Agenda and minutes

Audit and Risk Management Committee
Wednesday, 7th March, 2018 7.00 pm

Venue: Conference Room, Civic Centre, Silver Street, Enfield, EN1 3XA. View directions

Contact: Metin Halil 

Items
No. Item

507.

WELCOME AND APOLOGIES FOR ABSENCE

Minutes:

Councillor Maguire (Chair) welcomed everyone to the meeting.

Councillor Maguire also welcomed Fay Hammond (Director of Finance) to the meeting.

 

Apologies for absence were received from Councillors Doris Jiagge, Toby Simon, Ertan Hurer and Peter Nwosu (Independent Member).

Apologies for lateness was received from Councillor George Savva.

 

There was a private meeting between Members and BDO (External Audit), before the start of the scheduled Committee meeting at 06:45pm in Room 6.

 

 

 

508.

DECLARATION OF INTEREST

Members of the Committee are invited to identify any disclosable pecuniary, other pecuniary or non - pecuniary interests relevant to items on the agenda.

 

Minutes:

There were no declarations of interest.

 

509.

BDO - PROGRESS REPORT 2017/18 - 7:05 - 7:15

To receive from BDO (external auditors) a progress report on the external audit.

(TO FOLLOW)

Minutes:

RECEIVED from BDO (external auditors) a verbal progress update on the external audit for 2017/18.

 

1.    David Eagles (BDO) provided a verbal report.

2.    This verbal report was to provide the Committee an update to where BDO were in relation to the post closed position of the audit for 2017/18.

3.    The 2 audit plans are key documents to present at this stage to the committee which follows BDO’s planning process. In the meantime, BDO have had a lot of discussions with officers about the issues that caused problems with the closure of accounts last year.

4.    Andrew Barnes (BDO) would clarify some of those issues which led to that, regarding valuations.

 

AGREED to note the progress report on the external audit 2017/18.

 

 

510.

BDO - EXTERNAL AUDIT PLAN 2018/19 - 7:15 - 7:30 pdf icon PDF 98 KB

To receive a report from BDO (External Auditors) presenting the 2018/19 Audit Plan.     

(TO FOLLOW)

Additional documents:

Minutes:

RECEIVED a report from BDO (External Auditors) providing the 2016/17 Audit Plan. The report was introduced by Andrew Barnes and David Eagles.

 

NOTED

 

1.    The 2 documents presented under this item are:

·         The Council Audit Plan, as detailed at pages 1-21 of the report.

·         The Pension Fund Audit, as detailed at pages 23-39 of the report.

2.    The Council Audit Plan - This was the equivalent document that has been presented to the committee over the past 2 years, in terms of setting out what the key issues are that need to be addressed, as part of delivering the Council’s audit for 2018/19. The key risks to highlight to the committee are detailed on pages 11-14 of the report. BDO need to make sure that these risks are covered off and there is sufficient assurance for these during the long undertaking of completing the work.

3.    Andrew Barnes (BDO) highlighted some key issues from the report:

     The key risks under the Financial Statements risk area were as follows:

a.    Management override.

b.    Revenue recognition.

c.    Property, plant & equipment, Investment properties and Surplus assets valuations and accounting.

d.    Pension liability assumptions.

e.    Cash flow statement and disclosure notes.

f.     Group Accounting.

g.    Meridian Water and other re-generation projects.

h.    Consideration of related party transactions.

i.      Fraud and error.

4.    The key risks under the Use of Resources risk area were as follows:

a.    Sustainable finances.

b.    Meridian Water and other regeneration projects.

5.    The Property, Plant and Equipment risk (as above 3 c.) was an area that BDO had some difficulties with  last year, but have now engaged with the property team and finance team at an early stage. BDO had some feedback on the Valuation Commissioning document, that will be looked at by the valuers and a response back from the Head of Property, in respect of that.

Information from the valuers, as regards the 2018/19 closure of accounts, will be challenged by the property team to ensure they are satisfied,  that it has been done robustly and explanations are provided. This should make the process work more smoothly this year.

Because of the nature of the Council’s financial statements, which includes more than a £1 billion  worth of assets on its balance sheets, there is a potential areas for it to be wrong and BDO would have to look at this area more closely.

