee would receive reports to vary the Treasury Management Strategy like the one the Committee considered earlier this municipal year. Mr Murton confirmed that this would be the case. He explained where a commercial opportunity existed and the Council wanted to invest in it, it would require the Committee’s approval. o ACTION: Members of the Committee requested training in relation to the Treasury Management Strategy. Mr Bartle confirmed this would form part of the annual induction training for Members.
The Chair thanked Mr Bartle for the report.
The Audit Committee RESOLVED to:
1. Approve and adopt the following policy and strategies: a) The Treasury Management Strategy Statement contained in Appendix A; b) The Investment Strategy contained in Appendix B; c) The Capital Strategy Report contained in Appendix C; d) The Prudential and Treasury Management indicators contained in Appendix D; and
2) Note that the Approved Limit for loans to local charities for service purposes of £0.6m was exceeded by £0.4m in 2019/20, as the approved limit did not consider ... view the full minutes text for item 4.5 |
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ANY OTHER BUSINESS THE CHAIR CONSIDERS URGENT Minutes: There was no urgent business to be discussed.
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AUDIT COMMITTEE WORK PLAN 2019/20 PDF 156 KB Minutes: Members of the Committee were asked to note the Committee’s work plan for the last meeting of the municipal year – April 2020.
No changes were suggested to the work plan however the Committee acknowledged the Chair may need to revise the agenda due to the amount of items on the work plan.
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