To receive any apologies for absence.

Apologies were received on behalf of Councillor Stephanie Eaton. 

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.

Councillor Mizan Chaudhury declared a general personal interest in the agenda. The declaration was made on the basis that the agenda contained references to Tower Hamlets Homes and Councillor Chaudhury was a member of the Tower Hamlets Homes Board. 

To confirm as a correct record of the proceedings the unrestricted minutes of the ordinary meeting of the Audit Committee held on 13 July 2010 (postponed from 29^th June 2010).

RESOLVED that the unrestricted minutes of the meeting held on 13^th July 2010 be approved.

·                    Matters Arising

The Chair reported that the Labour Group had now appointed a second Deputy Member to the Committee and it was Agreed that this information should be passed on to Democratic Services for action.

Action: Z Folley Democratic Services.

In relation to the issue of additional meetings (Page 3 of the minutes Audit Committee Terms of Reference), it was emphasised that the Committee should try to capture as much work as possible within the existing schedule of meetings.

Members were advised that should they still wish to schedule in extra meetings, then they would need to put any such requests in writing to the Chief Executive showing reasons for urgency.

Members noted the implications of arranging additional meetings and the need to have regard to their terms of reference when suggesting topics for review by the Committee.

In relation the Benchmarking Club Results (Page 6 of the minutes, Internal Audit Annual Report 2009/10) Mr Minesh Jani (Service Head, Risk Management) confirmed that the figures did indeed cover the whole audit function.

Councillor Abdul Asad declared a general personal interest in the agenda. The declaration was made on the basis that the agenda contained references to Tower Hamlets Homes and Councillor Asad was a member of the Tower Hamlets Homes Board. 

Special Circumstances and Reasons for Urgency Agreed.

• The report was unavailable for public inspection within the standard timescales set out in the Authority’s Constitution, because of the continuation of discussions between the Council and its Auditors regarding items of account which it had been anticipated would be completed in time for publication of the agenda for this meeting of the Audit Committee.

• The Corporate Director Resources recommended that committee note the findings of the annual governance report for 2009/10 to allow the auditors to provide their audit opinion by the statutory deadline of 30^th September 2010.

Mr Jon Hayes (District Auditor) presented the Annual Governance Report  for both the Statement of Accounts and the Pensions Fund.

Mr Hayes reported that, as the audit was continuing there may be further matters to report to the Committee before the opinion is issued. Members were asked to consider the matters raised in the reports.

Mr Hayes asked Members to take note of the adjustments to the statements, and unadjusted mis - statements and requested that the Chair sign the letters of representation on behalf of the Council for both accounts.

In reply to questions about the THH Pensions Fund cost guarantee, (where  there was a recommendation that the liability be raised as a provision), Mr Finch (Service Head, Corporate Finance) explained the reasons for including this within the Council’s accounts as per previous years.

There was no reason for treating the two liabilities differently as THH was part of the Council. Besides, making this adjustment would involve an additional charge to the Housing Revenue Account. The accounting treatment of this did not affect the overall General Fund balance. Officers would keep the matter under review.

The Committee stated they were happy for the accounting treatment of the liability to stay the same as per officers’ recommendation, whilst the deficit remained at £1.3 million. However should the figure increase, the Committee requested a further report on this matter.

In relation the fixed asset balance sheet, Officers clarified that the errors related to a small number of properties, but this issue would be rectified during the 2010/11 process.

In response to further questions, Mr Naylor (Corporate Director Resources) explained the steps being taken to address the outstanding queries and the reasons for the delays, due the complexity of the process/the  pressures arising from this years budget setting process. However, Officers were on target to resolve the issues.

Officer expressed a commitment to review the lessons learnt and to apply these accordingly in the future when finalising the accounts. The Committee expressed a wish to keep a watchful eye over the key issues.

In reply to questions about the saving targets, Officers referred to the need to identify savings whilst protecting key front line  ...  view the full minutes text for item 5.

Mr Minesh Jani (Service Head, Risk Management) presented the Quarterly Internal Audit Assurance report. The report summarises the work of Internal Audit for the period July to September 2010. The report also set out the assurance rating of each audit finalised in the period and gives and overall assurance rating.

Finding of the individual reports were attached to the report with details of their assurance rating.