6.    The following issues raised in response to the Council Audit Plan:

a.    The Chair asked how BDO would test a sample of fees and charges. Andrew Barnes clarified that 2 key areas are checked in respect of revenues:

·         Complete Revenues – To make sure the Council have captured what they are due.

·         Existence Revenue – To make sure items are reflected in the statement of accounts, making sure the reason that has been reflected is genuine and there is genuine monies behind that.

b.    Councillor Dogan, in respect of the revenue recognition risk, wanted to know further about the testing of a  ...  view the full minutes text for item 510.

511.

2017/18 TREASURY MANAGEMENT STRATEGY & PRUDENTIAL INDICATORS - 7:30 - 7:45 pdf icon PDF 834 KB

To receive a report from the Executive Director of Finance, Resources & Customer Services presenting the Council’s proposed 2018/19 Treasury Management Strategy & Prudential Indicators.

 

Additional documents:

Minutes:

RECEIVED a report from the Executive Director of Finance, Resources & Customer Services setting out the Council’s 2017/18 Treasury Management Strategy Statement & Prudential Indicators.

 

NOTED

 

1.    The Treasury Management Strategy was approved at full Council on the 21 February 2018 and any comments the committee have will be picked up at the mid-year review. Next year, the team are hoping to bring this item earlier to committee so that comments can be fed in at an earlier stage.

2.    As detailed at Section 2 (page 3) of the report, policies and objectives haven’t been changed as compared to previous years. Section 2 sets out the issues that have been taken into account when undertaking external borrowing. The investment strategy of the Council continues to focus on 3 principles; Security, Liquidity and Return, in that order of importance.

3.    Section 3 (pages 3-5) of the report, sets out reporting requirements, procedures and scheme of delegation. Including, where the Audit & Risk Management Committee’s role fits into that as regards scrutiny before being recommended to full Council. The Committee is responsible for scrutiny and review of the treasury management policy and procedures and making recommendations to the responsible body.

Finance have to provide 3 main reports each year on the treasury management strategy, this being one of them, a mid-year treasury management report and an annual treasury report.

4.    As detailed on page 5 of the report, the 2018/19 Treasury Management Strategy covers  two main areas:

·         Treasury Management Issues

·         Capital Issues

           The items covered under each of the headings above are what the strategy covers, as detailed on page 5 of the report.

5.    Some of the key areas that were highlighted:

a.    Training & Consultancy – In the past, finance had provided some training sessions for Audit & Risk Management Committee members and are able to do the same if required. At present, finance are using Link Asset Services as the Council’s treasury advisers, providing advice and training where necessary including council officers.

b.    Borrowing Strategy – The Council will not borrow more than or in advance of its needs purely to profit from the investment of the extra sums borrowed. Any such decision will be taken within approved Capital Financing requirements. An exercise will be done to demonstrate whether or not it would provide value for money. When the exercise was done, it proved it didn’t so finance did not go ahead with that.

c.    Debt rescheduling – More recently, short term interest rates have been very low and debt rescheduling is something people consider. Finance had not found this to be viable so far, because of penalties that have to paid to redeem the debt earlier. Finance have been looking at the best mix of short and long term loans for each borrowing decision the council make.

d.    Investment Strategy – As detailed at Appendix 4A on page 11 of the report, Table 1 sets out the approved investment counterparties and limits and all those are in accordance with the guidance.

e.    Existing  ...  view the full minutes text for item 511.

512.

DWP IMPLEMENTATION OF UNIVERSAL CREDIT IN ENFIELD - UPDATE - 7:45 - 7:55 pdf icon PDF 227 KB

To receive the report of the Executive Director of Finance, Resources & Customer Services providing the DWP Implementation of Universal Credit in Enfield.

(TO FOLLOW)

Additional documents:

Minutes:

RECEIVED the report of the Executive Director of Finance, Resources & Customer Services presenting the DWP Implementation of Universal Credit in Enfield – Update.

 

NOTED

 

1.    The report was presented by Sally Mcternan (Assistant Director – Community Housing), providing a quarterly update on the rollout of Universal Credit in Enfield.

2.    Universal Credit (UC) is a government administered scheme and the Department of Work & Pensions (DWP) have adopted a phased rollout of UC in Enfield, as detailed in the table at 3.1 (page 1 -To Follow (2) agenda) of the report.

