Agenda and minutes

The Chair welcomed everyone to the meeting. Apologies for absence had been received from Councillors Brett and Leaver.

The Chair agreed to amend the running order of the agenda to accommodate those in attendance. However for clarity the minutes are shown in the order of the published agenda.

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

There are no declarations of interest.

Members & Democratic Services Group

To receive and agree the minutes of the Members & Democratic Services Group meeting held on the 20 June 2020.

General Purposes Committee

To receive and agree the minutes of the General Purposes Committee meeting held on 23 July 2020.

AGREED the minutes of the Member & Democratic Services Group meeting held on 30 June 2020 be approved.

AGREED the minutes of the General Purposes Committee meeting held on 23 July 2020 be approved.

To receive an update report on the Final Accounts.

Fay Hammond, Executive Director Finance, Matt Bowmer, Director of Finance and Gareth Robinson, Head of Corporate Finance introduced this report.

NOTED

1.      Fay Hammond advised that although the accounts were out on time at the end of June, the lack of resources within the team has caused problems with the audit, so currently the council is not in the position that it would like to be in. Every effort will be made working with BDO to hit the November deadline, but this is at risk.

2.    The accounts have taken place against the backdrop of Covid 19 and against the need for major change as noted in the October 2019 report to the previous Audit and Risk Committee.

3.    The five key factors noted in that report were; the need for a new asset register; inconsistent set of accounts; inadequate quality control, financial system issues and HRA valuations of beacon properties.

4.    There were serious concerns from finance and by BDO on the data contained within the Asset Register.

5.    Inconsistent accounts due to no core trial balance which is often the basis of the statement of accounts itself

6.    Lack of an adequate quality control process and a financial system which is difficult to interrogate so very difficult to response to auditors with the key documentation evidence that they require in a timely manner.

7.    To resolve these issues a resourcing plan was put in place. This involved bringing in two temporary chief accountants with a specific remit on capital and revenue, as well as additional resources to partly backfill vacant posts to ensure that there were adequate resources to deliver the audit. Unfortunately, prior to closedown of accounts both agency staff left, and the Council was unable to replace them. On top of this one team member retired and two individuals left the team. Two new staff members at accountant level were recruited, unfortunately one of these had a bad injury and will be off work until early November and the other started 19^th October 2020. The Council is reliant on two staff members for the main Accounts, although the main pension fund team is fully resourced. Moreover, the main accounts require specialised resource, preventing major reallocation of existing internal resources. There is a long-term plan as the Council has gone out to recruit to the role of Chief Accountant and trying to arrange a short-term contract as well.

8.    The Council did meet the first deadline to produce the Accounts under revised timelines. However, it will require a significant extra push to meet the next deadline.

9.    A new Asset Register has been successfully implemented and in the course of this implementation, the officers have discovered numerous errors in the records. The challenge for BDO is due to the delays on the other items, they have not been able to review the data migration on the asset register.

10.A new trial balance was produced for the accounts and the main statements are consistent but notes  ...  view the full minutes text for item 4.

To receive from BDO (external auditors) an update report for noting.

 David Eagles from BDO (external auditors) introduced the report.

NOTED:

1.    BDO covered the following two key points; to look at where we are and why we are where are and a technical point of reporting significant control deficiencies identified up to this point to the Committee which are directly relevant to the position of where we are.

2.    The current position in terms of BDO’s view of the situation is that the Council started out with recognition that the audit trail provided last year, the accounts productions process including valuations did not work and needed fundamental revision. Significant revisions to the process have been undertaken both in terms of commissioned valuations and the HRA beacons, the asset register and also some of the trail and mapping of the accounts.

3.    There was also a clear view on the resourcing needed for the accounts. Losing two very key senior individuals before closedown of accounts and to lose other people put the Council in a very difficult position. Inevitably, this has led to some lack of focus on some of the trail as the processes push through to achieve the deadline. This has meant that some of the trail and the quality control has not taken place in the way it was originally intentioned.

4.    BDO’s view is that the Council would not be in the situation that it is currently in had the resourcing that was planned to be in place been there. There also had some bearing on support for the audit once BDO were virtually on site to ask questions and start challenging things to find the samplings and respond to queries. Due to the quality control issues there were more queries coming through than BDO would normally raise in a normal year as part of this process.

5.    It will be incredibly challenging to meet the 30 November deadline; this will require a right first-time approach to things. When BDO request information it must be the right item for the right timeframe. This is part of the reason for this two week pause.

