Agenda and draft minutes
Venue: Room M71, 7th Floor, Town Hall, Mulberry Place, 5 Clove Crescent, London, E14 2BG
Contact: Zoe Folley, Democratic Services Tel: 020 7364 4877, E-mail: Zoe.Folley@towerhamlets.gov.uk
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APOLOGIES FOR ABSENCE To receive any apologies for absence.
Minutes: No apologies for absence were received.
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DECLARATIONS OF INTEREST PDF 48 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 Chief Executive.
Minutes: No declarations of interest were made.
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APPOINTMENT OF VICE - CHAIR To appoint a Vice – Chair of the Audit Committee for the Municipal Year 2011/12 . Minutes: The Chair nominated Councillor David Edgar to serve as Vice-Chair of the Committee. This was seconded by Councillor Denise Jones.
No other nominations were made and it was:-
RESOLVED
That Councillor David Edgar be appointed as Vice–Chair of the Audit Committee for the remainder of the Municipal Year 2011/12 or until a successor is appointed.
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UNRESTRICTED MINUTES PDF 88 KB To confirm as a correct record of the proceedings the unrestricted minutes of the ordinary meeting of the Audit Committee held on 22nd March 2011.
Minutes: RESOLVED
That the minutes of the meeting of the Audit Committee held on 22nd March 2011 be agreed as a correct record and the Chair be authorised to sign them accordingly.
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AUDIT COMMITTEE TERMS OF REFERENCE AND MEMBERSHIP PDF 51 KB Additional documents:
Minutes: The Committee considered a report of the Assistant Chief Executive, circulated with the agenda papers, which set out the terms of reference, membership, quorum and dates of meetings of the Audit Committee for the municipal year 2011/12.
RESOLVED
That the Committee note its terms of reference, membership, quorum and dates of future meetings as set out in Appendices 1, 2 and 3 to the report.
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UNRESTRICTED AUDIT COMMISSION REPORTS FOR CONSIDERATION |
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Progress report June 2011 PDF 253 KB Minutes: The Committee considered a report of the District Auditor, circulated with the agenda papers, which provided an update on progress in delivering the 2010/11 audit plan and in planning the 2011/12 audit. The report also identified a number of national emerging issues and developments.
Mr Jon Hayes, District Auditor, introduced his report and highlighted a number of key points. Work on the 2010/11 opinion audit was progressing well and Mr Hayes was confident that the issues that had arisen last year resulting in late publication of the opinion would not recur this year.
The Auditors’ initial plans for the 2011/12 audits of the Council and its Pension Fund were set out in letters to the Chief Executive in March 2011 as appended to the report.
Mr Hayes also updated the Committee on the Government’s plans regarding the future of the Audit Committee. These would see the end of the Commission’s responsibilities for overseeing and commissioning local audit and its other statutory functions, including those relating to studies into financial management and value for money; and the transfer of the existing in-house Audit Practice to the private sector (via a bidding process that would result in either the TUPE transfer of staff to private sector firms or the establishment via an in-house bid of a new employee-owned or mutual organisation) from 2012/13 onwards.
In response to questions from Members of the Committee, Mr Hayes reported further on a number of points:-
· His confidence regarding the timetable for the 2010/11 opinion was based on progress already made and work undertaken by officers as discussed in preparatory meetings last autumn. Information was being passed to the auditors in accordance with the required timetable.
· In relation to the weaknesses identified in the payroll system, Mr Hayes was aware of work that was underway at officer level. In this regard Minesh Jani, Service Head Risk Management, reported that the Corporate Management Team had agreed new procedures to ensure that the payroll and other systems were updated in a timely manner in every case when an employee left the Council, and other ‘leaver’ procedures followed.
In relation to the recent Audit Commission publication ‘Improving value for money in adult social care’ mentioned at page 36 of the agenda, the officers undertook to report back on the matters raised in the publication as they related to Tower Hamlets.
RESOLVED
That the report be noted.
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UNRESTRICTED TOWER HAMLETS REPORTS FOR CONSIDERATION |
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Internal Audit Annual Report 2010/11 PDF 313 KB Minutes: The Committee considered a report of the Corporate Director (Resources), circulated with the agenda papers, which set out the annual internal audit opinion in accordance with the CIPFA Code of Practice for Internal Audit.
