Agenda and minutes

Audit and Risk Management Committee - Tuesday, 7th March, 2017 7.00 pm

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

Contact: Metin Halil 

Items
No. Item

386.

WELCOME AND APOLOGIES FOR ABSENCE - 19:00 - 19:05

Minutes:

Councillor Maguire (Chair) welcomed everyone to the meeting.

 

Apologies for absence were received from Councillor Jansev Jemal and Vivian Uzoechi (Insurance & Risk Manager).

 

 

There was a private meeting between Members and BDO (External Audit), before the start of the scheduled Committee meeting. (18:45 – 19:00).

 

 

 

 

387.

DECLARATION OF INTEREST - 19:05 - 19:10

Minutes:

There were no declarations of interest.

388.

2016/17 AUDIT & RISK MANAGEMENT SERVICE PROGRESS REPORT - 19:10 - 19:20 pdf icon PDF 437 KB

To receive the report of the Executive Director of Finance, Resources & Customer Services summarising the work that the Internal Audit and Risk Management Service (ARMS) has completed for the period 1 April 2016 to 6 February 2017.

(Report No.237)

 

 

Minutes:

RECEIVED the report of the Executive Director of Finance, Resources & Customer Services (No.237) summarising the work of the Internal Audit & Risk Management Service for the period between 1 April and 6 February 2017.

 

NOTED

 

1.    Table 1, highlighted at 3.4 (page 2 of the report) detailed progress against the internal audit plan for 2016/17. All the planned audits had been started except where they had been amended. The section had completed 42% of the plan to date.

2.     Changes to the 2016/17 Internal Audit Plan are detailed at appendix 1 (pages 9 – 11) of the report. There had not been any limited or no assurance reports issued since the last Audit & Risk Management committee meeting. Table 2 (page 3) of the report details the limited assurances issued to date.

3.    Managers’ progress with implementing internal audit recommendations are summarised in Chart 1 (page 4) of the report. Overall, 64% of high priority recommendations and 69% of medium risk priority recommendations had been implemented. The chart details what the different departments are achieving. Present at the meeting were representatives from Children’s Services (Tony Theodoulou – Executive Director of Children’s Services), HHASC (Bindi Nagra & Doug Wilson) and Regeneration & Environment (Ian Davis – Executive Director).

4.    Counter fraud results are detailed at Table 4(a) (page 4) and Table 4(b) (page 5) of the report. These show that the team are on target in achieving savings from frauds prevented and investigations work.

The target for the recovery of council houses had been amended from 75 to 55. This reflected a more realistic outcome as the target is shared with council housing and dependent on council housing actions to achieve those recoveries. They had suffered from a re-structure during the year and 75 was unlikely to be achieved by the end of the year.

5.    The internal Audit Quality Assurance measures are detailed at Table 5 (page 6) of the report.

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

a.    Chaitali Roy (Independent Person) referred to Table 4(b) and whether any comparison of statistics had been with other Local Authorities to see how Enfield was performing. Christine Webster (Head – Internal Audit & Risk Management) advised that a comparison is done on an annual basis which compares council housing recoveries, but other local authorities did not monitor their counter fraud savings in the same way that Enfield did.

b.    Christine Webster was confident that the majority of reviews will be completed with the target being to get 97% of audits to draft report stage by the end of March 2017. However, due to an in-house re-structure, a small amount of these may slip and will be completed by the next Audit & Risk Management Team meeting in July 2017.

c.    Christine Webster would provide a summary of the completed whistle blowing allegations, within the annual report that will be coming to the Audit & Risk management meeting in July 2017.

d.    The Chair requested an update regarding the implementation of management actions (Chart 1, page  ...  view the full minutes text for item 388.

389.

SERVICE DELIVERY RISK REGISTERS UPDATE - CHILDRENS' SERVICES, HHASC AND REGENERATION & ENVIRONMENT - 19:20 - 19:30 pdf icon PDF 419 KB

To receive a report from the Executive Director of Finance, Resources and Customer Services providing a Risk Registers update.

