Agenda and draft minutes

Audit and Risk Management Committee
Thursday, 3rd October, 2019 7.00 pm

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

Contact: Metin Halil 

Items
No. Item

275.

WELCOME AND APOLOGIES FOR ABSENCE

Minutes:

NOTED

 

Councillor Bedekova (Chair) welcomed everyone to the meeting including new members Cllr James Hockney and Cllr Claire Stewart.

 

The Chair also confirmed that Cllr Tim Leaver has been confirmed as a new member of the Committee and as the Vice-Chair.

 

Apologies for absence were received from Councillors Akpinar, Demirel, Hockney and Barry.

 

The Leader of the Council also attended the meeting.

 

Councillors’ Levy and Maguire were in attendance.

 

276.

DECLARATION OF INTERESTS

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

 

Minutes:

NOTED

 

1.    Councillor Leaver declared a non-pecuniary interest as he is the Chair of the Pension Policy and Investment Committee and a Director of Housing Gateway Ltd.

2.    Councillor Steward declared a non-pecuniary interest as she is the Vice-Chair of the Pension Policy & Investment Committee.

3.    Councillor Gunawardena declared a non-pecuniary interest as he is a Director of Enfield Norse Limited.

 

277.

ORDER OF THE AGENDA

Minutes:

AGREED that the order of the agenda be varied, at the request of the Leader, so that item 5 (Brokerage Audit Report) could be heard first.

The minutes follow the order of the meeting.

 

278.

MINUTES pdf icon PDF 263 KB

Audit & Risk Management Committee

 

a.         To receive and agree the minutes of the Audit Committee meeting held on Wednesday 19 June 2019 and Thursday 4 July 2019 as a correct record.

 

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

Additional documents:

Minutes:

NOTED

 

1.    AGREED that the minutes of the Audit Committee meeting dated 19 June 2019 and 4 July 2019 be approved and signed as a correct record.

2.    Fay Hammond (Acting Executive Director Resources) confirmed that she had met with Cllr Barry and had spoken with her about item 4 on the agenda,  the Action Plan.

 

 

 

279.

FINAL INTERNAL AUDIT REPORT - COMMISSIONING (BROKERAGE) - 19:50 - 20:05 pdf icon PDF 87 KB

To receive the report of the Director of Law and Governance providing an explanation of the Internal Audit Report on Commissioning (Brokerage) and actions taken.

                                                                                   

 

 

 

 

Additional documents:

Minutes:

RECEIVED the report of the Director of Law and Governance regarding the Commissioning (Brokerage) Audit.

 

 

NOTED

 

1.    The report was introduced by Doug Wilson (Head of Strategy & Service Development), clarifying the background of the Commissioning (Brokerage) Audit which was part of the 2018/19 audit plan agreed by the Committee on the 7th March 2019 (pages 157 – 158 of the report).

2.    The response to the Brokerage Audit 2018/19 as reported and detailed at Annexe C - pages 179 – 182 of the report.

3.    Further annexes within the pack of documents support all the different actions of the audit and the responses to them.

4.    Where there had not been a policy in place to explain how the Brokerage Service worked, operated and the criteria used to select providers. There is now a policy in place and the service is clear that there is now a process to follow now.

5.    The Brokerage team were now clear as to the process to be followed. The Brokerage Manager will inspect some cases that brokers have manged to check that everything has been done in terms of reaching their decisions. The report also provides some background information in terms of assurance for the new process in place.

6.    Impartiality may not always be evident when people are involved in procuring or buying services. There is always a risk that a broker or someone buying the service could have a level of bias towards the buyer in the market. This is the reason why the Dynamic Purchasing System (DPS) was originally introduced. This was an automated and fair way of enabling brokers to push new business out to market, to receive responses back and have a clear evidence base for making decisions. Adult Social Care are reasonably assured that the processes now in place to select buyers who provide home care are reasonably robust, fair and transparent as possible.

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

a.    The Leader of the Council had attended the committee meeting because as part of an agenda, the administration must ensure that the Council is as transparent and fair as possible in all that it does as an administration. The administration had decided that several areas needed additional scrutiny. In particular, where finance is involved with known large direct payments to external companies, already in the public domain.

In terms of this audit, this was an opportunity to make clear to committee members of the political commitment of ensuring that appropriate proper processes are in place. The administration was now confident that proper processes are in place and was right and proper that the Audit & Risk Management Committee made public the Brokerage audit report as there were risk areas highlighted that related to the inability to demonstrate the decisions made. In some cases, decisions that led to considerable sums of money being spent and if those decisions were made in a fair, transparent and robust way. The Brokerage Service  ...  view the full minutes text for item 279.

280.

STATEMENT OF ACCOUNTS pdf icon PDF 177 KB

a) BDO - LBE AUDIT COMPLETION REPORT 2018/19 - ISA260 - 19:05 - 19:15 

 

To receive from BDO (external auditors) a report highlighting the key issues arising from the Council’s financial statements for the year ending March 31st 2019.

