Councillor Ayas Miah nominated Councillor Danny Hassell has vice-chair of the Audit Committee for municipal year 2017/18, which was seconded by Councillor Candida Ronald.

The Audit Committee agreed to appoint Councillor Danny Hassell has vice-chair.

Apologies for absence were received Cllr Rabina Khan.

Cllr Andrew Wood gave apologies for leaving the meeting for a short period to attend the Development Committee to raise objections to an application.

No declarations of discloseable pecuniary interest were disclosed by the members.

To confirm the minutes of the Audit Committee held on 21^st March 2017.

The minutes from the 21^st March 2017 were agreed to be an accurate record of the meeting and were signed off of the Committee.

The Chair, Councillor Candida Ronald informed members the Terms of Reference, Quorum, Membership and Dates of Meetings report was for noting. She said it was useful for Members to be reminded of the purpose and responsibilities of the Committee.

Members of the Committee agreed and confirmed they were happy for future meetings to commence at 7:00 p.m.

The Audit Committee NOTED the report.

Neville Murton, Service Head for Finance and Procurement introduced this report and stated the Draft Annual Financial Report for 2016-17 comprised of a Narrative Report by the Corporate Director for Resources and the draft Statement of Account which was subject to audit.  The full Annual Financial Report also contained the Annual Governance Statement which is subject to a separate report on the Committee agenda. Mr Murton said the draft Annual Financial Report and Annual Governance Statement would be submitted to the external auditors KPMG and would be placed on the Council website for public inspection next week.

Members of the Audit Committee asked the following questions

·         Page 46 – the Earmark reserve has seen a large increase and so has the Pension Reserve. Is there an explanation for this?

Overall the levels of reserves have been reviewed and earmarked reserves have changed to reflect the different priorities of the Council.The Pensions reserve has increased in value due to an increased deficit in the actuary’s report.  Though the pension fund investments increased in value by over £200m, the bond rate used by the actuary to calculate the net present value (NPV) of future pension liabilities has reduced – this reduction increased the under the NPV of pension liabilities by over £300m.

·         The Chair asked Officers to talk through the earmarked reserves on page 70.

Neville Murton responded that two notable earmarked reserves were the IT and theTransformation Reserves. The transformation reserve referred to the Council programme ‘smarter together’ and IT related to the Council’s ambition to update IT systems. The time frame for the projects is short to medium term.

·         Will external auditors have a view on the earmarked reserves?

They will examine the rationale adopted and will question the reasons behind the move away from a generic to more specific reserves.

The Audit Committee NOTED

1.    The Annual Financial Report for the financial year ending 31^st March 2017 comprising of the Explanatory Foreword and the Draft Statement of Accounts which are subject to audit.

Minesh Jani, Divisional Director for Risk Management presented his Audit Report for 2016/17. He referred Members to page 144 of the agenda and said paragraph 3.2 set out what the report encompassed. He made reference to the table at 8.3, page 146 which summarised the audit assurance resulting from audit reports in 2016/17. 22% of services had achieved ‘limited assurance’ and Officers from the services were present to answer questions from Members.

Members of the Audit Committee asked the following questions:

·         Were there no ‘nil’ returns?

The table captures information from 2016/17 and there were no ‘nil’ returns. 

·         Referring to Page 148, what does the Committee need to do in order to ensure recommendations from internal audit reports are fully implemented, in a timely way?

The Audit Committee does have a role and if services are repeatedly coming to Audit then it raises questions about how effective Risk Management has been.

o   ACTION: Recommendations arising from audit reports should be referred to the Corporate Leadership Team to ensure they are aware how services are preforming and what recommendations are outstanding.

·                What effect has the churn of staff and interim appointments had on services moving from ‘limited’ assurance to ‘substantial’.

Churn of staff does have a detrimental effect on services, however the Council is moving forward with its transformation programme with services and methodology changing.

·                When recommendations are made how does Audit test the vigour with which the recommendations are implemented?

Audit will always follow up recommendations with ‘follow up’ visits and recommendations are fully reported back to Service Heads and Divisional Directors. The Audit Plan is devised in consultation with Senior Management and takes into account areas of concern. The Best value regime has raised the need to improve Risk Management and the control environment.

The Audit Committee heard further from Officers in the following services:

Management and Control of Parking Permits

Michael Darby, Head of Parking and Mobility Services, informed members that out of the 16 recommendations 6 recommendations were moving forward and 10 were dependant on a new IT system being in place. Mr Darby stated tenders were being sought and it was hoped the new system would be in place by February 2018. Tony Qayum offered assistance in ensuring bidders/providers had the correct risk controls when procuring the PSI system.

It was agreed the ‘follow up’ visit by Audit should take place in April 2018 once the new system had bedded in.