(Report No.239)

 

 

 

 

Minutes:

RECEIVED the report of the Executive Director of Finance, Resources & Customer Services (No.239) presenting a summary of registers covering Health, Housing & Adult Social Care (HHASC), Children’s Services and Regeneration & Environment.

 

NOTED

 

1.    The report presents risk registers covering Health, Housing & Adult Social Care (HHASC) Children’s Services and Regeneration & Environment.

2.    The following representatives from the relevant service areas were in attendance for this meeting to answer questions about their relevant registers:

·         Tony Theodoulou – Executive Director - Children’s Services.

·         Ian Davis – Executive Director – Regeneration & Environment

·         Bindi Nagra – Assistant Director – HHASC (Strategy & Resources)

·         Doug Wilson – HHASC (Head – Strategy & Service Development.

3.    The Chair requested that each representative should talk about each red risk listed in the Service Delivery Risk Register, relating to their service area.

4.    Bindi Nagra and Doug Wilson spoke about each red risk, highlighting the following:

a.    Risk to stability of health and social care system -

·         This risk related to the pressures the NHS is currently under and in particular the discharge of patients from hospital.

·         The North Middlesex Hospital, The Royal Free and nationally, patients are increasingly being pushed onto the Adult Social Care system quicker and in greater volume.

·         This is a significant risk affecting the borough and the whole country with a significant impact on budgets. The need to remove people from hospital quicker has impacted on the numbers of people going into residential and nursing home care in greater numbers.

b.    Movement of CHC (Continued Health Care) clients with MH (Mental Health) needs into the community –

·         This is a risk that has come into fruition. The CCG have some clients cared for on the Chase Farm site who have now been re-assessed against the CHC criteria. This has resulted in 6 of those clients now re-classified as social care clients therefore is a financial risk and is classified as red because the council will be getting a transfer of 6 clients.

c.    Nursing Care home capacity –

·         Over the past 2 years, in Enfield, the number of vacancies for nursing care homes had gone down to zero. The issue that the council has is that they are competing with other local authorities to buy beds in Enfield.

·         The mitigation measure for this risk is a re-provision project for a 70 bed care home in Enfield, managed by a trading company which would provide a significant number of additional nursing home beds.

·         The new nursing care home was ready by the end of January 2017. It would be ready to move in by the end of April 2017 and fully occupied by May 2017.

5.    Ian Davis had no red risks relating to Regeneration & Environment but  highlighted the following risks:

a.    Failure to recruit and retain staff –

·         Kornferry consultants were carrying out management re-structure proposals and had bought forward proposals for pay scale options. The department recognise and want to address the loss of knowledge and retain experienced staff as part of the re-structure. Kornferry were  ...  view the full minutes text for item 389.

390.

DRAFT 2017/18 INTERNAL AUDIT PLAN AND INTERNAL AUDIT CHARTER - 19:30 - 19:40 pdf icon PDF 184 KB

To receive the report of the Executive Director of Finance, Resources & Customer Services presenting the draft 2017/18 Internal Audit Plan and Internal Audit Charter.

(Report No.240)

 

 

 

 

Additional documents:

Minutes:

RECEIVED the report of the Director of Finance, Resources & Customer Services (No.240) presenting the draft 2017/18 Internal Audit Plan and Internal Audit Charter.

 

NOTED

 

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

 

a.    This report included the draft internal audit plan 2017/18 and the refreshed Internal Audit Charter.

b.    The plan is presented in Appendix A (page 35) of the report and follows the process the section took to identify the audit areas.

c.    The diagram detailed at Section 1 (page 37) of the report walks through the different steps which enabled the team to link the plan to the Council’s Strategic objectives and risks and identifying the auditable units.

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

e.    The summary table detailed on page 38 of the report, shows how the team identify the highest scoring areas and how these are broken down across different departments. The table shows that the proposed audit days for 2017/18 are a 1,000 which is a reduction of the days proposed for 2016/17.

f.     Detail on the proposed internal Audit plan for 2017/18 is provided in section 2 (pages 40-43) of the report.

g.    Section 3 (pages 45-48) of the report details the Internal Audit Charter for 2017/18 and is a compilation of the Public Sector Internal Audit Standards (PSIAS) which requires the authority to have a charter. It shows how the team will deliver its work, the approach taken and what is required from managers, in return. It is a refresh from last year’s version with the only change being the new external auditors.

