Agenda and draft minutes

Audit and Risk Management Committee
Thursday, 17th October, 2019 7.00 pm

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

Contact: Metin Halil 

Items
No. Item

292.

WELCOME AND APOLOGIES FOR ABSENCE

Minutes:

Councillor Bedekova (Chair) welcomed everyone to the meeting.

 

Apologies for absence were received from Councillors Stewart, Demirel and Akpinar

Apologies for lateness were received from Councillors David-Sanders, Gunawardena and David Eagles (BDO).

 

293.

DECLARATION OF INTERESTS

Minutes:

There were no declarations of interest.

294.

ORDER OF AGENDA

Minutes:

AGREED that the order of the agenda be varied, due to David Eagles (BDO) being held up in traffic.

The minutes follow the order of the meeting.

 

295.

STATEMENT OF ACCOUNTS - ACTION PLAN UPDATE

To receive a verbal update on the Action Plan to the Statement of Accounts.     

Minutes:

RECEIVED a verbal update on the Action Plan for the Statement of Accounts from Gareth Robinson (Head of Corporate Finance).

 

NOTED

 

1.    The Finance team had already started a process for an improvement plan. Gareth would be providing a one-page briefing note to members on what has been done to date.

2.    Four major things have happened:

a.    The had provided a workshop yesterday, regarding HRA valuations. Looking at archetypes and all the issues raised last year. Finance think it is more likely to be in the order of 300 archetypes which equates to 300 beacon values of properties rather than the current 24 archetypes.  So, in practise it demonstrates what a large change the team are looking at going forward.

b.    Work had also begun around commissioning documents and have produced a draft commissioning document for both valuation firms. In line with that, the valuation firms were meeting with Gareth Robinson tomorrow. He was trying to get out a final commissioning document by the weekend and raise purchase orders before going on annual leave.

c.    Schools’ had been quite late in providing valuation information which had been receive d by 15 May 2019. However, the information was received by finance and they could consolidate these within the accounts for 2018/19. Going forward, finance have met with the individual who runs the company supporting most schools. He has suggested certain changes in financial key processes that have to be supported i.e. support from workshops. A letter will be sent to all headteachers, after half term, explaining what’s going to happen and why. Finance will be looking to see what they can do to support schools in this process i.e. payroll – completing tasks in-year rather than end of year.

d.    Finance had already instructed an individual to start looking at provisions and to start working through those. Finance have a very traditional back-up provision model and need to agree to a new model which matches the credible ranges of the IFRS (International Finance Reporting Standards) changes. Those changes came into place in 2018/19 and that process had already begun.

3.    In November 2019, the external auditors (BDO) are coming in to the council to start reviewing some IT controls. A document would be sent to BDO stating the times of year finance expect them to come to the council and why. During this period, finance will ensure that as much information as possible is sent to BDO, up front, so that they can review things much earlier in November, December and January and not in February, March or April, which is what has happened right now.

This is broadly what Finance have been doing to date and in future, Gareth Robinson would be submitting a one-page document to Members.

4.    One other thing that remains a risk are Finance’s staffing skills and the resources within the team. This would need to be fast tracked and may well mean that the section would need to use interims again this year as  ...  view the full minutes text for item 295.

296.

FINANCIAL RESILIENCE UPDATE INCLUDING MANAGING THE SAVINGS pdf icon PDF 335 KB

To receive a report from the acting Executive Director Resources presenting a Financial Resilience update including an update on Managing the Savings.

 

(TO FOLLOW)

Minutes:

RECEIVED the report of the Acting Executive Director Resources presenting the Financial Resilience update.

 

NOTED

 

1.    The report was presented by Matt Bowmer (Director of Finance).

2.    He would be talking about a couple of key points from the Executive summary, as detailed at page 1 of the ‘To Follow’ report, and the omission of useful information around the Dedicated Schools Grant (DSG) and a specific element around the Highmeads block, that provides special schools support for children that have specific educational needs in main stream schools. It is an area of local authority funding and has a large amount of pressure nationally and across London.

