Agenda and draft minutes
Venue: Council Chamber - Town Hall, Whitechapel. View directions
Contact: Farhana Zia, Democratic Services Tel: 020 7364 0842, E-mail: farhana.zia@towerhamlets.gov.uk
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RESOLUTION TO EXTEND DURATION OF MEETING The Audit Committee meeting commenced at 18:41 and was adjourned due to technical difficulties. The meeting recommenced at 18:47 and at 21:31 the Chair MOVED and Councillor Marc Francis SECONDED a motion to extend the duration of the meeting to 22:00hours so to transact the remaining items of business of the Committee, in accordance with Council Procedure Rule 9.1.
The motion was approved and so it was:
RESOLVED that the duration of the meeting be extended to 22:00hours so to transact the remaining items of business of the Committee
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DECLARATIONS OF INTEREST 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: There were no declarations of pecuniary interest declared by members.
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MINUTES OF THE PREVIOUS MEETING(S) To confirm the unrestricted minutes of the Audit Committee held on 10th October 2024.
Additional documents: Minutes: The Audit Committee RESOLVED:
That the unrestricted minutes of 10th October 2024 be AGREED and APPROVED as an accurate record of the meeting subject to the following amendments:
· Councillor Amin Rahman and Ms Jill Bayley, Head of Legal Safeguarding were in attendance for the 10th October 2024 meeting.
· Ms Charlotte Webster did not tender apologies has she had received a cancellation notice for the meeting.
Matters arising o ACTION: The Chair, Councillor Mufeedah Bustin requested that the actions which appeared in the minutes be formulated into an action log and be attached to future minutes of meetings.
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AUDITORS ITEMS FOR CONSIDERATION Additional documents: |
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Auditor's Annual Report for the years 2020/21, 2021/22 and 2022/23 Additional documents: |
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Additional documents: Minutes: There were three reports from Deloitte’s. Items 3.1, 3.2 and 3.3 were presented together. See below for the minute.
Mr Jonathan Gooding and Mr Angus Fish from Deloitte presented their reports. Mr Gooding referred to the item 3.1 and said the Government had introduced a legislative ‘backstop’ date, by which local authorities were required to publish their statement of accounts and audit reports, for financial years up to 31st March 2023. He said this date was the 13th December and therefore the accounts for 2020/21, 2021/22 and 2022/23 were being presented to the Committee.
Mr Gooding referred to the key messages within the report and the disclaimer opinion provided. He referred to the value for money commentary and the appendices to the report which related to the audit adjustments, findings and open queries as well as the control findings. In reference to Item 3.3 Mr Gooding said the Committee was aware of the issues regarding membership data in respect to the Pension liability.
In response to comments and questions from members the following was noted:
· Mr Gooding said a considerable number of local authorities were behind with their statement of accounts. The Government had legislated to help bring a close to outstanding accounts and had allowed external auditors to provide disclaimer opinions. · Mr Gooding confirmed hundreds of local authorities were in a similar position as this was a nationwide issue. · Referring to the Best Value Inspection (BVI) and its findings, Councillor Marc Francis asked how this had a bearing on the work of Deloitte and the outstanding accounts. Mr Gooding responded saying they were required to consider all matters until the sign-off of the accounts. · Referring to group accounts, Mr Ahsan Khan Chief Accountant and Corporate Head of Financial and Technical said the finance team had worked with Deloitte’s to rectify this. He said the 2021/22 and 2022/23 accounts did not have group accounts, but future years do. o ACTION: Members requested that the recommendations made by Deloitte within their reports be tracked and that the Committee is provided with assurances that the recommendations have been actioned. · Mr Gooding explained some of the delay had been due to the complexities of the issues raised. Other factors such as the pandemic and change in personnel also impacted the progress of the outstanding accounts. · Referring to the Pension Fund report at item 3.3, members asked if the membership data issue was a material risk. Mr Gooding responded saying they had done considerable testing in this area and discovered many errors in the data. He said this would have taken the auditors time to quantify. · Ms Julie Lorraine, Corporate Director for Resources and Section 151 Officer added an independent data management company had been employed to help the Council perform a data cleanse exercise. She said EY were aware of this. o ACTION: The Chair, Councillor Mufeedah Bustin requested a report be presented to the Audit Committee on the progress made in respect to the data cleanse exercise and the Triennial ... view the full minutes text for item 3.3 |
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EY Audit Status Report - Year ended 31st March 2024 Additional documents: |
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Additional documents: Minutes: There were two reports from EY. Items 3.4 and 3.5 were presented together. See below for the minute.