 

b) BDO - PENSION FUND AUDIT COMPLETION REPORT 2018/19 - ISA260 - 19:15 - 19:25 

 

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 March 31st 2019.

 

c) STATEMENT OF ACCOUNTS WITH ISA260 & ANNUAL GOVERNANCE STATEMENT 2018/19 - 19:25 - 19:40 

 

To receive the reports of the Acting Executive Director Resources presenting the Audited Annual Statement of Accounts and Annual Governance Statement for the 2018/19 financial year.

                                                                                                               (TO FOLLOW)

 

 

Additional documents:

Minutes:

(A) RECEIVED from BDO (external auditors) the LBE Audit Completion Report 2018/19 – ISA260.

 

NOTED

 

1.    The report was presented by Lucy Trevett (BDO) and David Eagles (BDO) highlighting the key findings overall including an update on the main council fund.

2.    The key position on the audit now, as detailed at page 9 of the report in the Executive Summary. Since the report was circulated there were further changes.

There had been 31 adjusted errors adjusted in the accounts and the updated version presented to members. Within that there were 6 material misstatements of which 3 items had adjustments. Several other adjustments listed on page 9 of the report are to do with property, not only valuations but also classifications and the adjustments made to the accounts regarding these.

3.    Overall, the 31 adjustments have increased the deficit on the provision of services to £108.6m. BDO have also identified 12 unadjusted audit differences totalling £3.6m which has reduced to £2.5m decreasing the deficit by this amount.

4.    As detailed at page 11 of the report, the summary of audit risks had not identified any new risks and is a focus of where BDO’s work was.

5.    Significant control findings, as detailed at page 12 of the report.

6.    As detailed at pages 14 – 17 of the report, non-current asset valuations are where a large part of BDO’s work has been.

7.    In terms of HRA valuations, this had been the most challenging element as BDO were still focussing on items that were raised in June 2019. Various responses from the valuer had been coming through which have progressed with no definitive answers. BDO were grateful for the support received from the Finance team to get to this point at present regarding direct intervention from finance officers, to receive the answers presently from the valuer, which BDO are still working through. Specially to receive answers that provide assurance. Progression has been made, based on several post code valuations over the past 2-3 years. BDO are in a better position as regards post code coverage. But with greater information this has highlighted and identified some potential hidden issues.

BDO have had several adjustments put through the accounts based on information they have had at present. The HRA valuations has been the biggest issue BDO have had over the past 3-4 months.

8.    As detailed at page 53 of the report, use of resources detailing 2 significant risks.

9.    As detailed at pages 57 – 61 of the report, a summary of the significant deficiencies and key areas found.

10. As detailed at pages 62 – 63 of the report regarding the follow up of prior year deficiencies. The recommendations cover much of the areas BDO had identified.

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

a.    Councillor Gunawardena asked for clarification regarding the Meridian Water (MW) valuation of industrial land and whether that valuation would be different if valued as residential. David Eagles clarified that with  ...  view the full minutes text for item 280.

281.

LBE - ACTION PLAN - 19:40 - 19:50 pdf icon PDF 213 KB

To receive the report of the Acting Executive Director Resources presenting an action plan to the Statement of Accounts.                            (Report No 109)

 

Minutes:

RECEIVED a report from the Acting Executive Director of Resources presenting the transformation of the closedown process of the Statement of Accounts.

 

NOTED

 

1.    The report was presented by Gareth Robinson (Head of Corporate Finance) which will be a regular update to the committee.

2.    The report was written to reflect the need to undertake a fundamental overhaul of the way the Council processes its accounts. The council is legally required to submit these by May 31 and the Audit of these by July 31. The council needs to organise all its activities to deliver the accounts on time.

3.    As detailed at 3.2 (page 146) of the report, there have been improvements with budget holders and all areas of revenue delivering to the timetable, except for schools.

4.    It is important to allow time to review the accounts by mid-April to eliminate issues to the audit thus completing the audit quicker. Audit issues have been taken very seriously and looking at past recognised recommendations, there have been very clear attempts to continually resolve them. However, there are more historic issues, as detailed at 3.7 of the report (pages 146-147).

5.    As detailed at 3.9 (page 147) of the report, the Council’s finance system needs updating and will be a large piece of work to do. There needs to be an automated working paper to reduce the risk of errors within processes. The 3rd party supplier had already been contacted to look at this.

6.    There are issues with valuations and the team have already had a meeting with the valuers looking at what is needed to change about the process. There will be a workshop in the next 12 weeks to look at how processes are changed within the financial system and to eliminate the delay in the valuation process. Valuations to be reviewed much earlier in February.

7.    As detailed at 3.10 (page 147) of the report, regarding property data quality.

8.    As detailed at 3.11 (page 147) of the report, regarding a new property management system which will be the solution for property valuations.

9.    As detailed at Section 4 (pages 149-152) of the report, looks at how the department are to change processes. The entire process needs to be transformed and the council needs to be able to resolve issues much earlier. There is recognition of a resourcing issue in the short term and potentially in the long term, to be resolved.

