Mr Paul Rock, Head of Internal Audit, Anti-Fraud and Risk stated the report provided members with an update on the progress made against the delivery of the 2021/22 Annual Audit Plan and highlighted any significant issues since the last report to the Audit Committee in July 2021. An update on anti-Fraud activity was also included in the report.

Mr Rock said a total of six audits had been finalised this quarter, of which four had achieved a limited assurance. Mr Rock said there had been a change in emphasis in how assurance reports are reported, with a move away from reporting by exception to reporting a more balanced view, including those areas which had achieved a reasonable assurance. Hence the good and the challenging areas were being reported on. He said one report relating to contract monitoring had been split into two to show the split opinion. Mr Rock said officers from the service areas were present for the meeting to provide an update on the assurance and the actions taken to remedy the recommendations made by the Internal Audit team.

Mr Rock highlighted the anti-fraud activity and said the new Fraud Prevention Officer was having a positive impact. He said a wide range of work designed to raise awareness of fraud across the authority had started to improve fraud prevention measures. He said the easing of Covid-19 restrictions meant the fraud investigation teams had started to clear the backlog of cases to investigate, with 28 properties being recovered this quarter relating to social housing fraud. Mr Rock said good progress had been made in relation to NFI matches – national fraud initiative, which had led to some positive outcomes. Mr Rock said there needed to be an increase in management activity across the full range of reports and as such he was meeting with key officers to offer advice and support on how they might manage that workload, especially where there had been a high number of matches.

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

• Councillor Edgar commented he was pleased the Fraud Prevention Officer was having a positive impact and said it was important to raise awareness cross the whole council. Referring to page 50 onwards and the NFI matches, Councillor Edgar questioned why there were a high percentage of closed cases. He said he appreciated not every match resulted in an investigation but queried why, for example blue badge fraud resulted in 253 cases being closed. Mr Rock responded stating he had two officers dedicated to blue badge fraud and this area was considered a high priority. He said from experience, the deceased data from DWP was not reliable and therefore additional inquiries to confirm a person had passed away had to be made before action is taken to remove the badge. Mr Rock said due to the number of matches, areas were categorised as high, medium and low priority and resources were targeted towards those where officers can achieve results. Mr Rock said dip sampling was used as a method to drill down into areas where they needed to spend more time to maximise the impact for the Council. 

• ACTION: Mr Rock to look at how the work of the National Fraud Initiative is promoted and communicated to residents of Tower Hamlets.

• In reference to page 47, paragraph 3.4, Mr Rock confirmed the responses from management in relation to high and medium priorities had improved significantly. Mr Rock said feedback was provided to each DLT which allowed managers to monitor their recommendations and actions.
• In response to why there had been an improvement, Mr Rock said this was due to a combination of things, from better engagement with managers and a move away from making recommendations to identifying issues. Mr Rock said by raising issues managers had the opportunity to identify the best action to resolve the issue and this had resulted in DLT’s being more responsive.

The Chair thanked Mr Rock for his report before inviting the Officers to address their individual reports which had received ‘limited’ assurance following Internal Audit’s assessments.

Contract Monitoring of Extra Care Sheltered Housing and Contract Monitoring of Integrated Community Equipment Store

Mr Warwick Tomsett, Joint Director of Integrated Commissioning stated the recommendations made by Internal Audit had been actioned and the service was on track to implement changes by the end of the calendar year. Mr Tomsett said the contract framework for this area of business as well as others were subject to a restructure and he hoped this would be an opportunity to embed consistency into processes for contract management across all contracts.

The Chair thanked Mr Tomsett for his update and said it was clear Internal Audit was adding value to the way services are shaped and delivered.

Members of the Committee had no questions for Mr Tomsett.

