Councillor Denise Jones declared an interest in respect of item 4.4 in that her daughter had recently become Chair of Governors at a borough school.

To confirm the minutes of the Audit Committee held on 28^th June, 2016.

The minutes of the meeting held on 28 June 2016 were approved as a correct record of proceedings.

Item deferred.

The Chair moved and it was

RESOLVED

That the order of business be varied.  Accordingly, Item 4.4 was considered after Item 4.1.  Following this the Committee considered the agenda items in the order published.

Report to follow.

Minesh Jani, Head of Audit and Risk Management presented the report which is summarised the work of Internal Audit for the period June to August 2016

Members noted that:

• the chart “analysis of assurance levels” indicated that, of the audits carried out during the period, 85% had returned a substantial assurance (23 audits) and 15% (four audits) had returned a limited assurance.  No audits in the period had returned a nil assurance.
• discussion of the audit of Community Languages had been brought forward from the previous meeting

Community Language Service

The Head of Audit and Risk Management introduced the item informing Members that a nil assurance had been returned because of concerns around governance arrangements in the following areas:

• performance management framework and KPIs were not sufficiently robust
• some SLAs had not been properly signed
• there was no audit trail for visits undertaken
• some DBS checks were not robust
• authorisations of payments was not robust

Shazia Hussain, Service Head, Culture, Learning and Leisure responded to the matters raised.  The Committee was informed:

• issues around governance had been recognised upon the transfer of the Community Language Service to CLC directorate in 2013
• a review of Teaching and Learning was undertaken swiftly
• she had requested the audit following concerns raised by the Head of Ideas Stores
• the outcome of the audit had enabled targeted intervention to be undertaken. To this end:
  • structures and processes had been put in place
  • training delivered on policies and procedures
  • SLAs and the register had been standardised
• there was an ongoing service review to establish evaluation criteria

Responding to Members’ questions the following were noted:

• the service standards had been regularised and now it was aimed to ensure that there was standard access across the borough and progression in the courses
• the objectives of the service were revised and integrated with formal qualifications for 6 community languages. The Primary Modern Language part of the service would be transferred to Children’s Services Directorate and the Assessment Service would cease
• measurement of the effectiveness of the service was incorporated into the adult learning monitoring arrangements
• compliance with required DBS and other checks would be maintained through whole Council arrangements to audit and monitor DBS and other checks
• although Ideas stores presently were not able deliver course evaluations, they were investigating how staff could be trained to do this through Adult Learning Services
• provision of satisfactory premises would be ensured as facilities formed part of the SLA for providers
• there were 100 sessional tutors and it was intended to review these to ensure that provision was standardised

Tower Hamlets Homes (THH) Major Works

The Head of Audit and Risk Management introduced the item informing Members that a limited assurance had been returned for the following reasons:

• poor administration of notices
• some policies were out of date
• co-ordination between teams was inconsistent

Ann Otesanya and John Tunney of THH responded to matters raised and provided the following information:

• a new executive team was now in post at the organisation and a  ...  view the full minutes text for item 4.1

Report to follow.

Minesh Jani, Head of Audit and Risk Management presented the report which informed members of the annual review of the Council’s risks and the measures in place to categorise prioritise them and so that it can identify how deliver effective risk management.

Members considered the report and indicated that they had no comments that they wished to make.

RESOLVED

1. That the contents of the report be noted;
2. That the actions highlighted at section 9 of the report be agreed;
3. That the corporate risks (table 2 on pages 7 and 8 of the attached paper) be noted ; and
4. That the risk owner(s) identified in the report requiring further scrutiny provide a detailed update on the treatment and mitigation of the risk including impact on the corporate objectives at its December meeting.

Report to follow.

Minesh Jani, Head of Audit and Risk Management presented the report which provided the Audit Committee with an oversight of the authority’s processes to facilitate the identification and management of its significant business risks.

The report also included a summary of the Q1 2016/17 Corporate Risk Register and Risk Management Team activity over the last 12 months.

Members were asked to consider

·         the actions highlighted at section 9 and whether they were minded to endorse them.

·         The corporate risks identified and whether any other risks should be considered.

RESOLVED

1.    That the contents of the report be noted;

2. That the actions highlighted at section 9 be agreed;
3. That the corporate risks (table 2 on pages 7 and 8 of the attached paper) be noted and

4.    That the risk owner(s) requiring further scrutiny provide a detailed update on the treatment and mitigation of the risk including impact on the corporate objectives at its December meeting

Minesh Jani, Head of Audit and Risk Management presented the report which summarised the schools audit work in the year 2015/16 including the audits reported at agenda item 4.1.

Members were informed that:

• 84% of the schools audited had returned a substantial assurance.
• The issues identified fell into 3 strands/themes
  • Governance
  • Procurement and property practices
  • Management of inventory
• The themes were identified with the aim of ensuring that practices were improved.  As issues were identified, proactive support would be given.
• Clerking services were available to schools via the Council but these services were chargable

Members noted the outcomes reported and made the following comments:

• The issues identified at audit were of a repetitive nature
• The authority should look at provision of proper clerking services to schools
• There should be a better standard of governor training especially in regard to financial management

Action by: Minesh Jani, Head of Audit and Risk Management

RESOLVED

            That Members note the contents of the Annual report from Mazars and to take account of the matters raised in each of the twelve areas examined.

Report to follow.

Kevin Miles, Chief Accountant presented the report which informed the Committee of the Council’s treasury activities from April to June 2016.

Members were informed that:

• Performance in the period was lower than some local authorities
• Market rates had been low but stable in the period
• Performance of the Council is above the model weighted average rate of return in its investment benchmark club
• A proposal to change the investment lending strategy would be put to Full Council on 21 September 2016.

Responding to Members’ questions, the Chief Accountant advised that:

• The Council’s external auditors (KPMG) had not raised concerns around it exposure to Lender Option, Borrower Option (LOBO) arrangements as the investments chosen were not reverse LOBO investments
• KPMG had not resolved the annual accounts objection received around LOBOs but had indicated that no other matters prevented the sign off the accounts
• KPMG were seeking legal opinion in relation to the LOBO complaint as this also concerned a number of other local authorities and caused delays in signature
• LOBOs presented risk in a long term framework.  The Council’s loan had 60 months remaining and in the present investment climate presented good value in the mid term
• In regard to exposure to risk versus returns. The Council was presently looking to review its treasury management approach to generate better returns without increasing its risk profile

RESOLVED

1.     That the contents of the treasury management activities and performance against targets for quarter ending 30 June 2016 be noted;

2.     That the Council’s investments which are outstanding as at 30 June 2016 as set out in Appendix 1 be noted and that it be noted that the balance outstanding at that time was £452.95m which includes £73m, pension fund cash awaiting investment in early July.

3.     That the recommendation to the Full Council to agree increasing investments over a year monetary limit from £50m to £100m as set out in section 3.12.3 be endorsed

4.     That the recommendation to the Full Council to approve increasing monetary limit and duration of part nationalised banks from £25m and 3 years to £50m and 5 years as set out in section 3.12.4 be endsorsed

Item deferred

Nil items.