6.    In terms of the control deficiencies BDO refer to two particular items reporting under ISA265 they are asked to report as early as possible. The control issues are detailed on page 40 onwards of the agenda pack, one relates to the preparation of the financial statements quality control and the second point relates to the significant risk of valuation, relates to some of the challenges that were unable to be completed to the original plan.

7.    Nothing is finished as yet there are a number of things that BDO are working through with the Council to address.

The Committee agreed to note the report.

To receive a verbal update from BDO (external auditors).

David Eagles from BDO (external auditors) provided a brief verbal update

NOTED

1.    BDO had hoped to bring the audit completion report for the pension fund audit report to this meeting, most of the audit is completed. However, the manager who was drafting the report has been off sick with Covid-19. This will now come to the November meeting of the Committee.

2.    BDO sign off both opinions at the same time so the Pension fund accounts cannot be finalised until the main council’s accounts are.

To receive the Final Pension Fund Accounts.

Bola Tobun, Finance Manager, Pensions and Treasury introduced the report.

NOTED:

1.    The Council is expecting BDO to issue confirmation and report of the audit, unfortunately this is not available.

2.    The account itself is on page 54 of the agenda papers. The accounts contain two statements; where we deal with members contributions from employers and employees. The second statement is the transactions showing how the money is invested and the return that is made- the Net Assets Statement.

3.    The only change since draft account that the Committee received in July is on the returns from investment, the position has been revised as the pension fund banker/ custodian Northern Trust used the previous months valuation for five of our Fund’s portfolios. This is because the prices and valuations of these portfolio’s cannot easily be obtained on the stock market. The global pandemic has had an effect on the market asset hence most of the assets depreciated further by the 31^st March 2020. When the draft account was presented back in July the closing net assets were £1.167bn but is now £1,149bn. The assets depreciated further from the previous year by a total by £35.7bn.

4.    The fund has appreciated by almost £100m by the end of June 2020 to £1.267bn. Due to the effect the Covid 19 pandemic  is having on the global economy a triennial valuation update was undertaken as at 31^st March 2020, the detail of the outcome of this exercise can be found on  page 48 of the agenda (section28). The fund was overfunded with funding level of 103% and surplus of £39m, when the triennial valuation was undertaken as at 31^st March 2019. A valuation update undertaken as at 31^st March 2020 indicates a reduction in funding level to 96% with corresponding deficit value of £50m.

5.    Attention is drawn to the table comparing Enfield with other funds (page 48 section 27). One year to date Enfield is ranked at 10 out of 63 funds.

6.    The covering report was asking for approval from the Committee this is to be held back until BDO’s ISA260 on the accounts. This has been delayed due to illness at BDO.

Questions, comments and queries raised:

·         Clarity requested what the benchmark fund is and how it is arrived at? Officers advised that the benchmark in this case is the fund benchmark based on different targets, index and benchmark of each asset class or portfolio that made up Enfield total investments. Enfield pension fund benchmark is therefore a basket or aggregate of each of all our investment portfolios benchmarks. As we have a different index for each of our active global equities and for passive global equities, different index and benchmark for our bonds and private equity. The PIRC universe is the average return of all the 63 LGPS funds returns with this organisation called PIRC (Pensions & Investment Research Consultants Ltd) league table.

·         In the report talks about a deficit but looking at the numbers looks  ...  view the full minutes text for item 7.

To receive an update report on Brokerage.

Doug Wilson, Head of Strategy and Service Development introduced the report.

NOTED

1.    The Brokerage service works in Health and Adult Social Care. As part of our statutory functions the council is required to support people to purchase care when they are unable to do this for themselves.

2.    A Brokerage audit was undertaken as part of the 2018/19 Audit Plan. This service was proposed for audit to provide assurance that the brokers were working appropriately, and that there was appropriate oversight and governance.

3.    The audit was completed in March 2019 with Reasonable Assurance. A couple of items were picked up; the process and policy for selecting care providers was not clear enough, the criteria applied was not clear, and the documentation and decision-making process was not clear.

4.    Work has been undertaken to put the necessary work in place including policy documentation, processes and regular oversight processes.

5.    A subsequent report came back to the previous Audit and Risk Committee covering the transition of service from one part of the council to another. The auditors were satisfied that the appropriate measures had been put in place and all the actions and recommendations within the report had been addressed, specifically around how the council determines which care providers are chosen. This information is detailed in the appendices on the agenda papers.

