Agenda and minutes
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Contact: Farhana Zia, Democratic Services Tel: 020 7364 0842, E-mail: farhana.zia@towerhamlets.gov.uk
Media
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APOLOGIES FOR ABSENCE Additional documents: Minutes: Apologies for Absence were received from Councillor Ayas Miah and Mr Neville Murton, Corporate Director for Resources.
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DECLARATIONS OF INTEREST PDF 214 KB Members are reminded to consider the categories of interest, identified in the Code of Conduct for Members to determine: whether they have an interest in any agenda item and any action they should take. For further details, see the attached note from the Monitoring Officer.
Members are also reminded to declare the nature of the interest at the earliest opportunity and the agenda item it relates to. Please note that ultimately it is the Members’ responsibility to identify any interests and also update their register of interest form as required by the Code.
If in doubt as to the nature of an interest, you are advised to seek advice prior the meeting by contacting the Monitoring Officer or Democratic Services.
Additional documents: Minutes: No declarations of disclosable pecuniary interest were made by the members.
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MINUTES OF THE PREVIOUS MEETING(S) PDF 256 KB To confirm the minutes of the Audit Committee held on 13th May 2020.
Additional documents: Minutes: The minutes from the 13th May 2020 meeting were agreed and approved to be an accurate record of the meeting.
Matters Arising
Purchase Cards It was noted an update on Purchase Cards had been circulated to the membership of the Committee.
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DELOITTE ITEMS FOR CONSIDERATION Additional documents: |
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Pension Fund 2019/20 Accounts Audit Plan PDF 235 KB Additional documents: Minutes: Mr Jonathan Gooding, external auditor from Deloitte’s presented the Pension Fund 2019/20 Accounts Audit Plan. He informed members the Plan had been discussed at the Pensions Committee on the 18th June and was coming to the Audit Committee for information.
Mr Gooding said the plan set out the scope of the work to be undertaken and identified the significant risks, which were consistent with regulations. He said materiality was set at £15M with a presumed risk in relation to the management override of controls and therefore journal entries would be tested to see if they were indicative of fraud.
The timetable to deliver the Pension Fund Audit Plan had shifted since the Pensions Committee had received the report because of capacity issues within the Council’s Pensions Team and the impact of Covid-19. Mr Gooding said the revised timetable meant the Audit Plan would report back to the Committee in November 2020.
In response to questions from Members the following was noted:
· Councillor Perry, Chair of the Pensions Committee stated she had read the document and accepted the change in timetable was due to the impact of Covid19 and capacity issues within the Pensions Team. · Mr Kevin Bartle, Interim Divisional Director for Finance, Procurement and Audit added the proposed restructure of the Pensions Team, which had been discussed at the Pensions Committee meeting of 18th June, would assist in resolving the capacity issues within the team and would enable the resolution of queries raised by the external Auditors. · In reference to page 25 of the agenda and in response to why an interim Pensions and Investments Manager was being recruited and not a permanent one, Mr Bartle said it was difficult to recruit staff who had specialist Pensions knowledge. He said the Officer covering on an interim basis had accepted an extension to the contract for a further twelve months and would be responsible for seeing through the proposed restructure of the team as well as the recruitment and retention of staff to the senior positions within the new structure. The Chair thanked Mr Gooding for his contribution to the meeting.
The Audit Committee RESOLVED to:
1. Note the Audit Planning report from Deloitte that related to the Tower Hamlets Pension Fund accounts as set out in Appendix A.
