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.

There were no declarations of pecuniary interest declared by members.

To follow.

Mr Steve Reid, from EY introduced the report and said the report presented is the one the Committee considered in December 2024. However, further updates had been made to the report. He said their intention was to issue a disclaimer opinion on the accounts. He drew attention the Section 3, Page 25 of supplemental pack 2, on value for money and said 4 significant weaknesses have been identified: Internal Control, BVI findings, Procurement and Contract Management and Statutory Financial reporting, with 3 statutory recommendations being made. He said the government deadline for the submission of the accounts was 28th February 2025.

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

•         Mr Reid said the Government had introduced the backstop provision to deal with the backlog in un-audited accounts. He said the ‘opening balances’ for 2023/24 could not be relied on as the former auditors, Deloitte’s had issued a qualified opinion for the 2022/23 accounts.

•         Mr Reid said their approach to setting the materiality was part of the audit plan, the committee had considered in October 2024. He said they had their own methodology when assessing what the level should be.

•         Mr Reid said they had made 3 statutory recommendations as part of their audit and said the timely reporting of accounts was essential. The council had made progress in this area, but the last unqualified set of accounts were in 2017. He said it was important to ensure timely submission of the accounts as it a key driver for the statement of accounts.

•         Mr Reid said they were required to consider the results of external reports, such as the BVI inspection.

•         Ms Hayley Clark said there was a slight delay with the ‘on boarding’ process. Returns from members had not been received promptly and this delayed the start of their work on the 2023/24 accounts.

•         Ms Julie Lorraine, Corporate Head of Resources and Section 151 Officer said the finance team had worked exceptionally hard to progress the accounts this year and said members would see significant progress in relation to forthcoming accounts.

•         Mr Reid explained that in accordance with the government guidelines the ‘reset’ stage have been completed. The next phase was the ‘recovery stage’. He said it was likely to take 3 years before any disclaimed accounts had worked through the system. He said Council and external auditors alike were waiting to see what new legislation or guidance is put in place by the Government in relation to the statement of accounts.

o       ACTION: Councillor Bustin stated it would be beneficial to have an update on the 3 statutory recommendations and asked that a report be provided to members at the next extraordinary meeting of 13th March 2025.

o       ACTION: Mr Ahsan Khan, informed the Committee they had devised a tracker to track their progress against the recommendations made by EY and said this would be presented to the Committee at the next ordinary meeting in April 2025.

•         In reference to the  ...  view the full minutes text for item 2.1

To follow.

Mr Hassan Rohimun, Audit Manager at EY presented the Pensions Fund Accounts. He referred members to pages 64 and 65 in the supplemental pack 2 and said this set out the scope and status of the audit. Mr Rohimun referred members to the table setting out the risks, page 67 onwards particularly drawing attention to the ISA 26 and said the quality of the membership data for actuarial valuations was a concern. He said EY would be issuing a disclaimer opinion for the Pension Fund accounts.

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

•         Membership data was being worked on, with a data cleanse exercise due to complete in March 2025.

•         An unqualified opinion regarding the Pension Fund accounts for 2025/26 was not possible, despite it being a smaller area of focus, as the Pension Fund Accounts were interlinked with the main accounts and any disclaimed accounts would take 3 years to put right, as explained earlier.

The Audit Committee RESOLVED to:

1.    Note the contents of the report and the recommendations therein.

The Chair, Councillor Bustin thanked officers from EY for their presentations.

To follow.

Mr Ahsan Khan, Corporate Head of Financial and Technical updated members in relation to the Statement of Accounts for 2023-24. He said this was the Council’s response to the EY findings. He said the legislative backstop date was the 28th February and as such the Finance Team were seeking final approval of the accounts at this meeting. He said the accounts were appended at appendix A, with the letters of representation at appendix B and the C. Mr Khan said the report also explained the adjustments that have not been made to the accounts as they were immaterial.

In response to questions and comments from members, the following was noted:

?      In reference to the Annual Governance Statement appended in Supplement 3, Councillor Kabir Ahmed put forward a proposed change to the wording on page 43, under the sub-heading of conclusion. Councillor Bustin explained the Chief Executive and the Mayor had ownership of the AGS and any changes would need to be considered by them.

o    ACTION: David Dobbs, Head of Internal Audit, Anti-Fraud and Risk said although the AGS was drafted by himself it was an iterative process, with other senior officers consulted including the corporate leadership team. Mr Dobbs said if Councillor Kabir could provide him with the suggested amendment, he would be happy to cdonsider it.

?       Ms Charlotte Webster, Independent Person said the Committee ought to be involved in the early stages of the drafting of the AGS and said this would assist in members having a better understanding of the process.

?       Referring to pages 21 and 22 of the AGS, Councillor Bustin commented that there was an imbalance between the good points and bad points made by the LGA Peer Review and the BVI Inspection. She said there was a focus on process and not the findings.

