Agenda and draft minutes

Audit and Risk Management Committee
Wednesday, 6th March, 2019 7.00 pm

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

Contact: Metin Halil 

Items
No. Item

992.

WELCOME AND APOLOGIES FOR ABSENCE

Minutes:

Councillor Mahym Bedekova (Chair) welcomed everyone to the meeting.

 

Apologies for absence was received from David Eagles (BDO)

Apologies for absence was received from Councillor Leaver.

Apologies for lateness was received from Peter Nwosu (Independent Member)

 

 

 

 

 

 

 

 

993.

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

 

The following declaration of interests:

 

1.    Councillor Yusuf declared a non-pecuniary interest in relation to Item 7 on the agenda – Local Authorities Trading Companies update, as he is a  Director (Chair) of the Independence & Well Being Company. 

2.    Councillor Ozaydin declared a non-pecuniary interest in relation to Item 7 on the agenda – Local Authorities Trading Companies update, as he is a Director (Chair) of Enfield Innovations

3.    Peter Nwosu (Independent Member) declared a non-pecuniary interest in relation to Item 7 on the agenda – Local Authorities Trading Companies update, as he is a Director of Housing Gateway Ltd and Enfield Innovations.

994.

SERVICE DELIVERY RISK REGISTERS UPDATE - PLACE & PEOPLE - 19:25 - 19:40 pdf icon PDF 415 KB

To receive a report from the Director of Law and Governance providing a Service Delivery Risk Registers update.

(Report No.198)

 

Minutes:

RECEIVED a report from the Director of Law and Governance, presenting the risk registers for the Service Delivery operating areas (People and Place Departments).

 

NOTED

 

1.    The report was presented by Gemma Young (Head of Internal Audit & Risk Management).

2.    A representative from each department had been nominated to attend the meeting to answer questions relating to their register. These were Tony Theodoulou (Executive Director People) and Sarah Cary (Executive Director Place).

3.    Tony Theodoulou stated there are risks in the report where the People department have taken steps to ensure that they mitigate against the worst possible scenario.

When working with vulnerable children or vulnerable adults, you cannot eliminate risk completely which is why some of the department’s assessments are in the Amber matrix range.

4.    After consulting the committee on which People risks, they wanted Tony Theodoulou to focus on, Councillor Yusuf requested PEO/1819-01 Failure to protect Children and PLA/1819 – 01 Failure to recruit & retain staff. These are detailed at 3.5 (Table on page 22) of the report:

·         PEO/1819-01 – This risk would always be inherent to the work of People department. Even with additional resources, you cannot completely control what happens in peoples’ homes or communities. There was no reason why this risk should be reduced from last year as it would always be there.

Schools have always played a big part in recognising vulnerable people. The other major source of information relating to referrals to Children’s Services is from the Police.

·         PLA/1819-01 – This risk was Place department and was clarified by Sarah Cary. This risk was not specific to Enfield. This was in the council’s planning & housing developments and property areas where qualified professional staff are needed. There is generally a shortage of these professionals within local government and across the UK. Because of that there are competitive salaries and is difficult to recruit and retain staff. The department had taken steps to improve the risk with Human Resources department and is not getting any worse at present.

In terms of Planning, the department must have professional chartered planners in post. There is a statutory duty to have certain levels of staff and this is not about the council setting its sights too high.  The pool in local government is low.

5.    The committee referred to 3.7 (page 23) of the report, regarding the 3 risks that have been removed from the register. Was this because they are green (matrix) and if so, what was the impact, in terms of moving them out of the risk register. Tony Theodoulou clarified:

·         PEO/1819-02 – This was highlighted as a risk since 2015, following an OFSTED inspection at that time. Since that time the service and processes had improved. The department’s responses’ to missing children is legally compliant. They have a system in place for cross-checking databases so that the department can understand far more strategically where children are going missing from and going to.

The department have a process for return home interviews and this risk  ...  view the full minutes text for item 994.

995.