MineshJani, Service Head Risk Management, introduced the report and highlighted the key points. Overall the report concluded that the Council has an effective system of internal control which was in operation throughout 2010/11. The basis on which this opinion had been reached was set out in the report which also summarised the audit resources utilised during the year, the range of work undertaken and the performance of the Internal Audit team for 2010/11.
In response to a question from the Chair, Mr Jani acknowledged that the percentage of priority 1 and 2 recommendations followed up that had been implemented by the 6 month review date (93% and 90% respectively) was still below the target figures (100% and 95%) although performance was much improved on last year. Corporate Directors were now informed directly when there were any concerns about speed of implementation and a number of directorates had introduced monitoring systems which Mr Jani felt could be utilised across the Council.
Information was not held on implementation rates after the 6 month review, although if an area was identified as high risk it would be scheduled for further review as part of a future audit plan.
The report also included a summary of each audit report not previously submitted to the Committee. In relation to the five reports that had identified a ‘limited’ assurance level, officers gave further information and answered questions from Members as follows:-
Creditors and R2P
Richard Parsons, Service Head Procurement and Corporate Programmes, reported that the R2P project had achieved significant efficiencies and improved payment performance. The audit had identified an number of issues particularly around links between R2P and legacy systems. All of the recommendations had been addressed as set out in the report and strengthened arrangements were in place in relation to avoiding incorrect payments and supplier set up, reconciliation and suspense account matching.
Effectiveness of Probationary Tenancies (Tower Hamlets Homes)
The Audit had found that very good procedures had been developed around probationary tenancies but that these were not being fully implemented and monitored in all cases.
Les Warren, Director of Finance and Customer Services, Tower Hamlets Homes (THH), reported that this review had been included in the audit workplan at the request of management. He felt that in the housing sector generally the value of probationary tenancies was not always fully recognised or utilised.
Following the audit review an interim solution had been put in place, utilising a spreadsheet to ensure that key stages in the procedure are adhered to. In the longer term a dedicated ICT solution would be developed.
In response to questions from Members, Mr Warren reported as follows:-
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Annual Governance Statement 2010/11 PDF 245 KB Minutes: The Committee considered a report of the Corporate Director (Resources), circulated with the agenda papers, which set out the framework for reviewing and reporting on the Council’s system of internal control and governance arrangements in line with regulation 4 of the Accounts and Audit Regulations 2011. The output from the review is the Annual Governance Statement which forms part of the annual accounts and identifies areas of good governance and any gaps in management of risks and control which may prevent the Council from achieving its desired outcomes.
MineshJani, Service Head Risk Management, introduced the report and highlighted a number of key points. The draft Annual Governance Statement for 2010/11 was set out at Appendix 3 to the report.
In response to questions from the Committee, Mr Jani reported that the change to an elected Mayoral form of executive had required a number of changes to the Constitution. The main changes were agreed at the Council meeting in October 2010 but a number of ancillary issues were addressed subsequently as the need arose and this process would continue. In this regard Councillor Eaton referred to her recent enquiry regarding the arrangements for appointing Chief Officers under the new system and the Corporate Director (Resources) reported that the Financial Regulations were also being updated.
Regarding awareness of the Mayoral system across the Council generally, Mr Jani felt that this was being cascaded from CMT through the directorates. A number of Committee members asked whether advice was provided to staff in relation to the Mayor’s powers and what to do if they felt under pressure to take a particular decision or action. The Corporate Director (Resources) advised that staff roles and management reporting lines were in the main unaffected by the new system and the Member/Officer protocol and other safeguards remained in place.
RESOLVED
That the Committee note the process and findings as set out in the report, and that the Draft Annual Governance Statement for the financial year 2010/11 be agreed as set out at Appendix 3 to the report.
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Audit Draft Statement of Accounts 2010/11 - to follow PDF 107 KB Additional documents: Minutes: The Committee considered a report of the Corporate Director (Resources), circulated separately in a supplemental agenda pack, which presented the Authority’s draft Statement of Accounts for the financial year ending 31st March 2011, prior to audit.
Peter Hayday, Interim Service Head - Financial Services Risk & Accountability, introduced the report and highlighted a number of key points. He apologised to the Committee for the late circulation of the report, which had arisen because of continuing work to finalise the treatment of items impacted by changes in recommended practice. Despite this the Corporate Director wished the Committee to have the opportunity to comment on the draft Statement of Accounts prior to submission to the auditors, in line with CIPFA best practice.