Mr Steve Reid, Partner at EY presented their reports. He said the first report summarised the status of the audit they’d be presenting at the extraordinary meeting of 30th January 2025. He said the audit for year 2023/24 was also subject to a backstop date of 28th February 2025 and at present they were more than likely to issue a disclaimer opinion in relation to this set of accounts.
He said they had built a positive relationship with the Council’s finance team but there were challenges in responding to sample testing. He referred members to page 59 of the supplementary agenda which set out the status of the assurances required. He also referred to page 62, which set out the timetable for delivering the audit.
Mr Hassan Rohimun, Audit Manager at EY then presented the Pensions Fund provisional audit planning report. He referred members to the risks stated on page 69 onwards in the supplementary agenda and the timescales mentioned at page 72.
In response to comments and questions from members the following was noted:
· Referring to Appendix A, Members asked why some of the assurances showed no ratings such as for Reseves or commentary on outstanding items and others such as short-term Creditors saying information had not been supplied by the Council. Mr Reid responded saying the situation was complex. As new auditors it would take three years to unwind the accounts and therefore, they were working with the Finance Team to target areas they could easily achieve, as part of their workplan and the backstop date. Reserves for Local Government were more complex and required a considerable amount of resource and as such there was no assurance for it. · Referring to the ‘limited’ assurance for the valuation of property, page 59 of supplementary pack, Mr Ahsan Khan, Chief Accountant and Corporate Head of Financial and Technical said they hadn’t been able to resolve this. He said there were two sets of professional valuers, one for the Council and the other for the external auditors, with differing valuations. However, they were working with the current auditors EY to address this and correct this for the 2024/25 set of accounts. · Members asked if there was a risk to borrowing due to the assurance rating for the HRA account. They asked what, if any impact this had on reporting to central government. Ms Julie Lorraine, Corporate Director for Resources and Section 151 Officer responded saying the risks were the same as other local authorities. Ms Lorraine said they had made it clear in the HRA statement the financial standing and materiality thresholds.
The Chair, Councillor Mufeedah Bustin thanked Mr Reid and Mr Rohimun for their presentation and the reports presented by EY.
The Audit Committee RESOLVED to
1. Note the reports from EY. The progress made in regard to the 2023/24 auditing of the accounts and the Pension Fund planning report. ... view the full minutes text for item 3.5 |
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TOWER HAMLETS ITEMS FOR CONSIDERATION Additional documents: |
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Statement of Account for 2020/21, 2021/22 and 2022/23 Additional documents:
Minutes: Mr Ahsan Khan, Chief Accountant and Corporate Head of Financial and Technical presented the Council’s response to the Statement of accounts for 2020/21,2021/22 and 2022/23. He referred to his report and the progress made to conclude these sets of accounts. He referred to paragraph 3.5 and said the Annual Governance Statements for the years mentioned had been updated to consider the BVI inspection as well as the procurement changes made.
In response to comments and questions from members the following was noted:
· Councillor Marc Francis asked where in the pack the changes had been made to the AGS concerning the procurement process and the BVI report. Mr Dobbs, Head of Internal Audit, Anti-Fraud and Risk responded to say page 462 onwards for the 2021/22 AGS, with reference to page 501 to the BVI report. Page 644 onwards for the 2022/23 AGS, with reference to page 677 -679. · Ms Julie Lorraine, Corporate Director for Resources and Section 151 Officer added these were audit opinions and that the AGS had gone through a robust process. Ownership of the AGS was with the Chief Executive and the Mayor. · Councillor Francis expressed his dissatisfaction with process, saying the Chief executive and Mayor ought to come to an Audit Committee meeting to self-reflect about the AGS. He said he was happy to endorse the report and appreciated the opportunity to update the AGS. · Ms Julie Lorraine said the AGS had been updated as per the CIPFA guidance, adjustments had been made to it. She said the BVI report had no effect on the AGS for previous years but the outcome of the BVI inspection had been reflected in the statement. The process did not need further scrutiny.
The Audit Committee RESOLVED to:
1. To approve Statements of Accounts for 2020/21, 2021/22 and 2022/23 within the statutory ‘backstop’ deadline date of 13 December 2024, which takes into consideration work performed by the external Auditors, Deloitte’s. 2. To approve the updated Annual Governance Statements for 2020/21,2021/22 and 2022/23, which have been inserted within the respective Statements of Accounts; these statements have been updated to ensure they are still appropriate to reflect the circumstances as at the date that the Statements of Accounts are approved, particularly relating to procurement and the BVI report.