 

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

a.    The Chair requested that for all the individual audit plans, internal audit also introduce a Brexit element.

ACTION: Christine Webster (Head – Internal Audit & Risk Management).

b.    With regards to the proposed 2017/18 Internal Audit plan, the allocation of 50 audit days proposed for the Local Authority Trading Companies, would be for one Audit but audit plans would be made for them all.

c.    As detailed on page 44 of the report, the proposed internal audit plan for schools and the length of the proposed audit days are reflected by changes that may occur within those schools i.e. changes in head teacher, school business manager, etc. These audits are backed up by more detailed risk assessments which show if there has been a change in head teacher or school business manager.

d.    Christine Webster clarified the statistics shown at the table detailed on page 38 of the report relating to the reduction in audit days for 2016/17.

3.    The Chair thanked Christine Webster for her report.

 

AGREED that the draft 2016/17 Internal Audit Plan & Internal Audit Charter be approved, subject to any final comments or amendments from members or officers.

 

 

391.

COUNTER FRAUD STRATEGY AND ACTION PLAN - 19:40 - 19:50 pdf icon PDF 427 KB

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

 

(Report No.238)

 

 

Minutes:

RECEIVED the report (No.238) of the Executive Director of Finance, Resources & Customer Services presenting an updated Counter Fraud Strategy and Associated Action Plan for the Council.

 

NOTED

 

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

a.    There was a requirement to keep the Counter Fraud Strategy updated.

b.    The Counter fraud Strategy was last updated in November 2015 and minor amendments had been made to reflect changes in key contacts and organisational structure within the Council and to take account of findings from a recent Home Office study on Serious and Organised Crime.

c.    The Counter Fraud Action Plan is presented at on pages 73-75 of the report.

d.    The Policy Statement (Counter Fraud and Corruption Statement) is appended at page 59 of the report and once endorsed by the committee, it will be signed by the Chief Executive and Leader of the Council and published onto the Audit & Risk Management Service’s web pages.

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

a.    Fraud awareness training is targeted in risk areas and a number of training sessions have been done in key areas of the Council.

b.    The Counter Fraud hotline can be used to report fraud across the Council. The number is 020 8379 4289.

c.    Chaitali Roy (Independent Member) highlighted that reporting fraud was still very much Council focussed and perhaps the Council should think about reporting fraud to wider sources i.e. government wide and local authority wide. Christine Webster advised that the whistle blowing policy details how reporting fraud worked.

 

AGREED to endorse the Counter Fraud Strategy, including the Counter Fraud and Corruption Policy Statement and Action Plan.

 

392.

2017/18 TREASURY MANAGEMENT STRATEGY & PRUDENTIAL INDICATORS - COUNCIL BORROWING, CAPITAL EXPENDITURE & SENSITIVITY OF INTEREST RATES - 19:50 - 20:05 pdf icon PDF 845 KB

To receive a report from the Executive Director of Finance, Resources & Customer Services presenting the Council’s proposed 2017/18 Treasury Management Strategy & Prudential Indicators.

 

Additional documents:

Minutes:

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

 

NOTED

 

1.    James Rolfe (Executive Director – Finance, Resources & Customer Services) introduced the strategy. The Treasury Management Strategy is the document that is part of the Annual Budget report that is agreed yearly in, February, by full council and updated as necessary through the year. There had been a lot of discussion about the treasury management strategy this year around the council’s approach to the mix of variable and fixed interest rates. The detail within the strategy is based on the advice received from the council’s external management advisers and has gone through quite a rigorous testing process.