In relation to the follow up Audits and the outstanding recommendations, it was reported that relevant Service Heads had been asked to identify a time line for their completion and, where necessary, would be requested to report back to the Committee to address any outstanding issues. Audit issued timely  and frequent reminders to ensure recommendations were implemented  as agreed, and worked closely with Deloite to ensure services agreed and understood the implications of the recommendations and what needed to be done. All finalised reports were reported to the Corporate Directors. Members stressed the need for the recommendations to be implemented.

In relation the individual reports with a nil assurance scores, the Committee noted the following points:

a)                       Central Foundation Girls Secondary School. 

Mr David Tully, (Head of Children’s Finance, Children’s Schools and Families) reported progress with this Audit. Children’s Services had offered the school a considerable amount of additional support. Officers had been working closely with them to ensure the recommendations were implemented and the National Standards for Schools were applied. They were also working on the idea of ‘Health Checks’ for Audits in Schools which should be of benefit to the school. In reply to questions, it was reported that the School would automatically be re inspected in six months time by both Audit and Children’s Services and that the follow up report would be reported back to the Committee. In reply to questions it noted that it was required that all staff working with children would use the Common Assessment Framework.

b)                       Contract Management and Monitoring - Corporate Review

Mr Mark Abrahams (Procurement and Corporate Programmes) presented the progress report.  He explained the purpose of the Audit designed to test the systems for contract monitoring. The report highlighted the key areas where further work needed to be carried out. Mr Abrahams explained the merits of the Tollgate process and the Competition Board, which it was expected should significantly strengthen levels of control, would address the issues, and generate efficiency savings.

The Committee also noted the role of the Competition Board in testing procurement plans to ensure better value for money.

Ms Jill Bell (Head of Legal Services, Environment) referred to the plans to install a central depository for contracts. Contracts exceeding a certain amount would be held in Legal Services.  Officers were also now keeping a Contracts Register to highlight opportunities with other London Boroughs with view to identifying efficiencies and savings. Officers were also exploring the idea of keeping e - copies of contracts. It was intended that Legal Services would be submitting a number of reports to the Competition  ...  view the full minutes text for item 7.

Mr Tony Qayum (Head of Audit Services) presented a report. The report summarised progress with tackling social housing fraud, achieved since March 2010.

Officers reported that discussions had taken place with CMT to consider ways of continuing this initiative given the issues around future funding. Officers acknowledged that, whilst the Housing Fraud Team had made significant progress, there were question marks over the continuation of the government funding for tackling housing fraud. Mr Naylor (Corporate Director Resources) expressed a wish to investigate the cases, listed in the report, (paragraph 4.7)  further to establish the profile and circumstance of those involved (i.e. to establish who exactly the properly were being unlawfully let out to). A further report looking at this could be borough back to a future meeting. This could look at the methods for gathering evidence and could explore the merits of the tests.

It was also reported that Officers explored good practice and achievements elsewhere to identify innovative ways of tacking social housing fraud. The Council encouraged the practice of whistle-blower.  The whilst-blowing policy was well publicised to encourage people to come forward. The Committee discussed way of encouraging more people to come forward.   It was also reported that THH routinely carried out tenancy Audits and were working closely with the Social Housing Fraud Team in delivering the results.

The Committee also discussed the exact benefits to the Council of carrying out this work and the Council’s legal powers as a Landlord in gaining access to properties.

RESOLVED:

That the content of the report be noted.

Mr Tony Qayum (Head of Audit Services) presented the Annual Anti Fraud Report including a summary of investigations carried out by the Housing Benefits service, the Parking Service and Insurance Services.  Following a briefing discussion where Mr Qayum highlighted the key findings and successes, it was:

RESOLVED

That the content of the report be noted.

Mr Tony Qayum (Head of Audit Services) presented the report. Following a brief discussion where Mr Qayum explained the purpose and background to the National Fraud Initiative and the statutory framework, it was:

RESOLVED:

That the contents of the report be noted. 

Mr Alan Finch (Service Head, Corporate Finance) presented the report which advised the Committee of treasury management activity for the current financial year up to 31^st August 2010.

Members noted the current criteria for investment, the investment strategy, and returns for the period which were higher than expected.

In reply to questions, Mr Finch reported that Officers were constantly seeking to maximize returns on investments within the present criteria. The Council reviewed the scheme on a regular basis and frequently held meetings with its Treasury Advisors to consider the strategy. Members noted the merits of minimizing exposure, given current market conditions.

It was noted that the current balance was higher than anticipated at the start of the year. Mr Finch reported that the balance was likely to fall to the levels of previous years, due to the plans to pursue existing housing opportunities.

RESOLVED:

That the content of the report be noted.