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.

No declarations of disclosable pecuniary interest were made by the members.

For the record, Councillor Kyrsten Perry stated she is the Chair of the Pensions Committee and Councillor Andrew Wood stated he is a member of the Pensions Committee.

To confirm the minutes of the Audit Committee held on 12^th November 2020.

The unrestricted minutes from the previous meeting of 12^th November 2020 were agreed as an accurate record of the meeting and were signed off by the Audit Committee.

There were no Deloitte items for consideration however Mr Jonathan Gooding and Mr Angus Fish were in attendance at the meeting to answer any questions Members may have in relation to the accounts.

Attached herewith the accounts for 2018/19 and 2019/20.

Items 4.1 and 4.2 were considered together. See below.

A verbal update on the account’s improvement plan, by Marion Kelly, Finance Improvement Team.

Mr Kevin Bartle, Interim Corporate Director for Resources, Ms Marion Kelly Finance Improvement Programme Director and Mr Tim Harlock, Interim Chief Accountant presented the progress made in completing the accounts for 2018/19 and 2019/20.

Mr Bartle said he was tremendously pleased both set of accounts had been reproduced and reinstated with the draft set of accounts attached at item 4.1. He thanked his team for all their hard work in achieving this milestone and said this achievement was no mean feat. He informed members the presentation would discuss the findings of the independent review and provide a summary of the progress made to date in implementing the recommendations. He said it would also provide an update on the accounts for both years as well as the Council’s Improvement plan with key actions being triaged into Phase one and Phase two of the improvement plan.

With respect to the independent review Mr Bartle said this was now publicly available on the Council’s website. The review had set out 24 recommendations in four sections, which had been summarised into two sets of higher-level recommendations. Those which the Council should do to complete the 2018/19 Audit and another set recommending what the Council needed to do to sustainably improve its Accounts process.

Mr Tim Harlock, Interim Chief Accountant then provided a summary of the challenges incurred in producing the 2019/20 accounts and the third version of the 2018/19 accounts. Mr Harlock said correcting the errors in areas such as discrepancies in CIL accruals, school accounting errors, Thames Water charges and leaseholders had taken an inordinate amount to time to resolve. He said smaller errors such as the completing of the NNDR3 form and valuations of assets had also impacted on resources with each query having to be worked through.

Ms Marion Kelly, the Improvement Plan Programme Director explained the Improvement Plan would be in two phases as it was simply not possible to implement all the changes in one go. Ms Kelly said in Phase One a series of reviews would be undertaken, and changes would be made before the end of March 2021 with a further set of changes being made by May 2021 before the 2020/21 accounts need to be produced. Phase Two would deal with key improvements that cannot be completed in a short timeframe and would be led by the soon to be appointed Chief Financial Officer.

Mr Kevin Bartle said a considerable amount of changes were required and hoped the detailed presentation provided sufficient detail on the challenges faced in producing the accounts. He said he hoped to have a set of qualified accounts to present at the July 2021 meeting.

The Chair thanked the Officers for their presentation and acknowledged the work of the finance team in producing the accounts as well as taking forward the improvement plan.

In response to questions from Members the following was noted:

·         The Improvement Plan Governing Board would start reporting in February 2021 to the Corporate Leadership Team.

·         Mr Bartle said  ...  view the full minutes text for item 4.2

Mr Will Tuckley, Chief Executive stated the Annual Governance Statement had been produced following a comprehensive and rigorous review of the Council’s code of corporate governance. Each Corporate Director had reviewed their risks and had retrospectively looked at issues to see how they had been addressed. Mr Tuckley said the statement built on the internal audit plan identifying the key changes required. Some areas had been strengthened such as the Consultation Hub, to ensure consultations were consistent and people had access to this. He said other successes had been the recruitment of an Independent Person to the Audit Committee and the sustained process of prosecutions in relation to fraud.

Mr Tuckley said in other areas such as the financial management of the accounts a great deal of work was necessary to improve processes and procedures. He said the Annual Governance Statement was clear on the key challenges facing the organisation, such as the aforementioned and issues to address the Pensions Administration Scheme however the Council had moved to a more mature place and was now aiming to address the issues to a higher standard.

Mayor John Biggs added he appreciated the work undertaken by the Audit Committee and said it was only right to hold to account the Council’s progress, which was now focussing on the internal administration arrangements and good governance processes, following the period of reputational damage. He said the Statement provided a critique of the journey the Council was on and whilst the Statement referred to the 2020/21 it was in the context of that journey. He thanked the Chair Councillor Val Whitehead for her Chairmanship and Mr Paul Rock, Head of Internal Audit for the report and said this would require sign off when presented with the accounts.

