Agenda and minutes

Audit and Risk Management Committee
Thursday, 26th July, 2018 7.00 pm

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

Contact: Metin Halil 

Items
No. Item

678.

WELCOME AND APOLOGIES FOR ABSENCE

Minutes:

Councillor Savva (Vice-Chair) welcomed everyone to the meeting.

Councillor Savva would be chairing the meeting in the absence of the Chair Councillor Mahym Bedekova.

 

Apologies for absence were received from Councillors Bedekova, Daniels, Leaver, Demirel and Jeremy Chambers (Director of Law & Governance).

 

The Vice-Chair noted that this was the third consecutive meeting that Councillor Jon Daniels was absent.

Councillor Lindsay Rawlings attended the meeting as an observer.

 

Also attending was Gerald Chanduru (BDO – External Audit)

 

A private member training session took place before the meeting with Finance Officers providing the ‘2018 CIPFA publication on Audit Committees’ before the start of the meeting (30 minutes).

 

 

 

679.

DECLARATION OF INTEREST

Members of the Audit & Risk Management Committee are invited to identify any dis-closable pecuniary, other pecuniary or non – pecuniary interests relevant to items on the agenda.

Minutes:

NOTED

 

Peter Nwosu (Independent Member) declared that he was an Independent Director of Housing Gateway Limited and Enfield Innovations Limited, which are two of the Councils Companies.

680.

ORDER OF AGENDA

Minutes:

AGREED that the order of the agenda be varied, at the request of BDO (External Audit) so that the Pension Fund Audit Completion Report 2017/18 could be heard first.

The minutes follow the order of the meeting.

 

681.

BDO - PENSION FUND AUDIT COMPLETION REPORT 2017/18 - 19:20 - 19:30 pdf icon PDF 474 KB

To receive from BDO (external auditors) a report highlighting the key issues arising from the Council’s Pension Fund financial statements for the year ending 31 March 2018.

(TO FOLLOW)

Minutes:

RECEIVED from BDO (external auditors) the Audit Completion Report on the Pension Fund 2017/18.

 

NOTED

 

1.    The report was presented by David Eagles (BDO).

2.    The audit had gone very well with only trivial items coming out of the work, listed on page 4 of the report.

3.    BDO’s materiality had been reduced slightly downwards based on the final draft accounts compared to the budget situation. There were no material misstatements with only two minor uncorrected items listed.

4.    There were no issues with internal control at all and no other financial issues to report for this audit.

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

a.    The Vice-Chair asked if the trivial points mentioned could be resolved quickly and by the statutory deadline of 31 July 2018. David Eagles (BDO) clarified that the Pension Fund Audit was ready to go and would meet the 31 July 2018 deadline.

b.    David Eagles clarified that in terms of the main audit, meeting the deadline would be very tight. There was a question about whether it would be possible to de-couple the signing of the pension fund side so as to be absolutely sure that it goes by the 31 July 2018.

c.    Fay Hammond (Director of Finance) wanted to highlight the fact that there were some issues with the pension fund audit last year and wants to recognise officers’ contribution and improvement from last year’s position to the current audit. David Eagles further comments that the amount of work that had gone into addressing the issues last year to address the massively accelerated time line this year, are quite significant. BDO were worried last year but Paul Reddaway and his team have put in a massive effort to address that and it is recognised.

 

AGREED that the Audit Completion Report on the 2017/18 Pension Fund Accounts be noted.

682.

BDO - LBE AUDIT COMPLETION REPORT 2017/18 - 19:05 - 19:20 pdf icon PDF 313 KB

To receive from BDO (external auditors) a report highlighting the key issues arising from the Council’s financial statements for the year ending 31 March 2018.

(TO FOLLOW)

 

 

Minutes:

RECEIVED from BDO (external auditors) the Audit Completion Report on the Statement of Accounts 2017/18.

 

NOTED

 

1.    The report presented BDO’s audit findings of the 2017/18 Statement of Accounts, the financial statements opinion. The report was introduced by David Eagles (BDO) and was presented in the ‘3rd To Follow Agenda’.

2.    David Eagles gave his apologies for the late report. BDO’s focus had been on resolving issues within the audit and had failed, in getting the document itself, out to members to read as early as they should have had. The document itself has a lot of content, is very technical and not a trivial read and to provide the report to members at such short notice was regrettable and he was sorry it had come through so late.

3.    David Eagles went through the report overview (pages 4-6). There were still some items that needed to be concluded on. BDO had not identified any additional significant audit risks that needed reporting to the committee. The final materiality (page 4) was only changed because of the final figures in the draft financial statements.