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TOWER HAMLETS ITEMS FOR CONSIDERATION Additional documents: |
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2018-19 Annual Governance Statement PDF 249 KB Additional documents: Minutes: Mr Paul Rock, Head of Internal Audit, Fraud and Risk stated the Annual Governance Statement had been revised several times and comments made by members of the Audit Committee had been taken into account. These were reflected in the revised Annual Governance Statement of 2018-19, which was being presented again for approval by the Audit Committee, following the May 2020 meeting. Mr Rock said specific comments made in relation to Pensions administration, were cited under principal A, on page 5 and 24 of the statement; the resignation of a former councillor was on page 5 and the planning peer challenge was cited on page 18, under other inspections. Mr Rock explained there was a difference in the opinion given in the 2018/19 statement and his opinion for 2019/20 as the 2018/19 opinion was based on a non-scaled opinion and concluded the governance arrangements in place were adequate. Mr Rock said the 2019/20 opinion would be based on the body of work internal audit had undertaken and what he considered to be relevant, using the scaled opinion as set out in table 1, page 76 of the next report. The Committee then heard from the Mayor John Biggs who said it was apparent the Annual Governance Statement had been to the Audit Committee on several occasions. He said following comments in July 2019, members of the Audit Committee as well as the Overview and Scrutiny Committee were given the opportunity to submit further comments. The Mayor said no comments were made until the Statement was presented again in May 2020 to the Audit Committee. He said the comments made by Councillor Wood had been added to the revised Statement and these were being presented to the Committee at this meeting. Mayor Biggs said the ownership of the Annual Governance Statement laid with him and the Chief Executive and he believed the Statement fairly recorded the current position of the Council and therefore he did not feel there were any major omissions in the Statement. He said that upon election, he had made a pledge to root out maladministration and bad practice of the previous administration and considerable progress had been made to improve the governance of the Council. The Mayor said he was disappointed the Statement had not been approved in May but hoped the revisions made were satisfactory to members of the Audit Committee, to allow for the approval of the Statement. Mr Will Tuckley, Chief Executive of London Borough of Tower Hamlets said he had given a substantial presentation at the last meeting and believed the statement gave a balanced view of the progress made since 2017/18. He said the Council had faced many challenges such as Children Services, Pensions Administration and Adult Social Care payments however good progress had been made to remedy these areas. He said more work was required to improve and strengthen governance in the Council, but this was work in progress. Overall, he believed the assessment made in the Annual Governance Statement was accurate. ... view the full minutes text for item 5.1 |
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Head of Internal Audit Annual Opinion PDF 234 KB Additional documents: Minutes: Mr Paul Rock, Head of Internal Audit, Fraud and Risk presented his Internal Audit Annual Opinion report. He said the report was in accordance with the requirements of the Public Sector Internal Audit Standards and was based on the evidence of work of the Internal Audit function as well as other matters which he considered relevant. Mr Rock said the opinion was based using the new scaled opinion range as per page 76 of the agenda, with ‘no assurance’ being the lower score and ‘substantial’ being the higher scoring. Mr Rock said he had concluded the Council had achieved ‘Limited’ assurance due to the significant issues relating to the closure of the Council’s 2018/19 Accounts and the issues associated with the accounting procedures that had emerged throughout 2019/20. Mr Rock continued stating the breaches of law in relation to Pensions Administration was another factor which led him to conclude the authority does not have adequate systems of governance, risk management and internal control. Mr Rock explained his reasons for the opinion given and outlined the areas the authority would need to improve, over the coming year, in particular the processes and procedures relating to the production of the Annual Accounts and the remedial action to be taken for Pensions Administration.
In response to questions from Members the following was noted:
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Internal Audit and Anti-Fraud Progress Report PDF 505 KB Additional documents:
Minutes: Mr Paul Rock, Head of Internal Audit, Fraud and Risk presented the Internal Audit and Anti-Fraud progress report. Mr Rock said the report provided an update on progress against the delivery of the 2019/20 Annual Internal Audit Plan and highlighted any significant issues since the last report to the Audit Committee in May 2020. Mr Rock referred members to paragraph 3.2 and the number of audits completed for 2019/20. He informed members the CCTV audit was cancelled due to an external review being undertaken. Mr Rock stated the Divisional Directors for the three ‘limited’ assurance reports were present for the meeting as outlined in paragraph 3.5 of the report. He referred members to Table 4, at paragraph 3.7 which set out the draft internal audit reports which were awaiting responses and said this had been discussed earlier. However, he wanted to highlight that despite the team’s collective best efforts, there were nine reports outstanding. Mr Rock continued saying he was particularly pleased with the progress made by the Anti-Fraud team, especially the recovery of social housing properties and the financial impact they had achieved plus the raising of awareness within the Council and public alike. Mr Rock also drew the attention of Members to Appendix C and the collaborative work between the Borough and Barts Health Trust. The Committee then heard from the Divisional Directors present: IT Business Continuity and Resilience Mr Adrian Gorst, Divisional Director for IT, stated the IT Directorate had witnessed a considerable amount of change, with IT being moved from a traditional hosting site to a cloud-based and vendor hosted site. He said the IT department were also preparing for the end of the Agilisys contract for March 2021, and this audit had been very timely. He said it was helpful to know the risks the service carried and what needed to be done to design the new service and eliminate the risks. Mr Gorst referred to the recommendations made within the report and said risk register had been updated to reflect the current control environment. He said the processes and procedures were being updated which he hoped to achieve by the end of July 2020. If reference to the other recommendations, Mr Gorst said these were in hand. He was they were looking to recruit to the Head of IT post, but in the meantime a project officer had been assigned to progress the recommendations.