In response to questions from Members the following was noted:

·         Councillor Marc Francis stated he supported the Annual Governance Statement for this year as it was honest, straightforward and speaks of the issues that need to be dealt with.  He said issues such as democratic governance and accountability were commonplace in such a large organisation but hoped these would be addressed in the future.

·         In reference to the Annual Audit opinion, page 62 of the agenda, Councillor Wood asked what areas needed improvement. Mr Paul Rock responded stating the AGS was providing commentary on the 2019/20 position and at the time improvement was required in risk management, financial accounting, accountability and improvement in response times to internal audit reports and management actions. He said the audit plan submitted to the Committee in July 2020 listed a programme of work, which his team were undertaking. He said they were not looking at the same areas and unfortunately discovered new areas where they had to give limited assurance. Mr Rock said he hoped future audits would lead to reasonable and substantial assurances.

·         Mr Tuckley added that whilst he wished for reasonable and substantive findings from the Internal Audit team, the reports needed to reflect a higher quality of administration across  ...  view the full minutes text for item 4.3

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 the progress against the delivery of the 2019/20 and 2020/21 Annual Audit Plan and highlighted any significant issues since the last report to the Audit Committee in November 2020.

Mr Rock referred to the draft reports and said the Local Community Fund report pending from 2019/20 audit workplan had been completed. He said good progress had been made in the implementation of agreed management action set out in Table 2, with 100% of high priority actions being fully or partially implemented. He said at this stage he’d be giving an overall ‘limited assurance’ however there were twenty plus reports in the pipeline and from initial indicators, he could forecast a better balance between the assurance categories of limited, reasonable and substantial.

Mr Rock referred members to paragraph 3.11 of the report and said he was pleased with the results from the first perception survey of Internal Audit’s role. He said although there were areas which required improvement, he’d be working on this to achieve better outcomes. Regarding Anti-Fraud work, he said the pandemic had limited what could be done, however the team was working on Blue Badge misuse and with the Cabinet Office in relation to the Transliteration pilot. Mr Rock also informed members the Whistleblowing Policy and Anti-Fraud and Corruption strategy had been updated.

The Chair thanked Mr Rock for his report before inviting the Officer to address their individual reports which had received ‘limited’ assurances following Internal Audit’s assessments.

Corporate Governance

Mr Will Tuckley, Chief Executive said a substantial amount of work had been undertaken to improve Corporate Governance such as the lifting of the MCHLG intervention, which had led to significant improvements. Mr Tuckley said despite this, he was disappointed with the internal audit findings of ‘limited’ assurance. He said since 2019 work to improve the strategic direction of governance had taken place and the Corporate Code for Governance had been reviewed. Check and balances were in place to ensure this is discussed at Corporate Leadership Team Board (CLT) and is presented to the Audit Committee for review and comment. He said the action plan for Corporate Governance is combined with the internal audit outcomes and the recommendations from the Grant Thornton report. He said it was vital that this sat at the heart of what the Council does.

In response to questions from Members the following was noted:

·         Mr Tuckley acknowledged the CIFPA report referred to in the independent review and the work commissioned to Grant Thornton in 2017 ought to have been part of the corporate priorities of the CLT Board. He said reports commissioned should be owned by the CLT Board such as the work on the accounts and going forward this would certainly be the case.

·         The Mayor added he concurred with Mr Tuckley that commissioned reports should be the priority of the CLT Board and  ...  view the full minutes text for item 4.4

Mr Paul Rock, Head of Internal Audit, Fraud and Risk presented the Risk Management Report. He said he was pleased with the progress made on the corporate risk register and said management of risk had improved during the pandemic, with increased responsiveness to Gold and Silver command. Mr Rock said the review of the risk registers at CLT and DLT had improved with owners being fully engaged in the management of the risk. He said the dedicate risk champions met regularly and whilst there were always areas to improve overall it was a positive picture.

Ms Ann Sutcliffe, Corporate Director for Place then presented the deep dive into her Directorate’s risk register.

Ms Sutcliffe said she endorsed Mr Rock’s view that there was increased ownership of risks and this had been embedded to be an integral part of business in day to day activity. Ms Sutcliffe said the Place Directorate had lost some of the momentum in updating and keeping abreast of risk register when the Officer responsible retired. However, this had been resolved with a new member of the team taking on the role, who had received training from Mr Rock’s team.