Brady Arts Centre and Kobi Nazul Centre

Steve Murray Head of Arts and Events informed Members that the Service had made significant progress against the 6 recommendations identified by Audit. Members of staff had been trained to use the HR Self-Service Portal to book annual leave and flexi time sheets and sickness records were cross referenced. He said the Centre kept hard copies of the return to work interviews conducted with staff and had tightened up procedures relating to purchase cards.

·         Cllr Hassell asked if issues such as timesheets and purchase cards could be explored  ...  view the full minutes text for item 3.3

Tony Qayum, Corporate Anti-Fraud Manager presented his Anti-Fraud update relating to the Corporate Anti-Fraud Team’s (CAFT) activities for the financial year end of 2016.

He referred Members to the table at 4.1, page 252-3 in the agenda which summarised the activity of CAFT and showed the amount of money the Anti-Fraud team had recovered.

The Chair commended Tony Qayum for the excellent work his team had achieved and enquired about the social housing amnesty. Tony confirmed this had been a successful campaign with most of the sub-let properties being returned to the Council.

Councillor Wood added the success of the team ought to be publicised by the Council’s communications team so to ensure the general public were aware Tower Hamlets was not a ‘soft touch’. Councillor Wood made reference to the work the CAFT team had undertaken regarding Blue Badge Fraud and said he was really pleased how the team had resolved queries from Members and the general public. Tony informed Members the team was to feature in a BBC programme about anti-fraud, which Members praised as a positive outcome of the CAFT team’s achievements.

The Committee NOTED the report.

Anthony Sontande-Peters, Interim Strategic Risk Advisor updated Members on the Corporate Risk register. He referred Members to point 5.2 of the report and stated a total of 13 risks had been identified. Appendix 1 gave an overview about the risk and the current risk rating; appendix 2 gave further details and appendix 3 was the corporate risk dashboard which set out the heat map of the Council’s risks and performance information in respect of the risks.

FIRE SAFETY – UPDATE FROM TOWER HAMLETS HOMES ON PRECAUTIONARY MEASURES TAKEN

Members of the Audit Committee heard from Ann Otesanya, Director of Neighbourhoods and Neil Issac, Interim Director of Finance from Tower Hamlets Homes about the precautionary measures they had taken in light of the Grenfell Tower Tragedy.

They stated THH had met with the Fire Brigade’s Borough Commander and had written to residents about the ‘stay put’ policy currently followed for tower blocks in the borough. Ann said it was clear the risk register will need to be expanded to include fire safety and there was work to be done to map out what THH’s policy should be, in light of the emerging advice.

Fire assessments had been undertaken and 8 tower blocks had been identified to be ‘high or substantial’ risk. Ann said THH was working with the Fire Brigade to ensure people’s safety was not compromised. Cladding on tower blocks was being reassessed but none of the blocks in Tower Hamlets have ACM materials. However that is not to say other materials will not be identified as being a risk, so the situation is fast moving.

With respect to the fire at Turin Street, the Fire Brigade had dealt with the situation extremely well. The fire spread in the roof space and therefore THH was working with the Borough Commander on how to make roof voids safer.  Three similar blocks, which are undergoing refurbishment, will have roof voids fire proofed as part of the works being undertaken.

THH officers have also had a visible presence on the Estates managed and have been providing advice and support to residents.

Members of the Committee asked the following questions relating to fire safety:

·         Have residents effected by the Turin Street fire being housed outside of the borough?

THH confirmed some residents were being housed in a hotel in Barking and Dagenham. However affected residents will be offered secure tenancies from existing housing stock. THH was working with residents to achieve the best outcome.

·         Letters sent in relation to the stay put policy is causing confusion amongst residents. Can you be clear on the advice you give.

·         Nationally buildings are being categorised quickly as to if they are a risk, so why is this information not being used?

Work is already underway to identify and categorise buildings however in light of Grenfell those risks have changed, so fire risk assessments have to be undertaken.

Risk assessments are undertaken by independent assessors and THH’s assessor – Savills carry this out. The oldest Fire  ...  view the full minutes text for item 3.5

Neville Murton, Service Head for Finance and Procurement and Kevin Miles, Chief Accountant Corporate Finance presented the Treasury Management Outturn Report for 2016/17. 

Under the Local Government Act 2003 the treasury management activities of the Council must be reported annually. The report summaries the Council’s treasury management activities for the financial year ending 31^st March 2017.

Kevin referred Members to page 326 of the agenda and the summary table showing all outstanding investments as at 31^st March 2017. He also referred members to page 322 which showed how current investments have been performing.

The Investment advisor would be appointed to offer training to Members of the Audit Committee.

Members of the Audit Committee NOTED the report and AGREED:

1.    It would like to receive investment training from the Council’s investment and treasury advisor; and

2.    In future the Committee would welcome an abbreviated summary of the adviser’s performance report rather than the whole report.

Minesh Jani, Service Head for Risk Management informed members the forward plan would be circulated via e-mail.

There was no other urgent business discussed.