In response to questions from members the following was noted:
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Internal Audit and Anti-Fraud Annual Plan PDF 247 KB Additional documents: Minutes: Mr Paul Rock, Head of Internal Audit, Fraud and Risk presented the Internal Audit and Anti-Fraud Annual Plan. He said the draft plan had been updated to include emerging risks due to the pandemic. Mr Rock said he had been working with Divisional Directors to update the plan to identify the emerging risks and changes in the strategic focus and day to day operations of the Council. He said the Internal Audit and Anti-Fraud plan was a living document and whist the plan had been reduced overall due to lost time and resourcing issues, if new risks and priorities emerged these would be added to the plan and the Committee would be informed of any changes.
Members had no questions for Mr Rock on this item.
The Audit Committee RESOLVED to:
1. Approve the draft Internal Audit and Anti-Fraud plan for 2020/21.
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Risk Management Strategy and Update PDF 361 KB Additional documents:
Minutes: Mr Paul Rock, Head of Internal Audit, Fraud and Risk presented the Risk Management Strategy update. Mr Rock said BDO, an external partner undertook an audit of risk management function, for him to maintain organisational independence. He said whilst a ‘substantial’ opinion was given to the framework adopted, ‘limited’ assurance had been given to its implementation. Mr Rock said he had been working to update the Risk Management Strategy and plan and was looking at ways to move this forward for the organisation. He said the recruitment of a Risk Manager had been unsuccessful and as such he was talking to neighbouring boroughs about sharing resources for risk management. He said the report also included the five-year risk strategy, which had been updated to reflect the risk appetite.
In response to questions from Members the following was noted:
· Mr Rock informed Members the recruitment of a Risk Manager had proven to be difficult because the initial advert was placed just before the pandemic and did not produce the response he was seeking. He said that with the help of the Communication’s Team, the advert was rewritten which resulted in a better response. However, of the applicant’s interviewed, Mr Rock said he did not feel they had all the qualities to move Risk Management in the direction he wanted. Mr Rock said he was open to exploring alternative delivery methods and would look to rerun the recruitment process once the pandemic situation had improved. · In response to how the Corporate Leadership Team would improve its review of the Corporate Risk Register, Mr Will Tuckley, Chief Executive responded saying that the management team had through the pandemic acted quickly and concisely responding to the changing risks. He said it was vital to keep the Register up to date and take mitigating actions against moving events. He said the report described how the system needed to improve and it was not just about management taking account of risks; this was what they do all the time, but to have a system in place which was pertinent and adaptable to mitigate against the risk. Mr Tuckley said it was necessary to ensure risk assessment and mitigation was part of everyday business and embedded within the organisation. Mr Rock concurred the experience of the pandemic had tested the flexibility of the risk management process and said the Gold and Silver Command responses were a stark contrast to his experience when he initially joined the Council. · In response to if the current plan was realistic and deliverable, Mr Rock acknowledged it would need revision again in light of the limited resources he had but said the employment of agency/temporary staff would incur significant cost, which is why he was looking to alternative ways to manage this, such as working with neighbouring boroughs. He agreed it was crucial not to lose the momentum that the pandemic had highlighted to maintain the importance of risk management.
The Audit Committee RESOLVED to: 1. Note the outcome of the audit ... view the full minutes text for item 5.5 |
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Annual Insurance Report PDF 365 KB Additional documents: Minutes: Mr Paul Rock, Head of Internal Audit, Fraud and Risk presented the Annual Insurance Report. Mr Rock said this was the first time the report was being presented to the Audit Committee. He said the overall assessment of the Service by external auditors showed the team was performing well. Mr Rock said it was important for the Audit Committee to have oversight of the work done by this team and as such he would be reporting to the Committee on an annual basis. Mr Rock said he was open to suggestions as to the information Members would like to see in the report.