There were a number of items which had been corrected and are listed on page 5 of the report. Some of these related to capital classifications but there was no massive bottom line effect for revenue balances.

4.    The committee were directed to page 7 of the report, outstanding matters, where items were outstanding as at the 20 July 2018:

Item 1 - Work was now completed in terms of laws & regulations, contingencies and cash flow movements. There was only one outstanding item in respect of creditors.

In terms of ‘Consistency checklist’, this was something undertaken at the beginning of the audit with the first draft statement of accounts and at the very end. This was to ensure that there were no anomalies after putting all the adjustments through.

In terms of group consolidation work, BDO had draft accounts for Housing Gateway but were still waiting for the final signed off version so as to complete the audit.

In respect of valuation of surplus assets, the CIPFA code requires these assets to be valued on the basis of highest and best use. BDO’s question was what that highest and best use should be in context of the Meridian Water Project and whether that should be residential, industrial or a mix of the two. A significant amount of work had been done by officers to help support this and information provided to BDO. David Eagles didn’t think there would be an issue at the end of this process.

In respect of accounting treatment for loans given to Housing Gateway Ltd and subsidiaries, an obscure item of capital finance regulations and code guidance had come to light. Suggesting previous treatment of this item was inappropriate. BDO have worked through the item and officers had produced some working papers to get through the adjustments. This was unfortunate and was something BDO could not ignore having found the issue.

5.  ...  view the full minutes text for item 682.

683.

FINAL AUDITED ANNUAL STATEMENT OF ACCOUNTS 2017/18 & ANNUAL GOVERNANCE STATEMENT - 19:30 - 19:45

To receive the report of the Executive Director Resources presenting the Audited Annual Statement of Accounts for the 2017/18 financial year along with a schedule of the agreed adjustments between the draft and final statement.     

 

 (Report No.51)

(TO FOLLOW)

 

 

 

Minutes:

RECEIVED the report from the Executive Director Resources requesting approval of the final audited 2017-18 Statement of Accounts for Member’s approval, to note the adjustments between the draft and final audited Statement of Accounts, in accordance with regulations and to note the 2017/18 Annual Governance Statement.

 

 

NOTED

       

1.    The report was introduced by Fay Hammond (Director of Finance).

2.    This was the formal introduction to the 2017/18 Statement of Accounts, having listened to what the external auditors have told the Committee and their analysis of it (detail at Item 3).

3.    BDO (external audit) are still trying to complete the accounts by the 31 July 2018 statutory deadline. However, there were still some Meridian Water project valuations that they were still working on and that it would be tight to complete the audit by 31 July 2018.

If there are any other unadjusted items that BDO have, they have to be communicated to those charged with governance. Unless BDO have a massive issue, these will be communicated by e-mail.

4.    Fay Hammond clarified that what is being proposed and what was being asked of the committee is to note this current Statement of Accounts (2017/18) and to recognise that we are not at the complete stage yet as we may need some adjustments. So we propose to delegate James Rolfe (Executive Director Resources) to agree those but in consultation with the Chair of the Audit & Risk Management Committee.

Finance will be happy to send those changes to the whole committee to make them aware of what those changes may be. But they will be those areas discussed today (Item 3) and are not expecting any other things to come out.

5.    Roy Baker clarified that if the committee are happy that any future changes are agreed between BDO and Finance in addition to those reported in BDO’s report (Item 3) and if the committee are happy for that to be delegated to James Rolfe, then the accounts can be signed this evening.

The Vice-Chair confirmed that he had put this proposal to the committee and it has been agreed.

6.    The following comments and queries in relation to the report:

a.    Peter Nwosu asked for clarity to what has been agreed regarding the signing of the accounts. Would it be changes to the accounts that are to be delegated to James Rolfe and the Chair of the Committee. Fay Hammond referred to the recommendations at 2.2 and 2.3 of the tabled 2017/18 Annual Statement of Accounts that had been tabled at the meeting.

Peter was concerned about any changes, as one would assume, would be in excess of £19m because of BDO’s materiality level of £20m. David Eagles clarified that that was correct, if BDO were requiring something to be amended then it would need to be a material issue. But BDO are required to report to those charged with governance, anything that is below that level, with our requirements.

Ultimately, the committee are signing up to say that they  ...  view the full minutes text for item 683.

684.

UNIVERSAL CREDIT IMPLEMENTATION UPDATE - 19:45 - 19:55 pdf icon PDF 324 KB

To receive the report of the Executive Director Resources presenting an update on the Universal Credit Implementation.