BDO - GRANTS AND RETURNS CERTIFICATION REPORT 2017/18 - 19:05 - 19:15 pdf icon PDF 1 MB

To receive from BDO (external auditors) the Grants and Returns Certification Report 2017/18.

 

Minutes:

RECEIVED from BDO (external auditors) the Grants and Returns Certification Report 2017/18.

 

NOTED

 

1.    The report was presented by Lucy Trevett, who was the new Audit Manager.

2.    The report covered 3 grant claims that BDO had looked at in 2017/18, which were all signed off by the required deadline.

3.    As detailed on page 5 of the report, the detailed findings highlight the Housing Benefit subsidy work. Due to several errors the Council made in administering benefit and calculating subsidy entitlement, BDO identified one area of 40+ testing, one area of additional testing and four amendments to the claim form.

As detailed at page 6 of the report, the four specific areas that BDO looked at. All the errors were of low value, reported and no impact on the value of subsidy claimed by the Council.

4.    As detailed at page 7 of the report, the two areas of further testing:

·         Pooling of Housing Capital Receipts.

·         Teachers’ Pensions.

5.    As detailed at page 9 of the report, shows the status of 2016/17 recommendations.

6.    The following questions and queries raised in response to the report:

a.    The Chair asked for clarity regarding the Housing Benefit subsidy and the outcome from the Department of Works & Pensions (DWP). In addition, the errors found in the testing, was there an update from the DWP. Lucy Trevett (BDO) clarified that she was not aware of receiving any update yet from DWP. What normally happens was that the deadline for all councils is November. DWP take a few months to process the information. They look at what BDO have reported as errors in the extrapolations and based on that, do they think BDO need to do more testing to try and identify what the error is. When the work is done next year, DWP will then report that.

Fay Hammond further clarified that, when you look at the Housing Benefit claim of £300m plus, the errors found equate to a small amount. Mistakes and delays in housing benefit payments had cost Haringey Council more than £1.45m for 2017/18, in comparison.

b.    Peter Nwosu (Independent Member) highlighted the reference to ‘cells’ within the report, was this referencing a spreadsheet. Lucy Trevett clarified that within the housing benefit document, the cells refer to a kind of benefit as there were different kinds of benefits.

c.    Peter Nwosu (independent Member) requested further clarification regarding the grossing up error of £1.164m (as detailed at the top of page 6 of the report). This was a large error and was there not some kind of interim review to check that officers are following the actions BDO had highlighted last year. Lucy Trevett (BDO) clarified that this was a systematic error and not a process error. Fay Hammond also clarified that as an action to correct this issue, she would need to speak to Civica to change the way the system works, and the way information is extracted.

ACTION: Fay Hammond (Interim Executive Director Resources).

d.    Lucy Trevett (BDO) explained  ...  view the full minutes text for item 995.

996.

BDO - PROGRESS REPORT 2018/19 - 19:15 - 19:25 pdf icon PDF 86 KB

To receive from BDO (external auditors) a progress report on the external audit 2018/19.

 

Minutes:

RECEIVED from BDO (external auditors) the 2018/19 External Audit Progress report to 25 February 2019.

 

NOTED

 

1.    The report was presented by Grace Quist-Therson (BDO).

2.    As detailed at page 14 of the report, the report provides the committee with an outline of BDO’s progress against its proposed work for 2018/19:

Progress to date – BDO have assessed whether the arrangements put in place by the Council allows the auditors to complete their work by the expected deadlines and if there are any issues that are likely to have a significant impact on our ability to provide unmodified audit reports and opinions. This is monitored using a ‘RAG’ assessment in the report.

3.    As detailed on page 15 of the report, key completion and reporting dates are noted within the table.

As detailed on page 16 of the report, where work has been completed and previously reported to the committee, BDO have ‘greyed’ out the text.

4.    As detailed at page 17 of the report, additional audit areas to test include the Whole of Government Accounts and the Use of Resources.

