Agenda and minutes
Venue: Town Hall, Mulberry Place, 5 Clove Crescent, London, E14 2BG
Contact: Antonella Burgio, Democratic Services Tel: 020 7364 4881, E-mail: antonella.burgio@towerhamlets.gov.uk
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COUNCILLOR AMINA ALI (CHAIR) IN THE CHAIR
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DECLARATIONS OF DISCLOSABLE PECUNIARY INTEREST PDF 64 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 or other declarations of interest were made.
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MINUTES OF THE PREVIOUS MEETING(S) PDF 117 KB To confirm the minutes of the Audit Committee held on 30th June 2014. Minutes: Matter arising from minutes of 30 June 2014 Audit Committee (AC)
Referencing page 3/ para 4/ bullet 3 of the minute pertaining to agenda item 5.1 [page 7 of agenda] an AC member noted that the Authority did not benchmark Its accounts against other local authorities, when it did so in other areas eg school services, and accordingly requested that benchmarking was undertaken in 2014/15.
The Chair Moved and it was:-
Resolved
That the unrestricted minutes of the ordinary meeting of the Audit Committee, held on 30th June 2014, be agreed as a correct record of the proceedings, and the Chair be authorised to sign them accordingly.
Action by: Nishaat Ismail (Committee Officer, Democratic Services, LPG)
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KPMG ITEMS FOR CONSIDERATION |
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Interim report to those charged with governance (ISA 260) 2013/14 PDF 1 MB To consider the interim governance report issued by the Council’s External Auditor.
Minutes:
Andrew Sayers, representing External Auditors KPMG introduced, and highlighted key points, in the report which summarised the key findings arising from:- · KPMG work to date at LBTH in relation to the Authority’s 2013/14 financial statements and those of the Local Government Pension Scheme it administered. · Work undertaken to support KPMG’s 2103/14 conclusion on the Authority’s arrangements to secure economy, efficiency and effectiveness in its use of resources. Points highlighted by Andrew Sayers included:- · That given the correlation between matters being examined by the Pricewaterhouse Coopers (PwC) inspection, being undertaken for the Secretary of State for Communities and Local Government, and areas in scope for audit by KPMG, the Authority’s external auditor, [in relation to the financial statements for 2014/14 and reaching a conclusion on the Authority’s financial arrangements in place for securing economy, efficiency and effectiveness in its use of resources for 2013/14], the report before the Audit Committee was interim pending KPMG consideration of the outcome of the PwC Inspection report. In the period leading up to PwC Inspection report, KPMG had focused on undertaking other normal planned audit work and activities to reach a Value for Money conclusion. · The majority of the planned audit work had been completed and based on this KPMG had not identified any matters that would adversely impact on its opinion of the Authority’s financial statements; similarly for the Pension Fund. · During the KPMG audit the Authority had identified two significant adjustments to the financial statements, which related to the grossing up of debtors and creditors, and the late notification of a creditor by an NHS organisation. The first had no impact on the net worth of the General Fund and the latter was covered off by an ear-marked provision. ????The provision for National Non-Domestic Rates of £3 million required an adjustment, but this was well below the materiality level???? · The KPMG audit had identified a significant risk arising from the implementation of the General Ledger system, however based on the outcome of audit testing a conclusion had been reached that outputs from the GL system could be relied on in auditing the financial statements. · The audit of property, plant and equipment, which was an inherently risky balance due to the potential for impairment/ valuation changes and required judgement/ estimation uncertainty; the audit had not identified any significant issues; however a recommendation on the future approach to valuations had been made. · There had been significant changes in the accounting treatment of National Non-Domestic Rates and due to balance sheet variances this area had been an audit focus. No significant issues had been identified and an adjustment had been made for provision. · Risk had been identified in respect of the triennial valuation of the Pension Fund relating to inaccurate data provided to the actuary impacting on actuarial figures in the accounts. Work completed to test source data and controls on accuracy had not identified any issues??? · The quality of the accounts and supporting papers was good and audit queries were dealt with efficiently. · The Authority’s ... view the full minutes text for item 3.1 |
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TOWER HAMLETS ITEMS FOR CONSIDERATION |
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Quarterly Assurance Report PDF 92 KB To note the work of Internal Audit for the period June 2014 to August 2014, the assurance rating of each audit finalised in the period and an overall assurance rating.