3.    Since the last committee meeting, the Enfield Job Centre Plus have completed its rollout for all postcodes served by that office now live for new UC claims. It is anticipated that the whole of Enfield will be rolled out by 31 May 2018.

4.    Since the last report, the Government has responded to some elements of design of UC and the DWP has responded to significant public concerns. Such as the claimant not being paid for the first 7 days after making a claim. The government has now reversed those decisions regarding scheme design elements.

The issue now was that the DWP have to amend their systems in order to deliver those changes. As a result, there are different elements applied to an applicant of UC, dependent on the date on which they make their claim. There is a roll out programme for all the amendments and fixes to be concluded by early summer 2018.

5.    The impact on Enfield is detailed at 3.8 of the (To Follow 2 agenda) report onwards. The DWP have reported to Enfield that 1400 full service UC claims had been made in Enfield since roll out began on 1 November 2017.

6.    The Enfield food bank is reporting an increase in use-age. Since January 2018, 571 households have required assistance with emergency food provision.

7.    There have been 211 Housing Benefit (HB) claims cancelled since 1 November 2017 as claimants’ transition onto UC.

256 council tenants are now in receipt of UC equating to 2.59% of the tenant body. However, housing revenue account arrears associated with UC claims accounts for 11.2% of the total value of arrears. So there is a disproportionate amount of debt which is owed to the Council by people who are in receipt of UC.

55 homeless households in temporary accommodation are in receipt of UC, which is 1.7% of the total tenant body.

General fund rent arrears associated with UC claimants accounts for 4.3% of the total value of arrears.

538 households receiving Council Tax Support are on UC.

8.    The Housing Benefit case load, which stood at 34,000 as at Jan 2018, is now showing a small but significant reduction because we are seeing people in the EN3 post code coming away from the Council’s HB payment system and on to UC.

9.    As detailed on page 5 of the report, a rag rated document that the Executive Director of Finance, Resources & Customer Services uses, as the  ...  view the full minutes text for item 512.

513.

INTERNAL AUDIT PROGRESS REPORT 2017/18 - 7:55 - 8:05 pdf icon PDF 558 KB

To receive the report of the Executive Director of Finance, Resources & Customer Services summarising the work that the Internal Audit and Risk Management Service (ARMS) has completed for the period 1 April 2017 to 28 February 2017.

(Report No.156)

Minutes:

RECEIVED the report of the Executive Director of Finance, Resources & Customer Services (No.156) summarising the work of the Internal Audit & Risk Management Service for the period between 1 April 2017 and 28 February 2018.

 

NOTED

 

1.    Chart 1, highlighted at 3.4 (page 26 of the report) detailed progress against the internal audit plan for 2017/18. The team had commenced 72 assignments (99% of the current plan) of which 36 (49%) have been completed. Since the audit plan was approved by the Committee in March 2017, 18 assignments had been added to the plan and six had been deferred or cancelled, as detailed in Appendix 2 (page 37) of the report.

2.    Table 1 (page 27) of the report, highlights 36 completed assignments.

3.    Detailed at 3.7 (page 28) of the report, 78 actions for improvement had been agreed with managers, including 6 relating to high risk findings.

4.    Since the last report, 15 reports had been finalised, three of which were given Limited assurance. Further details of the three limited assurance audits can be found at 3.9 – 3.11 (pages 28-29) of the report.

5.    Managers’ progress with implementing internal audit recommendations are summarised in Chart 3 (page 30) of the report. Overall, 64% of high priority recommendations and 50% of medium risk priority recommendations had been fully implemented.  This was an improvement since the last audit. The chart at 3.14 (page 30) of the report, details what the different departments are achieving.

6.    Counter fraud results are detailed at Table 2 (page 30) and Table 3 (page 31) of the report. Table 2 shows the overall achievements of the team and Table 3 highlights the team’s savings analysis. There is a more detailed summary of the Counter Fraud team’s activities detailed at Appendix 3 (pages 38-39) of the report.

7.    Table 4 (page 32) of the report, highlights the team’s Quality Assurance Measures detailing the targets set and the actual average figures achieved to date. By the End of March 2018, 95% of assignments would be at draft report stage.

8.    Appendix 1 (pages 35-36) provides a summary of the 2017/18 Audit Plan status as at 28 February 2018. The right hand column of the table highlighted whether the team were on target. Most of the audits were green which meant that they were at the stage the team wanted them to be, some are amber and a few are red meaning the team were a couple of months behind.