2.    The Strategy was presented by Cagdas Canbolat (Finance Manager), who highlighted the following issues and key areas:

a.    Cagdas Canbolat used a power point presentation to summarise the report.

b.    The strategy was detailed at pages 77 – 101 of the report.

c.    The strategy had to be approved before the start of the 2017/18 financial year as required under the CIPFA (Chartered Institute of Public Finance & Accountancy) code of practise.

d.    The main area of the strategy focusses on the borrowing and investment strategy. The other 2 main sections of the strategy are the prudential indicators and the minimum revenue provision, which is a policy document that would need to be approved at this meeting.

e.    In relation to borrowing, through the strategy and prudential indicators, the council can ensure borrowing is affordable and is able to put aside relevant funding to pay the council’s long term and short term debts.

f.     The key focus on investments is security, liquidity and return. Security was the key to the strategy.

g.    As detailed within the strategy and issued by the CIPFA code, the council needs to produce 3 main reports each year:

·         Treasury Management Strategy 2017/18

·         Mid-year Treasury Management report

·         Annual Treasury Management Out-Turn report

h.    Market conditions are considered as the strategy is put together. Page 93 of the report details a forecast of the market conditions. The council’s treasury management consultants are reporting an eventual rise in interest rates probably by the start of 2019.

i.      The strategy focusses on council borrowing and the main area finance are focussing on was to ensure that cash is readily available to meet the day to day running costs of the council and to meet the council’s service activities. When borrowing, the finance team need to strike a balance between securing low interest costs and achieving cost certainty over the period for which funds are required.

j.      The other focus within the strategy is the investment strategy. As part of the CIPFA code and DCLG (Department of Communities & Local Government) guidance, the council are required and need to ensure that, when investing its cash surplus, it will need to be prudent, have regard to security and liquidity in terms of the counter party list. However, Finance did not expect any  ...  view the full minutes text for item 392.

393.

SCRUTINY OF RIPA STATISTICS - 20:05 - 20:15 pdf icon PDF 145 KB

To receive a report from the Executive Director of Finance, Resources & Customer Services providing an update on the use of RIPA to ensure that it is being used in accordance with the law.

(Report No.236)

 

Minutes:

RECEIVED a report from the Director of Finance, Resources and Customer Services requiring the Audit Committee to receive an internal quarterly report  from the Monitoring Officer on the use of RIPA within the Council and to note that there have been no applications since the last report.

 

NOTED that

 

1.    During the monitoring period covered by the report and since the last Audit Committee meeting, there had not been any new RIPA applications.

2.    The Council will be inspected by the Office of Surveillance Commissioners on the 27th March 2017. A report for this will be heard at the July 2018 Committee meeting.

ACTION: Asmat Hussain – Assistant Director of Legal & Governance

 

AGREED to note the requirements under the Audit Committee to receive quarterly reports from the Monitoring Officer on the use of RIPA within the Council and to note that there had been no further applications since the last report for Directed Surveillance and Cover Human Intelligence Source [CHIS].

 

394.

EXTERNAL AUDIT - 2016/17 AUDIT PLAN - BDO - 20:15 - 20:30 pdf icon PDF 132 KB

To receive a report from BDO (External Auditors) presenting the 2016/17 Audit Plan.     

 

 

 

Minutes:

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

 

NOTED

 

1.    This was the planning report which sets set out the key issues and review of the external audit for 2016/17.

2.    The review would be conducted through the summer and included in BDO’s final report to the committee in September 2017. To deliver their audit opinion on Enfield’s financial statements that the finance team will be producing after the end of March 2017.

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

a.    Referred to page 8 of the report and the need for the council to produce group accounts. However, it was agreed with management that the difference with the group accounts and the single entity council accounts wouldn’t be materially different and therefore chose not to produce group accounts, which was fine for last year.

b.    However, the position had now shifted i.e. council trading companies extent of growth and number of subsidiaries. Those subsidiaries are now material to the council with the view that the council finance team should produce group accounts to draw those subsidiaries into the overall recorded accounts for the year end. This would be the key change when the draft statements are produced in September 2017.

c.    The report on page 11 of the report detailed what BDO believed to be the key audit risks, as a risk to BDO, in terms of delivering BDO’s opinion on the financial statements. These are classified as significant and normal risks. The 2 significant risks are set out on page 11 of the report:

·         Management Override

·         Revenue Recognition

·         Property, Plant and Equipment Valuations

d.    Explanations of the other risks within the financial statements and other significant risks are detailed from page 16 of the report. This highlights the 3 risks that BDO are pursuing as part of their audit for this year:

·         Sustainable finances

·         Meridian Water and other regeneration projects

·         Enfield 2017

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

a.    The audit fees had gone down due to the outcome of the housing benefits work, as reported at the last committee meeting.

b.    The finance team were more than happy to produce group accounts (last year) but it was dependent on resources. The team and council are facing restraint resources and in addition to that the timetable next year is going to be significantly bought forward. Presently, the team have to produce accounts by June and next year by the end of May. BDO currently provide an audit opinion by the end of September but next year will have to provide that by the end of July.

5.    The Chair thanked BDO for their informative report.

 

AGREED that the External draft Audit Planning Report submitted by BDO for 2016/17 be noted and endorsed by the Committee.

 

 

395.

EXTERNAL AUDIT PROGRESS REPORT - BDO - 20:30 - 20:45 pdf icon PDF 77 KB

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

 

 

 

 

Minutes:

RECEIVED from BDO (external auditors) the Audit Progress Report to 2 March 2017.

 

1.    This is the progress report that is bought to each committee meeting, regarding the external audit for 2016/17.

2.    The BDO audit plan had just been delivered to the committee and BDO were in the early stages of delivering the audit to the committee, as detailed at page 27 of the report.

3.    The remainder of the report outlines the different pieces of work BDO will need to do which has been timetabled will be reported in September 2017.

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

a.    Councillor Neville made an enquiry relating to the Treasury Management Strategy which was heard as an earlier item. 

 

At this point of the meeting a resolution was passed to move the meeting to Part 2.

 

EXCLUSION OF THE PRESS AND PUBLIC

 

 

RESOLVED, in accordance with Section 100(A) of the Local Government Act 1972 to exclude the press and public from the meeting for the items listed on part 2 of the agenda on the grounds that they involve 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).

 

7. Treasury Management Strategy & Prudential Indicators – Council Borrowing, Capital Expenditure & Sensitivity of Interest Rates

 

1.  James Rolfe (Executive Director of Finance, Resources & Customer Services) responded to questions raised about the Council’s external treasury management advisers.

 

 

 

 

 

AGREED to note the progress report on the external audit to 2 March 2017. 

 

396.

MINUTES - 20:45 - 20:50 pdf icon PDF 213 KB

Audit & Risk Management Committee

 

a.         To receive and agree the minutes of the Audit Committee meeting held on Thursday 12 January 2017, as a correct record.

 

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

 

Additional documents:

Minutes:

NOTED the progress update on actions identified at previous meetings.

 

AGREED that the minutes of the Audit & Risk Management Committee held on Tuesday 12 January 2017 be approved and signed as a correct record.

 

397.

AUDIT & RISK MANAGEMENT COMMITTEE WORK PROGRAMME 2017/18 - 20:50 - 20:55 pdf icon PDF 178 KB

To consider and comment on the Committee’s draft work programme for 2017/18.

 

Minutes:

RECEIVED an outline work programme for the Committee covering the 2017/18 Municipal Year Committee.

 

NOTED

 

1.    The Whistle Blowing Policy would now be heard at the July 2017 meeting.

 

AGREED to approve the outline work programme for 2017/18.

 

 

398.

DATES OF FUTURE MEETINGS

Members are asked to note:

 

(a)      that this is the last ordinary meeting of the Audit Committee scheduled for the 2016/17 Municipal Year;

 

(b)      that a new programme of dates for the 2017/18 municipal year are currently being prepared for inclusion and approval as part of the Council’s 2017/18 calendar of meetings, which is due to be considered and approved at the Annual Council meeting on 10 May 2017.

 

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

 

Minutes:

NOTED that this had been the last meeting of the Committee for the 2016/17 Municipal Year. A new programme of dates for 2017/18 are currently being prepared for inclusion on the Council’s calendar of meetings due to be approved at the Annual Council meeting in May 2017.