Additional documents: Minutes: Minesh Jani (Service Head Risk Management) introduced, and highlighted key points, in the report which:- · Summarised the work undertaken in the period June to August 2014. · Set out the assurance rating of each audit finalised in the period together with an overall assurance rating. He also reported the following audit performance: · Informed the AC that the report informed the annual internal audit opinion given at the end of each financial year.
Points highlighted by Minesh Jani included:- · 18 audit assignments had been undertaken in the last 3 months 13 giving substantial assurance and 5 limited assurance. These had been focused in areas of moderate or extensive significance to the authority as defined in para 3.2 of the report. · That performance of the Internal Audit Service to July 2014, as measured by the set Performance Indicators, was below target; with the detail set out at para 5.6 of the report summarised for AC members. · The audits assigned limited assurance were summarised in detail for AC members:
1. Declaration of Staff Interests - Systems Audit o Selected for audit because of the onus on staff, under the Employee Code of Conduct, to declare interests which conflicted with their employment by the Authority; and also the introduction of an online self-serve system to record staff Declarations of Interest (DOIs). o Assigned limited assurance due to low percentage of staff found to complete DOIs; and also in a sample tested in a separate NFI audit 5 of 10 staff completed a DOI on secondary employment. o Arrangements needed to check and monitor declarations and therefore regular HR reports to line managers recommended with an associated responsibility to monitor compliance.
A brief discussion followed which focused on clarification being sought and given on the following points:- o Concerning the location of the 5 staff not declaring secondary employment; also whether staff working in their own time to top up their income should really be viewed as a serious concern. The staff were located in schools. DOIs were an important matter, and the laborious manual reporting/ monitoring system had been streamlined with the online system; this was now being improved with regular monitoring reports in each directorate o Whether staff had been made aware of their obligation and the new online system and given clear advice as to completing a DOI. Staff received regular reminders via email and the intranet. A new form was being piloted with a view to going live in October and this was accompanied by clear advice and examples.
2. Photocopying and Printing Contract Monitoring - Systems Audit o Selected for audit because of the Authority’s new 3 year rental agreement for supply of Multi-Functional Devices (MFDs) and a managed print Service Level agreement both of which came with high start up costs. o Assigned limited assurance because contract monitoring arrangements were found not to be sufficiently robust, the supplier’s invoicing system was complex with risk of duplicate payments and errors, and a discrepancy between the number of MFDs on the supplier ... view the full minutes text for item 4.1 |
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Annual Anti -Fraud Report 2013-14 PDF 120 KB To note an update of the reactive and Anti-Fraud work undertaken during 2013/14 which captures the work of the Corporate Anti – Fraud Team in regard to Corporate Investigations, Housing Benefit Fraud Team Investigations, Social Housing Fraud Investigations and anti- fraud work around Parking Services. Additional documents:
Minutes: Tony Qayum (Corporate Fraud and Governance Manager) introduced, and highlighted key points, in the report which:- · Provided an update of reactive and Anti-Fraud work undertaken during 2013/14. · Informed AC members of the activity and areas of investigation and work undertaken by Corporate Anti – Fraud Team (CAFT).