5.    As detailed on page 18 of the report, there is a progress summary which was reported.

6.    The following questions and queries raised in response to the progress report:

a.    Councillor Yusuf enquired whether this year’s statement of accounts would be signed off on time. Grace Quist-Therson clarified that she was hopeful and that her team were working closely with the Council’s finance team and are having regular update meetings.

b.    Fay Hammond reported that the Senior Officer risk (Roy Baker) has now been mitigated as finance have recruited a new person to handover Roy’s position. The new person has been in post for a month now.

 

AGREED to note BDO’s 2018/19 Progress report to 25 February 2019.

997.

IGB ANNUAL PERFORMANCE YEAR END UPDATE 2018/19 & GDPR IMPLEMENTATION - 19:40 - 19:50

To receive the report of the Director of Law & Governance presenting the Information Governance Board’s year end annual performance update 2018/19 and the implementation of the General Data Protection Regulations (GDPR).

(TO FOLLOW)

 

 

 

Minutes:

This item has been deferred to a future Audit & Risk Management Meeting.

998.

LOCAL AUTHORITIES TRADING COMPANIES UPDATE - 19:50 - 20:05 pdf icon PDF 254 KB

To receive a report from the Acting Director Commercial presenting an update on the Local Authorities Trading Companies Update.

Minutes:

RECEIVED a presentation from Nicky Fiedler (Acting Director Commercial) regarding an update on the London Borough of Enfield’s Trading Companies.

 

NOTED

 

1.    This was a follow-up of a report given by James Rolfe (previous Executive Director Resources), a couple of years ago, on the Council’s Companies.

2.    The presentation was given under the following headings as detailed at pages 33-43 of the agenda:

·         Why do Councils have trading companies.

·         Overview

·         Enfield’s Companies/Benefits of the Companies

·         Energetik

·         Enfield Innovations Ltd

·         Independence and Wellbeing Ltd

·         Housing Gateway Ltd

·         Governance & Risk update

·      Reviewed companies’ governance in 2017

·      Established Shareholder Board 2018

·      Reviewed Reserved Matters

·      Clarified Roles

·         2019/20

3.    The following questions and queries raised in response to the presentation:

a.    The committee asked for clarity regarding the Council’s energy company, Energetik, and if the purpose of the company was to provide energy to residents. Nicky Fiedler clarified that it was predominantly to provide energy to the Council’s developing estate renewal schemes and then to the Meridian Water (MW) project’s 10,000 homes. This was a unique opportunity as there would be an Energy Recovery Facility right next door to the MW development.

Energetik was established in 2015 and had been trading in the last year. The Council took an investment decision in early 2017 and Energetik had its first customers a year ago.

b.    All the Council’s trading companies are limited.

c.    Councillor Savva’s enquiry regarding Energetik and if the company was on target to be completed with the provision of energy to residents. He raised concern that the incinerator would not be ready until 2028, the pipes were not in the ground and would Brexit hinder the project with prices going up.

Nicky Fiedler clarified that Energetik was on track and that there is a Cabinet report being heard, in March 2019, around the next stage of investment. The report is leading the Council to the direction of the investment but is not asking for the investment decision. The Council would need to take an investment decision on Energetik by September 2019 and the company would need to update the business plan, go through the business model and external validation.

The company is operational, at present, and has been expanding. The Energetik program was still on coursed to connect/supply the Council’s 4 estate renewal schemes.

d.    Councillor Savva referred to the mention of the Shareholder Board and if the Council made a profit from the trading companies. Nicky Fiedler clarified that there are multiple ways the Council and residents benefit from the trading companies. The companies do make a profit and could also reduce the cost of Council services and improve service quality.

The Independent & Wellbeing company doesn’t make a large profit, but it seems to reduce the cost of the service to the Council.

In terms of Housing Gateway Ltd, the Council has increased asset values, avoids the cost of nightly paid temporary accommodation costs and makes a profit.

Enfield Innovations Ltd are breaking even as a company.

Energetik is a  ...  view the full minutes text for item 998.

999.

CONTRACT PROCEDURE RULES - 20:05 - 20:20

To receive the report of the Director of Finance providing a Review of the Contract Procedure Rules.