3.    Enfield had fared well compared to some neighbouring local authorities and that element of our DSG was £47m. The bulk of it going into the schools’ funding formula. Up to last year the department was broadly in balance but are experiencing pressures in this financial year. At the end of the first quarter in September, the department were £2m in arrears and is increasing. Some of that is due to not enough provision in the borough, so places for children are being sought out of the borough which can be expensive. Extra provision had been created at the council’s own special schools. Because of the demographic pressure in this area, the council needs to staff up its own teams including the need to employ more educational psychologists.

Some of these pressures are due to grant levels not keeping track with rising demand.

The education department at Enfield are looking at increasing school places i.e. Durant’s School, to take the pressure off the borough.

4.    There is no overall conclusion about the state of the council’s financial resilience and whether we are or not financially resilient.

5.    As regards the budget setting for the current financial year, officers had gone back and resolved historical base budget issues. This concerned perennial overspends on budgets which were not addressed.

6.    As detailed at paragraph 4 (pages 3-4 of the report) – Financial position at the end of quarter one 2019/20.

7.    As detailed at paragraph 6 (pages 4-5 of the report) – 2020/21 Budget and 2020/21 Medium Term Financial Plan (MTFP).

8.    The following questions, statements and queries raised in response to the report:

a.    Councillor Leaver referred to 3.6 (page 3 of the report) and BDO’s review of the council’s financial resilience. Matt Bowmer clarified that he would be meeting with BDO’s lead auditor regarding this next week where BDO would be taking him through the approach. The approach is based on the CIPFA guide as well and will be best practise for local government. It is based on what CIPFA are saying, regarding what a good resilient council looks like.

b.    Councillor Lee-Sanders commented that it was positive that the council are following the CIPFA guidelines, but the reserve balance is an area for concern. Because if the council continued with the current trajectory the council would only have 4 years of being able  ...  view the full minutes text for item 296.

297.

BDO - LBE FEE LETTER 2019/20 & PENSION FUND FEE LETTER 2019/20 pdf icon PDF 140 KB

To receive from BDO (External Auditors) the 2018/19  London Borough of Enfield and Pension Fund Audit Letter

 

 

Minutes:

RECEIVED from BDO (External Auditors) the London Borough of Enfield Fee Letter 2019/20, the Pension Fund Fee Letter 2019/20 and a verbal update on the Statement of Accounts 2018/19.

 

NOTED

 

1.    BDO are required to issue the LBE Fee Letter 2019/20 and the Pension Fund Fee Letter 2019/20 by the PSAA (Public Sector Audit Appointments) Terms of Reference. The information is publicly available, in terms of the scale fees for the Pension Fund Audit and the main council audit.

2.    In terms of the statement of accounts update, when the committee met at the 3 October 2019 committee meeting, BDO had every expectation that it would have completed the accounts by now and have the final clearance from their quality reviewer.

Unfortunately, David Eagles (BDO) had been ill and was unable to complete the work which was necessary to get clearance from the quality reviewer.

           Plan B, is that BDO will continue work on the audit and clear the items

           down, so when the quality reviewer returns from annual leave by the end   of October 2019, BDO will have the information ready and get to resolution by mid-November 2019. David Eagles apologised for not being able to complete the work.

3.    The following questions, statements and queries raised in response to the report:

a.    Councillor Leaver confirmed if the accounts would be finished by Mid-November and that in the final review BDO did not expect any material adjustments and the accounts would be complete. David Eagles clarified that the one issue BDO have to resolve are the HRA valuations which still need to be worked through with certain things that need clearance on to ensure that the information from the valuers stacks up and makes sense.

The Pension Fund issue, mentioned at the last committee meeting, has now been resolved and completed.

b.    Councillor Gunawardena enquired what the expectation was before the quality reviewer went on leave. David Eagles clarified that the expectation was that BDO cleared the last bits of information, get that to the quality reviewer before he went on leave. But BDO were unable to do that. It would have been more than 3 days’ work. The interruption (sickness) was between the morning after the 3 October 2019 committee meeting and for 4-5 days after that BDO were still catching up with this work. However, BDO now have time between now and the end of October to clear the work.

c.    Councillor Barry mentioned that there were problems in the past with then HRA valuations and she just wanted to make sure that things were in place now to avoid issues for next year. David Eagles clarified that there had been a lot of discussion around this, led by Fay Hammond and her team, by setting up meetings with the valuers.