6.    There is also a regular assurance process in place including regular staff supervision. As part of the supervision a sample of cases will be reviewed to ensure that the criteria for selection is clear and documented and that the outcome is as we would expect it to be.

The committee agreed to note the report.

To receive a report from Gemma Young, Head of Internal Audit and Risk Management providing updates on:

·         Corporate Risk Register

·         Brexit Risk Register

·         COVID-19 Risk Register

This was introduced by Gemma Young, Head of Internal Audit and Risk Management

NOTED:

1.    The report includes the Corporate Risk Register, the COVID-19 Risk Register and the Brexit Risk Register.

2.    The Corporate Risk Register has been circulated for review by DMT’s and has been updated with two new risks being added. These are; Civil Unrest and Climate Change.

3.    The COVID-19 Risk Register has been updated by the COVID-19 Recovery Group and by Silver with two additional risks. These are; Local Lockdown and Second Wave.

4.    The Brexit Risk Register is currently being recirculated by the Brexit Panel. There are no major updates to this register. This will come back to the committee in November due to the closeness of the deadline. This will include a major update to ensure that this includes the most up to date risks.

The following query was raised:

The statutory deadline on the EU Settlement scheme is six months after the transition period. Is this issue picked up in the Risk Register? Gemma Young agreed to ensure that this is picked up in the major update of the Brexit Risk Register.

To receive a report on the Audit and Risk Management Service Progress update.

This was introduced by Gemma Young, Head of Internal Audit and Risk Management.

NOTED

1.    This item comes to every meeting to update the Committee members

2.    On the 2020/21 Internal Audit Plan there are 58% audit assessment reviews commenced with 8% of these finalised. This compares to 54% commenced and 16% completed in September 2019. There was a slight delay to the start of the plan due to the impacts of Covid-19.

3.    Since the plan was agreed in July 2020, no audits have been cancelled but one additional audit has been added to the plan. This is Enfield Stands Together, which was the council’s fund-raising response to the Covid 19 crisis. This has been audited already

4.    Five audits have been completed since the start of the year. Four of which were grant certifications or management letters where an assurance opinion is not required. The remaining audit was a Limited assurance opinion and is detailed within the agenda report.

5.    In terms of tracking agreed actions from internal audit work, managers have implemented 82% of high priority and 54 % of medium priority which were due by the end of August 2020.

6.    The report also summarises the work undertaken by the Counter Fraud Team with a particular focus on the business grants given out during the Covid-19 pandemic. Grants covering £1.4m have been withheld and recovered.

7.    The Counter Fraud team has identified savings to date of £1.9m in the financial year so far.

8.    £28k has been recovered under a Proceeds of Crime Act and a theft of £20k from the Council is being prosecuted by the Crown Prosecution Service.

The following query was raised:

·         Following a query on overdue audit actions that have been outstanding for more than one year. Gemma Young advised that this has been a real concern. Part of the Annual Audit opinion last year picked up that there were quite a lot of outstanding actions. Having identified the issue of recommendations not being completed in a timely manner there are additional Assurance Boards being held. These are chaired by the Chief Executive of the Council and has a very senior focus. Gemma Young is also attending Senior Management Team meetings across the Directorates much more frequently. This position should improve further over the next six months.

The Committee agreed to note the work completed by the Audit and Risk Management Service during the period 1 April 2020 to 15 September 2020.

To receive the Audit and Risk Committee Annual Report 2019-20

The Chair Cllr Bedekova introduced the Audit & Risk Management Committee Annual Report 2019/20.

NOTED

1.    The Audit & Risk Management Committee Annual Report 2019/20 is a summary of work the Audit & Risk Management Committee had achieved and oversaw the work of Internal Audit 2018/19.

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

3.    This report is produced as a requirement of the council constitution and provides details of the previous work that the committee has undertaken.

4.    The summary of work is all detailed within the report on pages 249-254.

5.    The Audit & Risk Management Committee has now been replaced by the General Purposes Committee and the terms of reference are detailed on pages 255-257 of the report.

AGREED that the Annual Report be approved for referral by the Chair onto Council at its meeting on the 18 November 2020.

The work programme for 2020/21 was noted with no additions.

To note the dates of future meetings:

Thursday 26 November 2020

Thursday 14 January 2021

Thursday 4 March 2021

Thursday 22 April 2021

All meetings start at 7pm.

The dates of future meetings were noted.