10.Members were asked to get back to Gareth Robinson with any further questions they may have. There would be a further committee meeting on the 17 October 2019 where a further action plan update will be heard with regularly updates through the committee cycle.

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

a.    In response to the committees concern about the financial system’s lack of automation, Gareth Robinson clarified that there would be two parts to the automation process. ICT is a long term project. In the short-term detailed information  ...  view the full minutes text for item 281.

282.

UNIVERSAL CREDIT IMPLEMENTATION UPDATE - 20:05 - 20:15 pdf icon PDF 231 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 Head of Financial Assessment, 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) and was a regular item for this committee.

2.    The report provides an update on the continuing implementation of Universal Credit in Enfield and the associated risks.

3.    As detailed at 3.1 and 3.2 (page 200) of the report.

4.    As detailed at 3.3 (page 200) of the report.

5.    As detailed at 3.4 (page 200) of the report.

6.    As detailed at 3.5 (page 201) of the report.

7.    As detailed at 3.8 (pages 201-202) of the report.

8.    The Universal Credit risk and mitigation register, as detailed at pages 203-204 of the report.

9.    The Chair thanked Sally Sanders for her report.

 

AGREED that Audit & Risk Management Committee note the contents of the report and the Universal Credit risk and mitigation register.

 

283.

ILLEGAL ENCAMPMENTS IN ENFIELD - 20:15 - 20:25 DOTX 35 KB

To receive an update report from the Executive Director Place regarding illegal encampments in the Borough.

 

Minutes:

NOTED

 

1.    This item will now be heard at the 16 January 2020 Committee meeting.

284.

BREXIT RISK FOR LOCAL AUTHORITIES - 20:25 - 20:35 pdf icon PDF 87 KB

To receive the report of the Director of Law & Governance presenting an update on the Brexit risk for Local Authorities.

                                                                                                            (Report No 97)

Additional documents:

Minutes:

RECEIVED a report from the Director of Law and Governance providing an update on current work by the Council around the risks it faces following the anticipated withdrawal of the UK from the European Union.

 

NOTED

 

1.    The report was presented by Jeremy Chambers (Director of Law & Governance). Just to note that a member of Gemma Young’s (Head of Internal Audit & Risk Management), Ejaz Patel had done much of the work putting this report together.

2.    The report is an update on the Brexit Risk Register, in terms of which scenario the council is preparing for as a Local Authority. The one the council are required to prepare for is that on the 31 October 2019, the UK leaves the EU with no deal.

3.    In terms of risks to the council and its ability to deliver services, this is the worst-case scenario because of many unknowns. So, the council will prepare against that background.

4.    Since the report was written, things are happening at national level and between now and 31 October, the council will keep its risk register under review.

5.    The council have set up a Brexit Panel (BP) chaired by Councillor Ian Barnes (Deputy Leader) and includes 3 Executive Directors, Directors, various other Heads of Service and invited partners from other organisations. As part of the agenda pack there is the Brexit Panel Terms of Reference as detailed at pages 255 – 257 of the report. The BP meets fortnightly and has a standard agenda where all attendees provide updates and then go through the risk register. The council were also part of the London Resilience Forum which includes all London Borough’s, blue light services, military and other organisations.

6.    In terms of the risk register, it consists of 3 parts:

·         Appendix A, pages 211-212 of the report and is a statement of the current position as of today. For the risk register for days 1 – 100.

·         Appendix B, pages 213 – 215 of the report and is the short-term risk register and is more detailed.

·         Appendix C, pages 216 – 254 of the report.

7.    In terms of positivity, the council risk register is in a good place. Compliments are being received along with requests to copy the format from other London Boroughs’. As an Executive Management Team (EMT) and Brexit Panel we are as comfortable as we can be with our preparedness for whatever happens on 31 October 2019 or beyond.

8.    The risk register is in the public domain on the Council’s web site. Signposting central government messages on what people need to do. The authority has invested central government money to assist Enfield residents. The Council are mindful of doing as much as it can to ensure as many EU citizens in the borough apply for settled status.

9.    Gemma Young had recently held a longer-term Brexit risk register workshop. She would be bringing back some long-term risks, looking over 3 years. At present the panel were looking at risks for  ...  view the full minutes text for item 284.

285.

AUDIT & RISK MANAGEMENT COMMITTEE WORK PROGRAMME 2019/20 pdf icon PDF 185 KB

The Committee is asked to agree the Work Programme put forward for the 2019/20 municipal year along with the timetabling of each issue on the Work Programme.

 

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 Cyber & Technology Security report to be heard at the 16 January 2020 meeting. To address the ongoing risk and impact on the Council.

4.    The statement of accounts action plan to be a regular item on the Audit agenda, with a verbal update at the 17 October 2019 committee meeting and a report to be heard thereafter at remaining committee meetings.

5.    Members request that any movement in audit risks need to be reported at every committee meeting. Gemma Young confirmed that a risk register update will be heard at the 17 October 2019 committee meeting.

286.

DATES OF FUTURE MEETINGS

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

 

Thursday 17 October 2019

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 17 October 2019

Thursday 16 January 2020

Thursday 5 March 2020

 

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