 

BDO would expect a bigger set of samples to be done at an earlier stage because it leads to better information and a better chance of addressing issues before the final accounts stage. This had been  ...  view the full minutes text for item 297.

298.

AUDIT AND RISK MANAGEMENT SERVICE PROGRESS REPORT pdf icon PDF 482 KB

To receive a report from the Director of Law and Governance providing the Audit & Risk Management Service Progress Report.

(Report No.121)

 

Minutes:

RECEIVED a report from the Director of Law and Governance, presenting the Audit & Risk Management Service Progress Report.

 

NOTED

 

1.    The report was introduced by Gemma Young (Head of Internal Audit & Risk Management). This was the regular update on how the Service is progressing with the Audit Plan.

2.    In terms of Internal Audit, as detailed at paragraph 3.4 (pages 5-6) of the report. Gemma Young was confident that the Audit Plan would be delivered by 31 March 2020.

3.    As detailed at paragraph 3.5 (pages 5-6) of the report. Changes to the 2019/20 Internal Audit Plan.

4.    As detailed at paragraph 3.7 (page 6) of the report. Audits added to the 2019/20 audit plan.

5.    As detailed at paragraph 3.8 (page 6) of the report, including Table 3 – Completed Audits.

6.    As detailed at paragraph 3.9 (pages 6 – 9) of the report – Highlighting summaries from the audit reports briefly explaining the reasoning behind the No and Limited Assurance opinions issued to date this year. The review identified the following:

·         Part Owned Companies (No Assurance) – The review identified 4 high risk findings and 3 medium risk findings.

·         Merryhills Primary School (Limited Assurance) – The review identified 2 high risk findings, 9 medium risk and 4 low risk.

7.    As detailed at 3.21 and Table 5 (pages 10-11) of the report, highlighting Counter Fraud achievements.

8.    As detailed at 3.23 (page 12) of the report, in terms of Council Housing activities.

9.    As detailed at 3.24 (page 12) of the report, which includes investigation of sub-letting or non-occupation and tenancies obtained by deception, death of tenant succession and right to buy discount. All investigated by the audit team.

10.As detailed at 3.25 (page 12) of the report, regarding temporary accommodation fraud.

11.As detailed at 3.26 (page 12) of the report, in terms of right to buy discount investigations. To date, 10 applications refused, saving over £1m in discounts not entitled to.

12.As detailed at 3.27 (page 12) of the report, in terms of No Recourse to Public Funds (NRPF), 7 applications cancelled/refused resulting in savings of £120k.

13.As detailed at 3.29 and chart 4 (page 12) of the report, in terms of council tax cases.

14.As detailed at 3.34 (page 15) of the report, in terms of Council Tax Single Person Discount data matching. The audit team have cancelled 76 single person discounts to date, allowing the council to re-bill an additional £31k in council tax charges for 2019/20.

15.As detailed at 3.35 (page 15) of the report, in terms of CIFAS Membership pilot.

16.As detailed on pages 16 – 17 of the report, the audit service also covers insurance. The team had received several abuse/failure to remove claims in the last 2 months, which have been referred to our Insurers solicitors who are considering these claims further.

17.As detailed at 3.41 and Table 9 (page 17) of the report regarding key litigation successes 2019/20. Five claims had been  ...  view the full minutes text for item 298.

299.

CORPORATE RISK REGISTER pdf icon PDF 338 KB

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

(Report No.122)

 

Minutes:

RECEIVED a report from the Director of Law and Governance, presenting the Corporate Risk Register.

 

NOTED

 

1.    Gemma Young (Head of Internal Audit & Risk Management) presented the report, which the committee requested be bought to every meeting.