(TO FOLLOW)

 

Minutes:

This item has been withdrawn due to no changes to the Contract Procedure Rules.

 

NOTED

 

1.    The report had been made but there had been no changes to the Contract Procedure Rules. It was decided not to declare the report.

There will be a review of the Constitution and the Contract Procedure Rules will change and the report can then be heard at a future Committee meeting.

1000.

INTERNAL AUDIT PLAN 2019/20 AND INTERNAL AUDIT CHARTER - 20:20 - 20:35 pdf icon PDF 321 KB

To receive a report from the Director of Law & Governance presenting the Internal Audit Plan 2019/20 and the Internal Audit Charter.

(Report No.196)

Minutes:

RECEIVED the report of the Director of Law and Governance setting out the Draft 2019/20 Internal Audit Plan and Internal Audit Charter.

 

NOTED

 

1.    Gemma Young presented the draft Internal Audit Plan, which remains under discussion with Executive Directors and Directors.

2.    The Internal Audit Charter sets up the purpose, probability and possibility of internal audit and is presented to the Committee yearly for approval as part of the Public Sector Internal Audit Standards (PSIAS).

3.    The draft plan had been developed in discussion with senior managers of the Council and with other audit teams in London, who are facing the issues. So, the department gets together with these audit teams and look at the big issues they are facing.

The team also use their cumulative auditor knowledge and experience of issues they have noticed in other audits around the organisation. The team also consider risk registers in how the audit plan is developed.

4.    In terms of detail regarding the 2019/20 draft plan (as detailed from page 51 of the report), there are 7 cross cutting audits, across the organisation, detailed at page 51 of the report. The audits are then broken down into the various Council departments: Chief Executives, Resources, People, Place, Trading Companies and Schools.

5.     The following questions and queries raised in response to the report:

a.    The committee asked what had changed in the Internal Audit Charter from last year’s one. Gemma Young (Head of Internal Audit & Risk Management) clarified that this was an update report with very few changes. There had not been any changes to the PSIAS which affects the charter.

b.    Peter Nwosu (Independent Member) referred to the Brexit cross cutting risk (page 51 of the report) which did not have a time line despite the objective seeming to refer to it as happening now. Gemma Young clarified that it would be her decision when to make the Brexit audit would occur, in order to add value and ensure timely delivery of assurance. Gemma Young also sits on the Council’s Brexit Panel.

c.    Councillor David-Sanders queried the Draft Audit Plan as regards the many ‘To be Confirmed’ entries in terms of audit timing. Would the audits be equally distributed throughout the year or would there be heavy quarters and light quarters’. He was conscious of the fact that there are a lot of audit days within the plan. Gemma Young clarified that that was the reason for the many ‘to be confirmed’ entries because they have been agreed in principal by Directors’. Most of the plan (80% - 90%) is agreed but this audit committee comes quite early in March. With the timings, Gemma Young was keen to not overload certain departments i.e. Finance would be very busy in Quarter 4 so no audits programmed then. So, Gemma Young was very keen to agree the timings with Directors so as not to overload officers. She preferred quite heavy quarters for Q1, Q2 and Q3 and then Q4 would be mainly intended for  ...  view the full minutes text for item 1000.

1001.

INTERNAL AUDIT PROGRESS REPORT 2018/19 - 20:35 - 20:45 pdf icon PDF 489 KB

To receive a report from the Director of Law and Governance presenting the Internal Audit Progress Report 2018/19.

(Report No.197)

Minutes:

RECEIVED the report from the Director of Law and Governance presenting the 2018/19 Audit & Risk Management Service Progress.

 

NOTED

 

1.    The report was presented by Gemma Young (Head of Internal Audit & Risk Management) and summarises the work that the Audit & Risk Management Service has undertaken for the period 1 April 2018 to 31 January 2019.

2.    The team had started 62 assignments which is 98% of the current audit plan and 38% of the current plan had been fully completed. At the same period in 2017/18 99% of assignments had commenced with 49% completed. Chart 1 on page 65 of the report details the progress made so far.