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Internal Audit and Anti-Fraud - Progress Report Additional documents:
Minutes: Mr David Dobbs, Head of Internal Audit, Anti-Fraud and Risk stated the report provided an update on Internal Audit activity 2024-25, including delivery against the Internal Audit Plan. The report highlighted any significant issues and concerns since the last update to the Audit Committee in October 2024.
Mr Dobbs referred to the graph at paragraph 2.2, page 687 and said the 24% for reasonable or substantial assurances was much lower than the benchmark but with the year-end report due in July 2025, the outturn percentage could be a higher or lower figure.
In response to comments and questions the following was noted:
· Members expressed their concern about the number of limited assurance reports. Mr Dobbs said summary updates were provided every quarter with Directorate and Divisional Heads invited to Audit Committee to explain the remedial action they had taken in relation to their limited assurance report. Mr Dobbs added access to the fuller reports was also available to members. o ACTION: The Chair Councillor Mufeedah Bustin recommended a separate extraordinary meeting be scheduled in February/March 2025, for the Committee to deep dive the work of Internal Audit and scrutinise performance as well as risk management. Members of the Committee agreed to this suggestion. · Members referred to the ‘detailed audit results’ on page 688 and questioned the rationale behind the ‘deferred’ audits and asked if these would be included in the 2025/26 audit plan. Mr Dobbs confirmed they would be re-considered. He said he’d be consulting senior management and would come back to the Committee. · Members asked if they could make suggestions on the areas to audit. Mr Dobbs said it was an operational decision and a new plan would be presented to the Committee in April 2025. o ACTION: Members requested that the ‘deferrals’ be referred to the Committee, with an explanation as to why it was deferred.
The Audit Committee RESOLVED to:
1. Note the Internal Audit progress report, including details of the assurance opinions for audits carried out as part of the 2024-25 Audit Plan (Appendix A).
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Risk Management – Corporate Risk Register Additional documents:
Minutes: Mr David Dobbs, Head of Internal Audit, Anti-Fraud and Risk presented the risk management report which included the Corporate Risk Register. He said the management of risk was a key Council function, with Internal Audit coordinating the risk registers on behalf of the Council and Directorates.
Mr Dobbs referred members to paragraph 3.7 onwards and said the risk management strategy would be consulted on next year in April 2025.
In response to comments and questions from members the following was noted:
· Mr Dobbs confirmed he would be consulting senior management, and directorate leads to ensure the risk strategy and appetite had a consistent approach. · Referring to paragraph 3.6 members asked how the risk training had been received by officers. Ms Victoria Lewis, Risk Officer said the training sessions had been well attended and there had been positive engagement from managers. · Referring to the detailed corporate risk register, Councillor Francis asked if the self-referral to the Housing Regulator would be added to the risk register. Mr Dobbs said the detailed risk register, from page 711 onwards gave more information of the risks and the mitigating action to be taken. He said the risk relating to the self-referral to the Housing Regulator had been drafted but hadn’t made it onto the register as he needed to have further discussions with the Directorate. o ACTION: Mr Dobbs agreed to share with Committee Members the precise wording of the risk before it is added to the Corporate Risk Register.
The Audit Committee RESOLVED to:
1. Note the Corporate Risks (referred to in Appendix A and B), and where applicable request risk owner(s) with risks requiring further scrutiny to provide a detailed update on the treatment and mitigation of those risks including impact on the corporate objectives. 2. Note the latest updates to the Council’s Risk Management arrangements as described in this report; and 3. The proposed approach in relation to the Council’s Risk Appetite within the development of a revised Risk Management Strategy and Framework.
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New Global Internal Audit Standards Additional documents:
Minutes: Mr David Dobbs, Head of Internal Audit, Fraud and Risk presented the New Global Internal Audit Standards report and said these had been published in January 2024 and would become mandatory for the profession in January 2025.
Mr Dobbs said further guidance would be made available from CIPFA in the format of revised Public Sector Internal Audit Standards. He said it was important for the Audit Committee and Senior Management to become familiar with the new Standards and their implications.
He said the report provided Senior Management and the Audit Committee with an overview of the standards and some materials to assist Members in gaining a better understanding of requirements.
In response to comments and questions from Members the following was noted:
· The Chair, Councillor Mufeedah Bustin asked if Officers would be coming back to the Committee with a detailed action plan regarding the implementation of the standards. Mr Dobbs responded saying he would report back to the committee the compliance journey at a future meeting. o ACTION: Mr Dobbs to report on the compliance journey in relation to the implementation of the Global Internal Audit Standards. · Councillor Francis welcomed the new standards and said that given the findings of the BVI inspection it was important to ensure the Audit Committee’s independence.