(Report no.49)

Additional documents:

Minutes:

RECEIVED the report of the Director of Finance & Assistant Director of Special Projects providing an update on the risks associated with the rollout of Universal Credit.

 

NOTED

 

1.    The report was presented by Sally Sanders (Head of Financial Assessment).

2.    The report was an update about the risks associated with the rollout of universal credit. The main thing to note was that the programme management of Universal Credit (UC) was now concluded because the rollout had been completed across Enfield.

3.    Universal Credit was now a fully rolled out service across Enfield for families with less than 3 children and the report is to provide an update of the risks and where the service was with the associated risks.

4.    Reference was made to the tabled spreadsheet of the identified risks. Many of the controls for the risks were now in place, some of the changes had been made by the Department of Works and Pensions (DWP) and many of the actions shown were still being worked on.

An example of this was UC01 Staffing, where since the rollout began in November 2017, the housing benefit caseload had only dropped by 1500 cases to 32k because of the increase in administration to UC. The department had not been able to reduce staffing levels in housing benefit (is ongoing) but when the migration comes in July 2019 then that is when the caseload will be impacted more.

5.    All of the controls detailed on the spreadsheet were in place for UC being rolled out.

6.    In response to the Chair’s request for any questions or comments, the following were discussed:

a.    In response to a question, raised by the committee, whether the UC rollout was chaotic as led to believe, Sally Sanders clarified that the department were trying to mitigate the impact of UC within the local authority. They were working closely with the DWP to make sure the residents are not impacted as much as they could be.

b.    Some of the controls in place are effective. It is challenging but the department are trying to work towards getting the best outcome for residents in the borough.

c.    James Rolfe clarified that the team were working well with the DWP and had done so for about 5-6 years. This was the latest in a series of welfare reforms to minimise the impact on customers and make it as smooth as possible. It is by no means perfect but nowhere near as bad as it has been portrayed. Even under the old housing benefit system, there were frequent changes made to it that caused quite a lot of challenges at operational level.

d.    In response to the Vice-Chair, Sally Sanders clarified that most of the work is done by both DWP and the housing benefit team. Housing benefit administration had been impacted by UC even though the DWP should be doing most of the work. When claimants approach housing benefit administration the team do not necessarily refer them to the DWP  ...  view the full minutes text for item 684.

685.

GYPSY AND TRAVELLER POSITION IN ENFIELD - 19:55 - 20:05 DOTX 35 KB

To receive a report from the Executive Director Place regarding travellers in the Borough.

(Report No.50)

 

Minutes:

RECEIVED the report of the Director of Property presenting the Gypsy and Traveller position in Enfield.

 

NOTED

 

1.    The report was presented by Gary Barnes (Director of Property).

2.    The understanding was that the committee had asked for a plan in relation to Gypsy’s and Travellers but unfortunately the department were not in a position that until there was an agreed policy decision. Therefore the report presented the updated position in terms of particularly:

·         the considerable increase in the numbers of traveller incursions that the council has faced over the past 3 years.

·         the cost related to the legal work the council has done  to remove them.

·         the cost of bailiffs, security and unfortunately fly tip clearance from sites.

3.    Over the past 3 years the council have spent in excess of £4.4m in terms of managing and dealing with considerable traveller incursions, mainly by criminal gangs.

4.    The council have been working very closely with the Environment Agency and the Metropolitan Police but unfortunately this gang or gangs work around the perimeter of the M25. This relates to the illegal collection of waste which is then dumped generating huge sums of money for the criminal gangs.

5.    Gary Barnes spoke about the GLA expectation of Enfield (as detailed within the report) and the need for the council to look at sitting down with the Metropolitan Police and in particular re-visiting the joint protocols and updating those. The council are doing a piece of work in terms of its Local Plan and developing a strategy for gypsys and travellers in terms of policing and planning.

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

a.    In response to the committee regarding criminal activity, waste and the kind of activity, Gary Barnes clarified the activity usually involves someone knocking at the door or flyers being posted through the door saying house clearance, garden waste, etc. There is a number on the flyer (mobile number) and then individuals turn, collect the waste and then fly tip.

b.    Most people are unaware that they are responsible, so they should be checking for a Trade Waste License which should be a clear license. The gangs normally clear homes and small businesses and then find a site to fly tip. When finding a site, the gangs force entry, maintain that entry with a few selected caravans and during the time they are on-site, they deposit huge quantities of waste. An example of this is the Rays Road site where within 3-4 days there was £100k worth of fly tip the council had to clear.

c.    Peter Nwosu what the timing was around getting the protocols with the Police and coming back with a business case. Gary Barnes clarified that he was in an interim role and that a new Director of Property had been appointed last week. However, in terms of the council’s local plan, the protocols would be part of the council’s local plan process. He would like to think that the joint  ...  view the full minutes text for item 685.