The revised Corporate Risk Register is presented at Appendix A (pages 35-42) of the report.

2.    There had been no significant changes to the risk register affecting ratings and there were no new risks added to the register.

3.    Updates to individual risks are in the final column in Appendix A (pages 35-42) of the report.

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

a.    Councillor Barry referred to CR01 – Budget Management and the high risk attributed to it. Gemma Young clarified that most risks are mitigated reasonably effectively. However, with this risk Finance are constantly scanning the horizon and making sure they are up to date with the latest information. There are many factors outside of the council’s control regarding this risk.

b.    Councillor Barry referred to CR05 – Duty of Care. This was shown as a medium risk and was surprised because with the introduction of Universal Credit, domestic violence was one of the areas expected to see more problems due to the impact of women’s shelters and austerity, driving an increase in violence. Gemma Young clarified that this risk has many mitigations in place. The register had been reviewed at committee before and by all service areas, who are happy with the medium rating.

c.    Councillor Barry referred to CR11 – Housing. Gemma young clarified that the point had been reached where many of the mitigations had happened. When the Corporate Risk Register is heard again at the January 2020 committee meeting there will probably be an update to this risk.

d.    Councillor David-Sanders referred to an earlier point in the audit report and CR14 – Trading Companies. This risk was showing as medium and considering the ‘No Assurance’ attributed to the part owned companies audit, the risk did not specify whether it is referring to wholly owned or part owned companies. Was the medium risk appropriate or would it need updating? Gemma Young clarified that it was at a medium risk because the bulk of company activity is within wholly owned companies. However, she would refer this risk back to the Director of Law & Governance and report back to the January 2020 committee meeting.

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

 

     AGREED to note the risks recorded in the Corporate Risk Register.

 

 

300.

AUDIT AND RISK MANAGEMENT COMMITTEE - ANNUAL REPORT 2018/19 pdf icon PDF 215 KB

To receive a report from the Director of Law and Governance presenting the Audit & Risk Management Committee Annual Report 2018/19.

Minutes:

RECEIVED the Audit & Risk Management Committee Annual Report 2018/19.

 

NOTED

 

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

2.    The Audit & Risk Management Committee Annual Report 2017/18, is a summary of work the Audit & Risk Management Committee had achieved and oversaw the work of Internal Audit 2018/19.

3.    This is the Chair of the Committee’s report on the activities of the committee over the last municipal year.

4.    This report is produced as a requirement of the council constitution and provides a clear and sensible read of previous work the committee has done.

5.    The summary of work is all detailed within the report on pages 43-56.

 

AGREED that the Annual Report be approved for referral by the Chair onto Council at its meeting on the 29 January 2020.

 

301.

AUDIT & RISK MANAGEMENT COMMITTEE WORK PROGRAMME 2019/20 pdf icon PDF 186 KB

Minutes:

RECEIVED an outline work programme for the Committee covering the 2019/20 Municipal Year Committee.

 

AGREED to approve the outline work programme for 2019/20 subject to the following additions.

 

NOTED

 

1.    A further Brokerage report update to be heard at the 5 March 2020 committee meeting.

2.    The Illegal Encampments report to be heard at the 16 January committee meeting.

3.    A further School’s audit report to include schools’ issues and detail around outstanding actions.

4.    A further follow up audit report regarding part-owned companies.

 

 

 

302.

DATES OF FUTURE MEETINGS

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

 

Thursday 16 January 2020

Thursday 5 March 2020

 

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

 

Minutes:

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

 

Thursday 16 January 2020

Thursday 5 March 2020

 

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

 

303.

EXCLUSION OF THE PRESS AND PUBLIC

To consider passing a resolution under Section 100A(4) of the Local Government Act 1972 excluding the press and public from the meeting for any items of business moved to part 2 of the agenda on the grounds that they involve the likely disclosure of exempt information as defined in those paragraphs of Part 1 of Schedule 12A to the Act (as amended by the Local Government (Access to Information) (Variation) Order 2006).

 

(Members are asked to refer to the part two agenda)

 

304.

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.