9.    The red risks were as follows:

a.    FRCS – Budgetary control – Audit of looking into the council’s processes for actioning savings targets. Unable to programme meeting dates in the diaries of key managers.

b.    FRCS – CAM (phase 1) – Continuous audit monitoring audit. The team were still trying to clear some of the exceptions identified.

c.    FRCS – Pensions – Some problems regarding assistance from the pension team regarding testing. Should be resolved in a few days.

d.    R & E – Highway Services

10.The following  ...  view the full minutes text for item 513.

514.

DRAFT 2018/19 INTERNAL AUDIT PLAN AND INTERNAL AUDIT CHARTER - 8:05 - 8:20 pdf icon PDF 393 KB

To receive the report of the Executive Director of Finance, Resources & Customer Services presenting the draft 2018/19 Internal Audit Plan.

(Report No.157)

 

 

 

Minutes:

RECEIVED the report of the Executive Director of Finance, Resources & Customer Services (No.157) presenting the draft 2018/19 Internal Audit Plan and Internal Audit Charter.

 

NOTED

 

1.    The report was introduced by Christine Webster, Head of Internal Audit & Risk Management.

 

a.    This report included the draft internal audit plan 2018/19 and the refreshed Internal Audit Charter.

b.    The proposed plan is presented in Appendix A (pages 49-53) of the report and follows the process the section took to identify the audit areas.

c.    The diagram detailed at Section 1 (page 47) of the report walks through the different steps which enabled the team to link the plan to the Council’s Strategic objectives and risks and identifying the auditable units.

d.    The auditable units are then risk assessed against the inherent risks and mapped against those environment controls, already known about. This results in only targeting resources in areas where there is a high residual score.

e.    The summary table detailed on page 48 of the report, summarises the split of internal audit days across departments and a grand total of 985 days, which is a slight reduction from last year. In our efforts to save money for the Council and with current resources, the team should be able to achieve the audit plan through the year.

f.     Detail on the proposed internal Audit plan for 2018/19 is provided in section 2 (pages 49-53) of the report.

g.    Section 3 (pages 54-57) of the report details the Internal Audit Charter for 2018/19 and is a compilation of the Public Sector Internal Audit Standards (PSIAS) which requires the authority to have a charter. It shows how the team will deliver its work, the approach taken and what is required from managers, in return. It is a refresh from last year’s version.

 

2.    The Chair thanked Christine Webster for her report.

 

AGREED that the draft 2018/19 Internal Audit Plan & Internal Audit Charter be approved, subject to any final comments or amendments from members or officers.

 

515.

RISK MANAGEMENT STRATEGY 2018/19 - 8:20 - 8:30 pdf icon PDF 151 KB

To receive the report of the Director of Finance, Resources & Customer Services providing a summary of the Council’s Corporate Risk Management Strategy.

(Report No.158)

 

Additional documents:

Minutes:

RECEIVED the report of the Executive Director of Finance, Resources & Customer Services (No.158) presenting a refreshed Corporate Risk Management Strategy for the Council.

 

NOTED

 

1.    The Risk Management Strategy is refreshed on an annual basis usually, but the last time it was presented to the committee was in 2016. The team delayed a refresh of the document in 2017 because the Culture Review was being undertaken. The team felt that there may be a possibility that they may want to change the focus of the strategy.

2.    The Council has committed to embrace a more constructive style which allows for greater creativity, flexibility and innovation. Managers should have a greater understanding of risks that could arise and therefore the team have had to simplify the strategy. This would make it more understanding for a wider range of people.

3.    The strategy encourages a wider range of groups to undertake risk management. This has been simplified and is summarised in a flow chart on page 74 of the report.

4.    The following issues raised by members in response to the report:

a.    The Chair wished to know more about training. Christine Webster clarified that there was a risk monitoring officer in the team. The team offers group or one to one training. A module has been compiled and is available on the i learn platform where people can do a computer based training exercise. The team also facilitates risk work shops i.e. putting together a risk register for the first time.

b.    Councillor Dogan asked if the team updates training on different risks that may arise. Christine Webster clarified that at departmental level risks are assessed which feed into the risk registers bought to committee and then at a lower level of operation, risks are reviewed.

c.    Cyber risks are identified in the ICT operational risk register.