Ms Sutcliffe said a review of the Directorate risk register and the service register commenced in November 2020, with five risks on the Directorate risk register being closed. Ms Sutcliffe said risk PMP0008 would be reallocated to the Children and Culture Directorate, as Place are responsible for the asset management for the building and not the day to day running of it.

Ms Sutcliffe said one of the big issues for the Directorate had been fire safety. She said this was discussed at the last meeting of the Audit Committee and work was underway to adjust the risk in line with the Building Safety Bill, whereby Council’s will be responsible for the safety of high-rise buildings. Ms Sutcliffe said a report was being prepared for CLT and Cabinet which would set out the roles and responsibilities; and the resource implications this would have. Ms Sutcliffe said emerging risks would be added to the Service and Directorate risk registers.

Other areas that required monitoring were risk associated with Judicial Reviews and the Capital works programme.

In response to questions from members the following was noted:

·         Councillor Wood said he was surprised only five risks were on the Directorate risk register and asked how risks were recorded on the register. Ms Sutcliffe said risks are removed from the register once they had been mitigating against. For example, the management of the new Town Hall and the discovery of asbestos. This was on the risk register, throughout the period when decisions had to be made regarding the removal of asbestos however came off the register once it had been dealt with. Ms Sutcliffe said the real challenge facing her Directorate were risks associated with fire safety, cladding and tall buildings. She said the Council had to ensure it gets this right. Ms Sutcliffe said work was underway to identify the  ...  view the full minutes text for item 4.5

Mr Hitesh Jolapara, Interim Divisional Director for Finance, Procurement and Audit presented the Treasury Management Strategy Statement, Investment Strategy and Capital Strategy report for 2021-22. Firstly, he thanked his team for producing the report and said whilst this was a very detailed and technical report, it set out the treasury management framework which the Council was obliged to follow under the Local Government Act 2003 with regard to the CIPFA code and the MHCLG guidance on Treasury Management.

Mr Jolapara said the Council is required to produce three strategy documents, with progress updates provided in the mid-year report and the treasury management outturn report. He referred members to paragraph 3.7 and said the investment income budget was broadly on target as well as the prudential indicators.

In response to questions to from members the following was noted:

·         Mr Jolopara said in the event a local authority would experience financial stresses, the Government would need to step in, as a last resort. He said when lending money to other authorities checks, such as looking at their balance sheet, monitoring and reports from regulators would all be taken into consideration.

·         Mr Bartle added that it would be unprecedented for a local Council to fail and stated he did not think the government would allow this. He said lending to other local authorities was done in line with the treasury management strategy, with due diligence to minimise the risk. He said lending to other authorities carried a relatively low risk.

The Audit Committee RESOLVED to:

1.    Note the contents of the treasury management activities and performance against targets for the half year ending 30^th September 2020; and

2.    Note the Council’s Investments as set out in Appendix 1. The balance outstanding as at 30^th September 2020 was £180.90m.

The Audit Committee noted the work plan for the last meeting of the municipal year, scheduled for April 2021.

In view of the contents of the remaining items on the agenda the Committee is recommended to adopt the following motion:

“That, under the provisions of Section 100A of the Local Government Act 1972, as amended by the Local Government (Access to Information) Act 1985, the press and public be excluded from the remainder of the meeting for the consideration of the Section Two business on the grounds that it contains information defined as Exempt in Part 1 of Schedule 12A to the Local Government Act, 1972.”

EXEMPT SECTION (Pink Papers)

The exempt committee papers in the agenda will contain information, which is commercially, legally or personally sensitive and should not be divulged to third parties. If you do not wish to retain these papers after the meeting, please post them to the Democratic Service Office, 1st Floor, Mulberry Place London E14 3BG or hold onto the papers until such time you can return to the Town Hall and dispose of the papers in the confidential bins.

The Chair MOVED and it was

RESOLVED:

“That, under the provisions of Section 100A of the Local Government Act 1972, as amended by the Local Government (Access to Information) Act 1985, the press and public be excluded from the remainder of the meeting for the consideration of the Section Two business on the grounds that it contains information defined as Exempt in Part 1 of Schedule 12A to the Local Government Act 1972.”

The restricted minutes from the previous meeting of 12^th November 2020 were agreed as an accurate record of the meeting and were signed off by the Audit Committee.

There was no urgent business to be discussed.