The Audit Committee RESOLVED to:
1. consider the report, and the related implementation guidance attached in Appendices A to C.
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Treasury Management Report and Mid-Year Review Additional documents: Minutes: Mr Paul Audu, Interim Head of Pensions and Treasury presented the Treasury Management Mid-Year report for 2024-25. He referred members to the tables on page 107 of the supplementary agenda which summarised the balance sheet as at 31st March 2024 and the treasury management activity which had taken place up to 30th September 2024. He also referred members to paragraph 3.39 which updated members on the income returns and paragraph 3.44 which set out the compliance against the CIPFA code.
In response to comments and questions from members the following was noted:
· The Chair, Councillor Mufeedah Bustin commented that the report needed to be placed further up the agenda, so members could reflect and scrutinise its content. o ACTION: Councillor Bustin asked if training on Treasury Management could be organised for the Committee members.
The Aduit Committee RESOLVED to:
1. Note the contents of the treasury management activities and performance against targets for the half year ending 30 September 2024; and 2. Note the Council’s investments as set out in Appendix 1. The balances outstanding at 30 September 2024 were £194.007m.
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AUDIT COMMITTEE WORK PLAN Additional documents: Minutes: The Chair, Councillor Mufeedah Bustin referred members to the workplan and asked members if they had any comments or suggestions to make regarding the Committee work plan.
In response to comments and questions from members the following was noted:
· Councillor Bustin said the Committee had already agreed to hold an extraordinary meeting in February/March 2025 to deep dive the work of Internal audit and risk management. · Councillor Bustin also recommended the Committee meet informally in January 2025 to discuss the workplan going forward, considering the BVI report. · Ms Julie Lorraine, Corporate Director for Resources and Section 151 Officer reminded members their responsibilities were those as set out in the terms of reference for the committee and that the BVI report was being scrutinised from a different perspective and therefore should not be conflated.
The Audit Committee RESOLVED to:
1. Note the Committee workplan for 2024-25 and AGREED to holding an extraordinary meeting in February/March to scrutinise the work of Internal Audit.
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ANY OTHER BUSINESS THE CHAIR CONSIDERS URGENT Additional documents: Minutes: The Chair, Councillor Mufeedah Bustin raised two matters under any other business, (1) the Best Value Inspection report and (2) the composition of the Audit Committee.
Best Value Inspection She said the BVI inspection had made a link between the role of the Audit Committee and governance processes. She asked for the views of members and the external Auditors EY.
In response to comments and questions from members the following was noted:
· Councillor Francis stated there was a link between the risk and control of governance and the Audit Committee ought to report and make suggestions to the BVI’s Transformation and Assurance Board. · Mr Steve Reid, Partner at EY stated the Audit Committee needed to focus on the terms of reference for the committee and its role in relation to the governance framework. He said any scrutiny of the BVI report needed to be aligned to the terms of reference and should not be a scrutiny of its findings. · Ms Charlotte Webster, Independent Person concurred the Committee ought to align its discussion of the BVI report findings to the terms of reference for the Committee and said she would support this.
Audit Committee Composition · Councillor Marc Francis said he had previously expressed his reservations about Executive members being members of the Audit Committee. He said the LGA Peer Review and the recommendations of Deloitte’s supported this. He said this was a point in principal and needed to be addressed. · Councillor Kabir Ahmed said it had to be borne in mind that sometimes this was not always possible, due to the size of the groups and proportionality requirements. He said the composition of the committee had been discussed multiple times and changes had been made, with the change in Chairmanship. · Ms Jill Bayley confirmed the Committee’s terms of reference were presented to the committee at the beginning of the municipal year and any changes to them needed to be agreed before then.
The Audit Committee RESOLVED that:
1. Further discussion was required in relation to both these matters, outside of the Committee setting.
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EXCLUSION OF PRESS AND PUBLIC 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/Confidential (pink) papers for consideration at the meeting 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 hand them to the Democratic Services Officer present or dispose of them in the confidential bins.
Additional documents: Minutes: 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.”
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RESTRICTED MINUTES OF THE PREVIOUS MEETING(S) To confirm the restricted minutes of the meeting 10th October 2024.
Additional documents: Minutes: The restricted minutes for the 10th October 2024 were AGREED and APPROVED to be an accurate record of the meeting, subject to the amendments mentioned at item 2.
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ADULT SOCIAL CARE PROCUREMENT: VERBAL UPDATE Additional documents:
Minutes: The minute for this item is restricted.
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