Aluminium Composite Material (ACM) Information and Record Management

Ms Karen Swift, Director for Housing stated that collating data on private sector tall buildings was a mammoth task and two full time equivalents were employed to undertake this work. Ms Swift said there were over 800 private sector building and 74 Tower Hamlets Homes buildings, that required classification. Ms Swift said the collation of data was an iterative process, with information being updated on databases, with only a small number of cases requiring legal action. She said the audit findings in relation to letters and phone calls being logged and decisions on if legal action was required against building owners, was something that needed to be addressed. She said they were closely working with the IT department to establish a database that was fit for purpose, rather than rely on excel spreadsheets. She said they had been in touch with Southwark Council who had done a lot of work in this area and Northgate to see what services they could provide. Ms Swift said an ICT project manager had been employed and weekly updates on different options available were being looked at.

Ms Swift said the conversation had moved on from ACM materials and the government’s External Walls Survey (EWS) was looking at other dangerous materials used on buildings other than ACM. She said the EWS had identified 897 buildings, of which 140 still needed to reply. Ms Swift said that despite using different tactics such as writing letters, visiting etc there were intractable legal entity issues which prevented responses being received. Ms Swift said the government’s Delta database needed to join up with other databases such as the GLA database to ensure the information held on building safety was correct. Ms Swift said the recommendations of the Hackett review and those of the Overview and Scrutiny Committee had been the cornerstone of the work done on building safety, with a report going to Cabinet in November on the progress made.

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

• The Internal audit report had added value to the work on ACM and data collection, however much of the work had already started with the ACM and EWS government surveys. Ms Swift said it was clear resilience needed to be built into the system and as such her team was working closely with IT to look at all the different options. She said any prosecution would be under the Housing Act, which sits within regulatory services and therefore they needed to think carefully about whether it was useful to operate a case management system for all buildings. She said this would involve investment and cost, or if data should be transferred onto a case management system at the point where a building owner is being prosecuted.
• Following the ACM and EWS surveys, the team had quickly adapted the way in which data is collated. To avoid paperwork coming into the Council, the EWS survey was conducted online, with building owners completing information themselves. Ms Swift said she’d be happy to report on the progress made at a future meeting of the Audit Committee.

• ACTION: Ms Swift to provide an update on the progress made to build resilience into the data collection system, for building safety. Ms Swift to be invited to the March 2022 meeting of the Committee.

The Chair thanked Ms Swift for her update and said she looked forward to hearing the progress made in relation to ACM and record management.

Payroll

Mr Damion Kennedy, Payroll Manager stated the recommendations made by Internal Audit were being actioned and were due for completion by the end of the calendar year. He said the work relating to reconciliations, was being undertaken by the Finance Team, as discussed earlier as part of the Finance Improvement Plan. Mr Nisar Visram, Director for Finance, Procurement and Audit added the processes, documentation and the separation of duties were all being put in place, with clear procedures being drafted which were to be actioned shortly.

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

• Councillor Edgar asked what progress had been made in relation to the exception reports run by payroll. Mr Damian Kennedy said of the 44 reports mentioned, only 20 were applicable and as such he was in the process of tidying up the number of reports run. He said he was writing a procedure note, making it clear what exception reports were required.

The Chair thanked Mr Kennedy for his update and stated the Committee appreciated the work required in relation to the reconciliation of the payroll system.

Contract Monitoring of Children’s Commissioned Services – Campbell Road Young People’s Support

Ms Judith St John, Director for Commissioning and Culture said the internal audit report was a very important audit which deep dived into one specific area. However, lessons from this would apply to other areas where services are commissioned. She said of the five areas identified, further work was needed which she hoped would be complete by December 2021. She said to ensure consistency, staff were encouraged to use the contract management guidance and toolkit as well as ensure everything was documented. She said staff had found it difficult to provide the information required due to the pandemic but notwithstanding this, the changes and the tightening of procedures meant they were in a much better position and on track to deliver by December.

Members of the Committee had no questions from Ms St John.

The Audit Committee RESOLVED to:

1. Note the contents of this report and the overall progress and assurance provided, as well as the findings/assurance of individual reports.