Points highlighted by Tony Qayum included:- · Signposting AC members to:- o The staff resources allocated to anti-fraud activities set out in the table at para 3.2 of the report. o Appendix A which set out the background to and legal basis for the National Fraud Initiative (NFI); also information about the 2012/13 NFI and going forward. o Appendix B which summarised arrangements for the transfer of existing Housing Benefit Fraud (HBF) investigation services to the Department for Work and Pensions (DWP) and briefly outlined the need for future consideration of the resourcing implications for some areas of fraud investigation which were currently bi-products of HBF investigations. · Key matters arising from the Service Outturn for 2013-14, and in particular that training sessions had been run for staff and external bodies/visitors on Anti- Fraud and Corruption matters (and more were planned for the financial year), together with training exercises with the Risk Management Service and a joint training session for Members. An optional training session on the anti-fraud work undertaken by the authority and the impact of fraud would be run in October, and the role of Members would be covered. · The success of the NFI for LBTH was summarised including the identification of over £700,000 of fraud and potential error. The initiative had existed for some years and had always yielded significant value. · The continued provision of monthly governance reports to the Corporate Director of Resources and Monitoring Officer which provided an early warning of issues arising from CAFT activity comfort provided by investigations. · Good performance from Housing Benefits Investigations with: o A large increase in sanctions achieved: 151 in 2013/14 with 160 anticipated in 2014/15. o A rise in court convictions from 42 to 48 in 2013/14 with 60 anticipated in 2014/15. o A large increase in fraud and potential error from approximately £600k in 2012/13 to £825k in 2013/14. This reflected the level of housing benefit managed by the Authority but also highlighted the need for and added value provided by investigation. · Good performance on Social Housing recoveries. LBTH had been the first authority to apply for funding to address the abuse of social housing and each year a team of 3 staff successfully identified significant levels of sublets which deprived the homeless of accommodation. A data matching exercise had identified significant numbers of matches that needed investigation and 43 recoveries had been achieved in 2013/14 as well as prevention of 3 illegitimate Right to Buy (RTB) purchases 1n 2013/14 and 12 in 2014/15 with the associated discount savings. There was potential for this area of fraud to double by year end. However Government funding would stop in the near future and the resourcing of this important work needed expeditious consideration.
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Treasury Management Activity for Period Ending 31 July 2014 PDF 242 KB Report to follow. Additional documents: Minutes: Kevin Miles (Chief Accountant) introduced, and highlighted key points, in the report which:- · Detailed treasury management activity for the financial year to end of July 2014. · Advised AC members of that the Treasury Management Strategy (TMS) and Prudential Indicators agreed by full Council in February 2014 continued to be appropriate, and treasury activities had not resulted in breach of the approved limits. However a mid-year review of the TMS would be considered by full Council in November. · Detailed the current credit criteria adopted by the Corporate Director of Resources, and also the current investment strategy and projected investment returns.
Points highlighted by Kevin Miles included:- · At the end of July the Authority had investments of approximately £330 million which was approximately £180 million higher than the projected average cash balance of £150 million. · Officers anticipated that the cash balance would reduce as expenditure on the capital programme picked up through the remainder of the financial year. · The current strategy was not to have too much money invested in longer term investments, so as to allow the Authority to take advantage of the potential increase in interest rates. · The current average return on investment stands at 0.69%, and was on target to achieve budgeted cash return on assets of £1.6 million for 2014/15. A discussion followed which focused on clarification being sought and given on the following points:- An AC member considered that an average 0.69% return on investments of £330 million appeared low. It was acknowledged that interest rates were low at the moment but, it was understood that 6% interest was offered by Lloyds for a 30 day deposit. Consideration also that the proportion of investments allocated to the various maturity periods was not appropriate and more could be yielded from shorter term investments. Accordingly benchmarking of investment returns with other local authorities (LA’s) was needed. Capita was the Authority’s benchmarking partner and it advised that the Authority was achieving as good a return on investment as other LAs and it was slightly lower than institutions were achieving. Although the Authority could borrow to repay what it owed, large penalties offset the benefits of that approach. The Authority did have a large loan with Barclays but had the option to repay this if interest rates rose.????? Clarification also sought as to which organisation the Authority used short term deposits overnight as it was understood that other LAs used Ignis, but it was not mentioned in the report. It was likely these investments were spread over a number of banks however a written response would be provided. What was the Authority’s position in relation to Royal Bank of Scotland (RBS)?. RBS was part of the Nat West group and it was sensible to take advantage of the interest rates it offered. However the Government might reduce support for RBS in future years, or even sell it back to the private sector, and this must be borne in mind. Although RBS offered a better return than other banks, ... view the full minutes text for item 4.3 |
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ANY OTHER BUSINESS THE CHAIR CONSIDERS URGENT Minutes: Nil items.
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