?       Mr Dobbs responded stating there was and whilst there was an element of subjectivity there was no PR spin, as suggested by the members. He said additional comment had been made by the external auditor and as such there was challenge to the AGS.

?       In reference to the ‘income and expenditure’ statement, page 123 of supplement 2, Councillor Bustin asked what the reason was for the HRA being overspent. Mr Ahsan Khan, Corporate Head of Financial and Technical said this related to the valuation of property. He said if there is a change in valuation, the loss in valuation shows as an increase in expenditure. He said it related to temporary accommodation assets which have been reduced.

o       ACTION: Ahsan Khan to provide a briefing on the HRA account overspend.

?       Referring to the balance sheet, page 134 of supplemental agenda 2, Councillor Bustin asked why the Pension Asset had been reduced to zero. Mr Ahsan Khan explained that this related to the LGPS fund. He said at the end of 22/23 the Council had a net asset with £23M, this substantially increased in 23/24 with over £200M due to investments made. He said there was a technical accounting  ...  view the full minutes text for item 3.1

To follow.

Mr Ahsan Khan, Corporate Head of Financial and Technical presented the Treasury Management Strategy, Investment Strategy and Capital Strategy Report for 2025-26 to 2027-28. He said the report set out the Council’s legal obligation under the Local Government Act 2003 to have regard to both the CIPFA code and the Ministry of Housing, Communities and Local Government (MHCLG) Guidance on Local Authority Investments. In particular, he drew attention to the Capital Strategy report and said the report was asking the Committee to approve the minimum revenue provision, for year-to-date 2024/25 and 2025/26 after consultation with advisers in relation to the minimum revenue provision. He said this would be more aligned with the Council’s borrowing strategy.

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

?       In answer to what checks and balances are in place, if there is a change in assumptions, Mr Ahsan Khan replied that they would bring any such decisions back to the Committee. He said members received regular updates via the budget monitoring reports as well as the mid-year Treasury Management update, which the Committee last saw in December 2024. He said the finance team constantly monitored the strategies and each year the strategy was reviewed and refreshed for a three-year period.  

The Audit Committee RESOLVED to recommend to Council to:

1.    Approve and adopt the following policy and strategies:

1.1)        The Treasury Management Strategy Statement (TMSS) contained in Appendix A;

1.2)        The recommended investment counterparties and limits in Appendix A paragraph 5.7;

1.3)        The Non-Investment Strategy Report contained in Appendix B;

1.4)        The Capital Strategy, which includes the Minimum Revenue Provision (MRP) Policy Statement, contained in Appendix C;

1.5)        The Prudential and Treasury Management indicators contained in Appendix D; and

1.6)        The Treasury Management Policy Statement as set out in Appendix E.

Mr David Dobbs, Head of Internal Audit, Anti-Fraud and Risk presented his report on the Implementation of Internal Audit recommendations. He said the process used to measure how internal audit recommendations are implemented and monitored had changed. He referred to paragraph 3.6 and the bullet point therein. He said the new method went beyond the self-assessment process that had been used previously. He referred to appendix A which highlighted the limited assurance reports and said the new approach had come into effect in February 2025. He said he would bring a further report at a future meeting of the Audit Committee.

In response to questions and comments from the members, the following was noted:

?       Mr Dobbs said 3 auditors were working through the limited assurance reports and they were working through the backlog. He said this would take time to clear before it’ll be business as usual. He said that for some recommendations, it maybe that management have said they have implemented a new approach, but this has not been tested. Mr Dobbs said some recommendation would take time to work through.

?       In response to what the impact of this work would have on the delivery of the Audit Plan for this year, Mr Dobbs said he’d be monitoring the allocation of resources so that new audits and the backlog would be equally balanced. He said it was essential that when providing his Audit Opinion in June/July there was enough evidence of both new and previous audits to base his opinion on.

?       Councillor Bustin explained to Committee Members that Corporate Directorates would be invited to the extraordinary meeting to explain their limited assurance reports for their service areas.

o   ACTION: Discussion on the timing of the meeting and what should be on the agenda for the 13th March meeting took place. It was AGREED that a report on the 3 statutory recommendations made by EY and the Homecare Contract would be the two items returning on the 13th March 2025.

o   ACTION: The Democratic Services Officer to look at the Corporate Diary to see if the meeting can be moved to an earlier time, possibly sometime in the afternoon due to Ramadan. If not, the meeting will proceed for the time scheduled.

?       Members AGREED that the internal recommendations ought to be considered at the next ordinary meeting.

The Audit Committee RESOLVED to:

1.    Note the report, including details of how Internal Audit will work with Management to provide assurance over the implementation of agreed recommendations; and

2.    Agreed that they would identify which service areas they’d like to deep dive and invite Corporate and Service Directors to the next ordinary meeting of the Committee.

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.

The Chair, Councillor Mufeedah Bustin MOVED the motion to exclude members of the press and public for the restricted (part 2) of the agenda. This was SECONDED by Councillor Amina Ali.  

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.”

To follow.

The minute for this item is restricted.