686.

SERVICE DELIVERY RISK REGISTERS UPDATE - PEOPLE AND PLACE - 20:05 - 20:20 pdf icon PDF 250 KB

To receive a report from the Executive Director Resources providing a Service Delivery Risk Registers update.

(Report No.52)

(TO FOLLOW)

 

 

 

Minutes:

RECEIVED the report of the Executive Director of Resources presenting registers for the Service Delivery operating areas of People and Place Departments.

 

NOTED

 

1.    Officers from relevant service areas were in attendance to address any questions about their registers. These are Tony Theodoulou (Executive Director of People), Bindi Nagra (Director of Health and Adult Social Care) and Jayne Paterson (Regeneration & Environment).

2.    The paper provides the register for the Council Services operating areas that cover People and Place.

3.    The Register contains 21 risks as summarised in the table at pages 2-3 (Para 3.6) of the 1st To Follow Agenda. One of the risks is assessed as green, two of the risks are assessed as red and the rest are all amber.

4.    The Service Delivery Risk register is provided in Appendix 1 (page 6 onwards) of the report.

5.    Tony Theodoulou talked about the red risk within Children’s Services (PEO1819-03 – Increased Service Demand) as detailed at page 7 of the 1st to follow agenda. This was about managing increasing demand within the available budget and that is the primary risk. This was born out at the last financial year’s budget out-turn where there had been an overspend of £2.2m. It was difficult to see how that would be reduced. This risk continues to be a financial pressure despite scaling activity back to what is considered to be a safe statutory minimum. Demand is increasing in many areas and the department are struggling to meet statutory deadlines within the budget envelope.

6.    Bindi Nagra talked about the red risk within Adult Social Care (PEO1819-10 – Market Stability and Sustainability) as detailed at page 9 of the 1st to follow agenda. This risk highlights the potential challenges to the care hierarchy relating to both residential and nursing home care providers.

Enfield has 100 care homes, 14 are nursing homes and the rest are residential care homes. The council has purchased about a third of those beds and the rest of the beds have been purchased by self- funders and the Clinical Commissioning Group’s (CCQ). The council have some responsibility for the market under the Care Act.

In terms of the cost of care, the council are the lowest payers for home care and residential nursing home care. The council buys both in terms of residential, nursing and home care.

The council believes that that there is potential always for their to be an issue with any of the care providers in terms of their stability i.e. driven by their finances, by equality issues or Care Quality Commission (CQC) safeguarding issues with the suspension of placements.

Within Enfield there are 2 Four Seasons care homes which the CQC have flagged up as appears to be in financial trouble. The council has virtually purchased all the beds in both of these care homes. If either of these homes fails in some way there would be a massive impact on the council as the department would not be able to  ...  view the full minutes text for item 686.

687.

INTERNAL AUDIT PROGRESS REPORT 2018/19 - 20:20 - 20:30 pdf icon PDF 309 KB

To receive the report of the Executive Director Resources summarising the work that the Internal Audit and Risk Management Service (ARMS) has completed for the period April to July 2018.

 

 (Report No.53)

(TO FOLLOW)

 

 

 

Minutes:

RECEIVED the report of the Executive Director of Resources summarising the work that the Internal Audit and Risk Management Service (ARMS) had completed for the period 1 April to 30 June 2018.

 

NOTED

 

1.    This was the regular progress report that Christine Webster (Head of Internal Audit) presents to the Audit & Risk Management Committee. To report to the committee how the Internal Audit Service is progressing with the delivery of the Internal Audit Plan for the year.

2.    This report presented the results of where the service are up to  as at 30 June 2018. The chart at 3.4 (page 16) of the report details the proportion of the audit plan at different stages.

3.    52% of the plan had been started and 3% had reached completion. The teams target is to achieve 95% of the plan to draft report stage by the end of the year.

4.    There had been some changes to the plan since it was first agreed and there have been 15 new assignments added with 2 to be deferred. Annex 2 (page 24 of the1st to follow agenda) details why those changes were made.

