Agenda and minutes

Audit and Pensions Committee - Wednesday, 21st June, 2017 7.00 pm

Venue: Courtyard Room - Hammersmith Town Hall. View directions

Contact: David Abbott  Tel: 020 8753 2063

No. Item


Minutes of the Previous Meeting pdf icon PDF 345 KB

To approve the minutes of the previous meeting as an accurate record.


Councillor PJ Murphy reiterated his request for information on the proportion of absenteeism caused by stress within the organisation.

ACTION: Nick Austin


The minutes of the previous meeting, held on 21 March 2017, were approved and signed by the Chair.


Apologies for Absence


Apologies for lateness were received from Councillor Mark Loveday.


Declarations of Interest

If a Councillor has a disclosable pecuniary interest in a particular item, whether or not it is entered in the Authority’s register of interests, or any other significant interest which they consider should be declared in the public interest, they should declare the existence and, unless it is a sensitive interest as defined in the Member Code of Conduct, the nature of the interest at the commencement of the consideration of that item or as soon as it becomes apparent.


At meetings where members of the public are allowed to be in attendance and speak, any Councillor with a disclosable pecuniary interest or other significant interest may also make representations, give evidence or answer questions about the matter.  The Councillor must then withdraw immediately from the meeting before the matter is discussed and any vote taken.


Where Members of the public are not allowed to be in attendance and speak, then the Councillor with a disclosable pecuniary interest should withdraw from the meeting whilst the matter is under consideration. Councillors who have declared other significant interests should also withdraw from the meeting if they consider their continued participation in the matter would not be reasonable in the circumstances and may give rise to a perception of a conflict of interest.


Councillors are not obliged to withdraw from the meeting where a dispensation to that effect has been obtained from the Audit, Pensions and Standards Committee.


There were no declarations of interest.


Appointment of Vice Chair

The Committee is asked to elect a Vice Chair from its membership for the 2017-18 Municipal Year.



That Councillor Michael Adam be appointed Vice Chair for the Municipal Year 2017-18.


Pensions Sub-Committee Membership pdf icon PDF 110 KB

The Committee is asked to agree the membership of the Pensions Sub-Committee for the 2017-18 Municipal Year.



That the Committee approved the following membership of the Pensions Sub-Committee for 2017-18:

·         Councillor Iain Cassidy (Chair)

·         Councillor PJ Murphy

·         Councillor Guy Vincent

·         Councillor Michael Adam

·         Councillor Nicholas Botterill


Treasury Outturn Report 2016-17 pdf icon PDF 340 KB

This report presents the Council’s Outturn Treasury Report for 2016-17 in accordance with the Council’s treasury management practices.


Peter Carpenter, Head of Treasury and Pensions, presented the Council’s Outturn Treasury Report for 2016-17 and noted that the overall treasury position at year end was higher than the previous year at £327m. Returns were down by around £300,000 because of low interest rates. Due to the level of cash held (£327m at 31 March 2016) it was anticipated that no new borrowing would be required in 2016-17.


Councillor Michael Adam, referring to paragraph 5.27 of the report, noted that the average return on investment was 45 basis points (0.45 percent). He asked if the higher yield investments agreed by members would come through this year – and if there was room to accept some more risk in this area for higher returns. Peter Carpenter said the Treasury Department would be putting £50-80m into enhanced money market funds over the medium term and expected a rise in returns of 15 basis points up to a total of 60 basis points.


Councillor PJ Murphy, referring to paragraph 5.17 of the report concerning Housing Revenue Account self-financing, asked when a policy on the charging of interest would be agreed. Peter Carpenter said Treasury needed to investigate this issue and consider an overall borrowing policy – he expected this to be done by September.


Councillor Nicolas Botterill, noted that 5.21 of the report stated that any financial instrument held with a non-UK bank was limited to £50m. He asked if this had changed recently because following the financial crisis of 2008-2009 this limit was lowered considerably. Peter Carpenter said the limit had been raised in the past year. He reassured the Committee that the Council followed Government Treasury Advisors Guidance and only used the most trusted institutions.



That the Committee noted the report.


Update on Health and Safety Checks pdf icon PDF 182 KB

This report provides an update on actions taken by Property Services since the previous report in March 2017.