Members of the Committee welcomed this opportunity and the Corporate Director (Resources) confirmed that the Statement of Accounts would come back to the Committee for further consideration after submission for audit. There would be a five-week period from early July during which the accounts would be published but Members’ questions and comments would be welcomed at any point after the meeting and for the coming two months.
In response to questions from Members of the Committee, Mr Hayday provided further information as follows:-
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The Future of Local Audit PDF 129 KB Minutes: The Committee considered a report of the Corporate Director (Resources), circulated with the agenda papers, which provided an update on the Government’s plans for the future of local external audit and the potential impact of this on Tower Hamlets; and set out a proposed response to the Government consultation on this matter.
Peter Hayday, Interim Service Head - Financial Services Risk & Accountability, introduced the report and highlighted a number of key points. The three main areas covered by the consultation were:-
· Regulation of local public audit; · Commissioning local public audit services (including proposals to change the membership arrangements for the Audit Committee, under which the committee might include a majority of Independent (i.e. non-Councillor) members); and · Scope of audit and the work of auditors
Members expressed initial views on the draft response to the Government consultation included at Appendix A to the report as set out below:-
Members wished to give further consideration to the draft response and forward any further comments for inclusion ... view the full minutes text for item 7.4 |
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Update on Risk Management PDF 93 KB Minutes: The Committee considered a report of the Corporate Director (Resources), circulated with the agenda, which provided an update on the Council’s risk management arrangements and the risks reported to the Corporate Management Team in June 2011.
MineshJani, Service Head Risk Management, introduced the report and highlighted a number of key points. He and the Corporate Director (Resources) then responded to Members’ questions as follows:-
RESOLVED
1. That the Committee note the contents of the report; and
2. That the Committee note the actions planned over the next year to embed risk management, as set out in section 7 of the report.
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2010-11 Treasury Management Outturn Report, Update to 31 May 2011 PDF 254 KB Minutes: The Committee considered a report of the Corporate Director (Resources), circulated with the agenda papers, which advised Members of treasury management activity for the financial year ended on 31st March 2011 as required by the Local Government Act 2003. The report detailed the treasury management outturn position based on the credit criteria adopted by the Corporate Director of Resources, the investment strategy for the financial year as approved by the Council and the investment returns. In accordance with the Code of Practice the report would also be submitted to the full Council meeting on 13th July.
OladapoShonola, Chief Financial Strategy Officer, introduced the report and highlighted a number of key points. The Council had complied with its legislative and regulatory requirements. The prudential and treasury management indicators detailing the impact of capital expenditure activities during the year were set out in the report. Borrowing was only undertaken for a capital purpose and the statutory borrowing limit was not breached.
In response to questions from Members the officers provided further information as follows:-
· Some slippage in the Capital Programme had occurred resulting in a lower Capital spend than estimated. The Capital Programme year-end report to be submitted to the Cabinet on 6th July would give further details of this. The forthcoming budget process would ensure that all schemes were subject to scrutiny to ensure that ongoing slippage from year to year was minimised.
In relation to the maturity structure of the debt portfolio as set out in the table at paragraph 8.2 of the report, Members sought further information on the basis on which the ‘limits’ shown were set, and how these related to the actual expenditure.
RESOLVED
That the contents of the report be noted.
8. OTHER BUSINESS
(a) References from the Council Meeting
The Chair stated that the Council meeting on 13th April 2011 had agreed to refer to the Committee a Member’s question regarding staff and contractors employed in the Mayor’s Office. He asked for an update on this matter.
MineshJani, Service Head Risk Management, reported that a protocol was being developed to determine how matters referred from the Council meeting would be dealt with and this would be reported to the next meeting alongside the item referred from the April Council meeting. It was important to ensure that items were considered by the relevant body and that the Committee was able to focus on its core duties.
The Chair asked that the draft protocol be circulated to Members of the Committee in the next two weeks, along with a briefing on the matters referred from the 13th April meeting.
(b) Executive decision making
The Chair reported that at the Cabinet meeting on 8th June 2011 it was stated that certain decisions would be taken by the Mayor under his Executive powers. He sought further information on these powers and the process for such decisions.
The Service Head, Democratic Services confirmed that the Mayor had authority to take ... view the full minutes text for item 7.6 |