5.    There were 2 audits that had been completed and are detailed at 3.6 (page 17 of the1st to follow agenda).

6.    As detailed at chart 2 (page 17 of the1st to follow agenda) a summary of managers progress with implementing agreed audit actions from audit reports. From the audit reports completed over the past 2 years (and have been brought forward), the team have tracked 96 recommendations and 25 of those led to high risk areas. Overall, 44% of the high risk recommendations have been implemented, 11% of the medium risk ones and the rest have been progressed. This meant some action had been taken but not fully progressed. The team would continue to follow those until fully implemented.

7.    In terms of the Counter Fraud Service, the team achievements have been summarised at Table 2 (page 18 of the1st to follow agenda). In terms of council house recoveries, the team have an annual target of 60 and 40 temporary accommodation recoveries to achieve during the year. The team are already ahead of the profile on that and have achieved 70 council house recoveries and 10 temporary accommodation recoveries.

8.    In terms of savings, the team tries to identify savings for the council which could have been lost to fraud and are already over half of their target.

9.    Christine Webster also oversees the Insurance and Risk Management Service and Risk Register. The remainder of the report was about Internal Audit quality assurance measures and table 3 (page 18 of the1st to follow agenda) provides targets aimed for and the achievements to date.

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

a.    Peter Nwosu raised some questions regarding agreed timescales with managers for implementing audit recommendations. He was trying to establish how many of the high risk recommendations were overdue, where a time was agreed but actually were  ...  view the full minutes text for item 687.

688.

WHISTLEBLOWING POLICY - 20:30 - 20:40 pdf icon PDF 371 KB

To receive the report of the Executive Director Resources seeking endorsement of the updated whistleblowing policy and guidance for its implementation.  

 

The Committee agreed that the updated whistleblowing policy and guidance be reviewed again at this meeting of the Audit & Risk Management Committee. 

 

(Report No.12)

 

Additional documents:

Minutes:

RECEIVED the report of the Executive Director Resources (No.54) presenting the updated Whistleblowing Policy.

 

NOTED

 

1.    This paper was a refresh of the Whistleblowing Policy, which is reviewed every year by Christine Webster – Head of Internal Audit & Risk Management. This report replaced the version that had already been published.

2.    Part of Internal Audit’s remit is to refresh and ensure that the council has proper policies relating to fraud, bribery, corruption and the mechanisms to report those.

3.    The Whistleblowing Policy has been in place for a number of years and is refreshed yearly. This report is the refreshed version and within it there are some areas that had been greyed out/highlighted which are the changes that have been made since it was first presented at the 20 June 2018 meeting. Names have been refreshed and up to date now i.e. who people should report to and to cross reference  to some other policies i.e. people identify concerns around safeguarding.

4.    The Vice-Chair re-iterated that he has always made his feelings known about this subject and encourages people to come forward and report issues.

5.    The Vice-Chair and committee were saddened at the news that Christine Webster (Head of Internal Audit) was leaving the Council after 5 years.

On behalf of the committee and everyone, the Vice-Chair thanked Christine for her contribution, hard work, devotion and wished her evry success in the future.

 

AGREED that the updated & refreshed whistleblowing policy, and guidance be noted and endorsed.

 

689.

BDO - PROGRESS REPORT -20:40 - 20:50

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

(TO FOLLOW)

 

 

 

Minutes:

NOTED

 

1.    This item was included on the agenda in error.

690.

MINUTES pdf icon PDF 188 KB

Audit & Risk Management Committee

 

a.         To receive and agree the minutes of the Audit Committee meeting held on Wednesday 20 June 2018, as a correct record.

 

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

 

Additional documents:

Minutes:

AGREED that the minutes of the Audit Committee meeting dated 20 June 2018 be approved and signed as a correct record.

 

 

 

 

691.

AUDIT & RISK MANAGEMENT COMMITTEE WORK PROGRAMME 2017/18 pdf icon PDF 182 KB

The Committee is asked to agree the Work Programme put forward for the 2018/19 municipal year along with the timetabling of each issue on the Work Programme.

 

Minutes:

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

 

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

 

NOTED

 

1.    The error on the published agenda regarding the March 2019 Committee meeting.

The date should have been Wednesday 6 March 2019.

 

692.

DATES OF FUTURE MEETINGS

To note the dates agreed for future meetings of the Audit & Risk Management Committee:

 

Thursday 18 October 2018

Thursday 10 January 2019

Thursday 7 March 2019

 

 

(All meetings to commence at 7.00pm unless otherwise agreed.)

 

Minutes:

NOTED the dates of future meetings:

 

Thursday 18 October 2018

Thursday 10 January 2019

Wednesday 6 March 2019

 

 

(All meetings to commence at 7.00pm unless otherwise agreed.)