5.    The Chair thanked Christine Webster for her report.

 

AGREED to note and endorse the refreshed Risk Management Strategy 2018/19.

 

516.

COUNTER FRAUD STRATEGY AND ACTION PLAN 2018/19 - 8:30 - 8:40 pdf icon PDF 456 KB

To receive a report from the Executive Director of Finance, Resources & Customer Services providing an update on the Counter Fraud Strategy and Action Plan.

(Report No.159)

 

 

Minutes:

RECEIVED the report (No.159) of the Executive Director of Finance, Resources & Customer Services presenting an updated Counter Fraud Strategy and Associated Action Plan for the Council.

 

NOTED

 

1.    The report was presented by Christine Webster, Head - Internal Audit & Risk Management, highlighting the following:

 

a.    The Counter fraud Strategy was last updated in March 2017 and minor amendments had been made to reflect changes in key contacts and organisational structure within the Council. The main change is that it has been expanded to become a Counter Fraud Bribery & Corruption policy. So the strategy now includes bribery.

b.    The Counter Fraud Action Plan is presented at on pages 102-105 of the report. This focusses on the Council’s exposure to fraud risk. It identifies 10 different categories of fraud risk and who is responsible for mitigating those risks.

The key thing to note is that it is not the Counter Fraud teams’ responsibility to mitigate risks, but they do have some responsibility like preventing and detecting fraud wherever they can. The ARMS service part of the action plan forms the business plan for the counter fraud team and that will form the 2018/19 work of the counter fraud team, which Christine Webster will report back to the committee

c.    The Policy Statement (Counter Fraud, Bribery and Corruption Statement) is appended at page 88 of the report and once endorsed by the commitee, it will be signed by the Chief Executive and Leader of the Council and published onto the Audit & Risk Management Service’s web pages.

2.    The following issues raised in response to the report:

a.    Councillor Savva asked if the team had taken on any extra staff to deal with fraud. Christine Webster clarified that there hadn’t been any apart from a seconded officer into the Right to Buy team. The team were also running a pilot alongside the No recourse to public funds team. So there are additional personnel in those particular areas.

 

AGREED to endorse the Counter Fraud Strategy, including the Counter Fraud, Bribery and Corruption Policy Statement and Associated Action Plan and to note the continuing actions that are being undertaken to manage the Council’s fraud risk exposure, including the Counter Fraud team’s plan of work for 2018/19.

 

517.

MINUTES pdf icon PDF 233 KB

Audit & Risk Management Committee

 

a.         To receive and agree the minutes of the Audit Committee meeting held on Thursday 11 January 2018, as a correct record.

 

 

b.         To note the update on actions identified at the last meeting.

 

Additional documents:

Minutes:

NOTED the progress update on actions identified at previous meetings.

 

AGREED that the minutes of the Audit & Risk Management Committee held on Thursday 11 January 2018 be approved and signed as a correct record.

 

518.

AUDIT & RISK MANAGEMENT COMMITTEE WORK PROGRAMME 2018/19 pdf icon PDF 180 KB

To consider and comment on the Committee’s draft work programme for 2018/19.

 

Minutes:

RECEIVED an outline work programme for the Committee covering the 2018/19 Municipal Year Committee.

 

NOTED

 

1.    The Treasury Management Strategy and Prudential Indicators report will be heard at the October 2018 committee meeting instead of the March 2019 meeting.

 

AGREED to approve the outline work programme for 2018/19.

 

519.

DATE OF FUTURE MEETINGS

Members are asked to note:

 

(a)      that this is the last ordinary meeting of the Audit & Risk Management Committee scheduled for the 2017/18 Municipal Year;

 

(b)      that a new programme of dates for the 2018/19 municipal year are currently being prepared for inclusion and approval as part of the Council’s 2018/19 calendar of meetings, which is due to be considered and approved at the Annual Council meeting on 23 May 2018.

 

The provisional dates being included on the calendar for consultation purposes will be provided for members as soon as they have been finalised.

 

Minutes:

NOTED that this had been the last meeting of the Committee for the 2017/18 Municipal Year. A new programme of dates for 2018/19 are currently being prepared for inclusion on the Council’s calendar of meetings due to be approved at the Annual Council meeting on 23 May 2018.