3.    As detailed at point 3.5 (page 65) there had been a lot of changes to the audit plan. Twenty new assignments had been added and nine deferred/cancelled as shown in Annex 2 (Page 79 – 80 of the report).

4.    Since the last committee meeting, there have been 2 No Assurance Audits and 1 Limited Assurance as detailed at pages 66 – 67 of the report.

5.    In terms of implementing audit actions, 61% of High-Risk actions and 49% of Medium risk actions had been fully implemented by the end of February 2019. Compared to last year, 46% of High-Risk actions had been implemented by 1 February 2018.

6.    As detailed at 3.14 (page 69) of the report, the annual savings target is £2m and by the end of January 2019 the team had achieved £3.6m. The team recovered 58 Council properties and 31 Temporary Accommodation recoveries.

As detailed at page 71 of the report, 29 Right to Buy applications had been cancelled, submitted by tenants.

7.    As detailed at 3.16 (page 72) of the report, 25 applications had been cancelled as regards ‘No Recourse to Public Funds’ equating to a saving of £430K per annum.

8.    As detailed at 3.17 (pages 72-73) of the report, the Insurance team’s highlights included a significant new claim and is likely the reserve will exceed the £500K deductible. This was a large claim that Gemma Young would keep Members informed of.

9.    As detailed at Table 7 (page 73) of the report, the Current Abuse cases are listed.

10.As detailed at Table 8 (page 73) of the report, several key successes, so far for the Insurance team, resulting in £243K worth of claims avoided and dis-continued pre-trial.

11.The following questions and queries raised in response to the report:

a.    The committee queried the audit action implementation of the high-risk items (61%) which equated to 39% of high-risk actions not implemented. How did the team action this. Gemma Young clarified that the implementation of audit actions by managers is monitored via the assurance board. Managers attend the board to provide reasons for non-implementation of actions and this is taken very seriously. Some of the reasons refer to system issues whereby the supplier is contacted to make those changes. They are still high-risk items but have not been able to be remedied. There are  ...  view the full minutes text for item 1001.

1002.

ANTI-MONEY LAUNDERING POLICY & GUIDANCE - 20:45 - 20:55 pdf icon PDF 236 KB

To receive a report from the Director of Law and Governance presenting the Anti-Money Laundering Policy and Guidance.

(Report No.194)

Minutes:

RECEIVED the report from the Director of Law and Governance presenting the Anti-Money Laundering Policy & Guidance.

 

NOTED

 

1.    The report was presented by Gemma Young (Head of Internal Audit & Risk Management). This report is presented yearly and all that has been done is essentially a tidy up of the report with minor changes to reflect personnel. There had not been any big changes in Money Laundering legislation and the report remains fit for purpose. The Council were not a big target for money laundering like financial institutions would be, but officers must be aware of it.

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

a.    Councillor David-Sanders referred to the scope of the policy around contractors and members who work in the Council and money laundering. It was sometimes quite difficult to keep a track of what contractors there are and their compliance. Was the Council robust with that because that was the riskier area rather than employees of the Council as regards compliance with the policy procedures. This policy was just for the Council, as the Council had risky areas like Right to Buy and business rates.

Gemma Young clarified the contractor compliance issue that generally it would be within the terms of the contract, they wouldn’t go within external organisations. Gemma Young would report back to the committee as regards the permits online raised issue.

ACTION – Gemma Young (Head of Internal Audit & Risk Management).

 

AGREED to endorse the updated anti-money laundering policy and guidance.

 

1003.

WHISTLE BLOWING POLICY - 20:55 - 21:05 pdf icon PDF 275 KB

To receive a report from the Director of Law and Governance presenting the Whistle Blowing Policy.

(Report No.195)

Minutes:

RECEIVED the report from the Director of Law and Governance presenting the Whistleblowing Policy.

 

NOTED

 

1.    The report was presented by Gemma Young (Head of Internal Audit & Risk Management).

2.    This was a refreshed policy with minor amendments i.e. contact details. The policy is a framework to enable and encourage people with any concerns regarding any aspect of the Council’s business.