In response to questions from Members the following was noted:
· An example of an insurance claim by a resident was cited by Councillor Wood. He said it would be helpful to see the circumstances in which claims are rejected and asked if this could be included in future reports. Mr Rock responded saying he was hesitant in stating reasons for the rejection of claims as it could be open to fraud but could provide such information outside of the meeting. Councillor Wood concurred any such information would be via pink papers rather than in the public forum.
The Audit Committee RESOLVED to:
1. Note the contents of the report.
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Code of Corporate Governance - Annual Review PDF 233 KB Appendix to follow.
Additional documents: Minutes: Mr Matthew Mannion, Head of Democratic Services presented the Code for Corporate Governance. He said the Code was initially presented to the Committee in 2018, forming a part of the appendices of the Annual Governance Statement. However, this year in order to give the Code of Corporate Governance more visibility, the document was being presented separately. Mr Mannion said it would be added to the transparency pages of the Council Website. Mr Mannion said the design of the code matched the model required by CIPFA best practice and he welcomed comments on how much information should be included in the document.
In response to questions from Members the following was noted:
· An example was cited by Councillor Francis in relation to Core Principal B, regarding openness and stakeholder engagement. He said the example highlighted the disparity between what was initially stated in a report to Cabinet and the result in how decisions are taken. However, he supported the document and the core principals within the document. The Audit Committee RESOLVED to:
1. Review and comment on the revised Code of Corporate Governance; 2. Endorse the Code and agree that it be published on the Council’s Website to increase visibility of the Code.; 3. To delegate to the Head of Democratic Services, following consultation with the Chair of the Audit Committee and the Head of Internal Audit, Fraud and Risk, the authority to make minor changes to the Code as required before final publication on the Council’s website.
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Whistleblowing Annual Report PDF 319 KB Additional documents:
Minutes: Ms Asmat Hussain, Corporate Director for Governance introduced the annual report to the Committee stating it outlined the work undertaken on Whistleblowing. Ms Hussain said the Internal Audit function had conducted a review of whistleblowing policies and procedures and had made recommendations on how the process could be improved. Ms Hussain asked Members to be mindful of the nature of the report and said specific cases could not be discussed in detail. She said a pink paper session could be held if this was what was required.
Mr Mark Norman, Legal Advisor and Deputy Monitoring Officer addressed the Committee stating the recommendations within the audit report had been implemented and the process of reporting, investigating and providing feedback had been improved. Mr Norman referred Members to Appendix A, section 1 which outlined the concerns received for the initial period as well as the table at section 2 which highlighted cases under investigation.
In response to questions from Members the following was noted: · Mr Norman confirmed the Committee would receive an update in relation to the outstanding concerns in section 2 of appendix A, in the next annual report. He said specific details would only be shared in private session if members requested this. · Mr Norman explained ‘anonymous’ concerns as well as ‘non anonymous’ concerns had to fulfil a criterion that identified if the issue was serious, credible and if the allegations were true in that they could be verified by another source. Mr Norman said anonymous whistleblowers sometimes provided a contact email, so the concern could be acknowledged however the outcomes are not shared with them. · With respect to staff resigning before the conclusion of an investigation, Mr Norman said the resignation would not be accepted and if the breach was of a criminal nature, the staff member would be prosecuted through the legal justice system. The Audit Committee RESOVLED to:
1. Note the contents of the report.
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Audit Committee Annual Report 2019/20 PDF 112 KB Additional documents: Minutes: The Chair, Councillor Whitehead presented the Audit Committee Annual Report for 2019/20. She said the report reflected on the achievement of the Committee and would be presented to Council at its next meeting.
There were no questions from Members.
The Audit Committee RESOLVED to: 1. Note and approve the Chair’s Annual Report, which is to be presented to Council.
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AUDIT COMMITTEE WORK PLAN PDF 200 KB Additional documents: Minutes: The Audit Committee noted the work plan for the Committee for 2020/21.
Mr Kevin Bartle, Interim Divisional Director for Finance, Procurement and Audit requested the Annual Financial Accounts for 2018/19 and 2019/20 be added to the 12th November meeting along with the Deloitte report.
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ANY OTHER BUSINESS THE CHAIR CONSIDERS URGENT Additional documents: Minutes: There was no urgent business to be discussed.
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