3.    The policy sits with Gemma Young, who keeps a register and would be bringing back a report to the next Audit & Risk Management Committee about how many whistle blowers there had been in the last year.

4.    The following questions raised in response to the report:

a.    Councillor Savva asked if the policy only applied to Council employees. Gemma Young clarified that the public could tell officers about their concerns, but they would not be covered by the whistleblowing policy. It only aims to give protection to employees within the Council, so that they are not victimised for speaking up.

b.    Councillor Savva enquired if Council employees knew about the policy. Gemma Young clarified that it was part of the e-learning module and is generally known by staff but is not specifically promoted.

 

AGREED to note and endorse the updated whistleblowing Policy and Guidance.

 

1004.

BREXIT RISK FOR LOCAL AUTHORITIES - UPDATE - 21:05 - 21:15 pdf icon PDF 370 KB

To receive an update from the Director of Finance on the Brexit Risk for Local Authorities.

(TO FOLLOW)

Minutes:

RECEIVED the report from the Director of Law and Governance presenting the Initial Brexit Risk Register/

 

NOTED

 

1.    The report was presented by Gemma Young (Head of Internal Audit & Risk Management). This was the initial Brexit risk register developed by the Brexit Panel, which is chaired by Councillor Daniel Anderson, Deputy Leader of the Council.

2.    The register aims to capture the risks of a ‘No Deal’ Brexit from day 1 – day 100 and is a limited list for that reason. The department has got larger risk registers which are more long term but this was very much the immediate requisite.

3.    As detailed  at Appendix A (pages 5 – 7) of the report, there were 9 risks detailed within the register.

4.    The following questions and queries raised in response to the report:

a.    Councillor David-Sanders comments that he was pleased to see that the membership of the Brexit Panel had been extended to include Citizen Advice Bureau’s, local business & commerce, which was very re-assuring.

 

AGREED to note the risks recorded in the initial Brexit risk register.

 

1005.

MINUTES pdf icon PDF 314 KB

Audit & Risk Management Committee

 

a.         To receive and agree the minutes of the Audit Committee meeting held on Thursday 24 January 2019 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.

 

 

 

 

1006.

AUDIT & RISK MANAGEMENT COMMITTEE WORK PROGRAMME 2017/18 pdf icon PDF 188 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.

 

 

1007.

DATES 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 2018/19 Municipal Year;

 

(b)      that a new programme of dates for the 2019/20 municipal year are currently being prepared for inclusion and approval as part of the Council’s 2019/20 calendar of meetings, which is due to be considered and approved at the Annual Council meeting on 8 May 2019.

 

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

 

(a)      that this is the last ordinary meeting of the Audit & Risk Management Committee scheduled for the 2018/19 Municipal Year;

 

(b)      that a new programme of dates for the 2019/20 municipal year are currently being prepared for inclusion and approval as part of the Council’s 2019/20 calendar of meetings, which is due to be considered and approved at the Annual Council meeting on 8 May 2019.

 

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

 

1008.

EXCLUSION OF THE PRESS AND PUBLIC

Minutes:

RESOLVED, in accordance with Section 100(A) of the Local Government Act 1972 to exclude the press and public from the meeting for the item listed on part two of the agenda on the grounds that it involves the likely disclosure of exempt information as defined in Paragraph 3 (information relating to the financial or business affairs of any particular person (including the authority holding that information) of Part 1 of Schedule 12A to the Act (as amended by the Local Government (Access to Information) (Variation) Order 2006).

 

1009.

MERIDIAN WATER RISK REGISTER UPDATE

To receive a report from the Programme Director of Meridian Water presenting the Meridian Water Risk Register.

 

(This item contains exempt information as defined in Paragraph 3 (information relating to the financial or business affairs of any particular person – including the authority holding that information) of Schedule 12A to the Local Government Act 1972, as amended).

Minutes:

Peter George (Programme Director – Meridian Water) presented the Meridian Water Risk Register and answered questions from members of the Committee.