Jane Martin, Interim Director for Property Services, and Chris Culleton, Principal Compliance Manager, attended to present the update report and provide a verbal update on the Council’s response to the Grenfell Tower fire.


Jane Martin reported that all of the recommendations from the original internal audit report had now been completed (detailed in 4.1 of the report). The committee had requested further independent review of Mitie’s remaining 591 EICR test reports not covered by the original sample review but due to staff resource issues this had not been commissioned and would not be available for review and comment until the September meeting.


Housing Property Services had appointed additional staff to support the existing teams and strengthen health and safety compliance and a new compliance database was being introduced at the end of July.


Jane Martin informed the committee that a new Fire Safety Strategy had been written and, with the appointment of consultant fire specialist Graham Coupar, Housing Property Services had embarked on an immediate targeted programme of service evaluation and improvements to ensure H&F was in a better position to deal with existing and future fire investigations, meet its responsibilities under the fire safety regulations, and further develop the borough’s strategic approach to fire safety and risk management.


Following the fire at Grenfell Tower, officers and MITIE technicians had checked all blocks of six stories and above. A block of 12 stories and above is classified as a ‘tower’ and there were 14 in the borough. Three towers on the Edward Woods Estate were cladded, and while residents were understandably concerned, officers assured the committee that the panelling was a stone wall product and not comparable to the flammable cladding on Grenfell Tower. The fire brigade had visited the towers and tested the fitting of the panelling and had no immediate concerns. Officers were listening to residents’ concerns and holding advice surgeries.


Councillor Nicholas Botterill asked if there was a reason all the relevant fire risk assessments were not publicly available on the Council’s website. Chris Culleton said historically the Council had not published them but officers were intending to going forward. Councillors supported this and felt it was good practice to do so.


Councillor Guy Vincent asked what comfort the Council could provide to residents in tower blocks. Would sprinklers be installed for example? Jane Martin said officers were putting together cost proposals for the installation of sprinklers (in individual properties and common areas) on blocks six stories and above. The proposals would be completed by 14 July.


Councillor Guy Vincent asked if there would be funding available from Central Government for the installation of sprinklers and other fire safety improvements. Officers said it would be welcome but felt it was unlikely.


Councillor Mark Loveday noted that the committee had previously been told the programme of electrical safety testing would be completed by 2019 – he felt that was not a tenable position anymore. He asked officers how quickly the remaining electrical testing could be completed. Chris  ...  view the full minutes text for item 7.


Corporate Anti-Fraud Service End of Year Report 2016-17 pdf icon PDF 507 KB

This report provides an account of fraud related activity undertaken by the Corporate Anti-Fraud Service from 1 April 2016 to 31 March 2017.


Andrew Hyatt, Head of Fraud, presented the report on fraud related activity undertaken by the Corporate Anti-Fraud Service between 1 April 2016 and 31 March 2017. He noted that case summary one in appendix one of the report should have stated that the employee in question was a member of staff at a local school and was dismissed following the outcome of the investigation.


Councillor PJ Murphy, referring to 1.4 of the report, noted that proceeds of crime cases awarded a total of £662,073 to the Council but only £310,551 had been recovered. He asked if there was a business case there to have more staff to enable to service to recover more of this money. In response, Andrew Hyatt said the majority of the money awarded was compensation for losses the Council had incurred through fraud which had been recovered through the investigations. Having more staff was not guaranteed to increase the amount of money recovered but the team was looking at other improvements - such as hiring an additional financial investigator and bringing in a housing specialist to investigate illegal sub-letting.


Councillor Guy Vincent noted that the amount of proven fraud in the borough was increasing (table 1.5 of the report) and asked whether there genuinely were more incidents of fraud or if the Council was simply getting better at detection. Andrew Hyatt said the overall level of fraud seemed to be the same but the team had more resources this year and that had improved output. For example; Right to Buy was an area of growth because the team had become a part of the applications process – allowing them to vet and challenge applicants.


Councillor Ben Coleman asked if the team should take on more staff to increase output further. Andrew Hyatt said the team was currently carrying some vacancies, as they were finding it hard to recruit experienced investigators. He was looking to bring the team up to full complement first then looking at what could be achieved with a larger team. It was also noted that the fraud values, other than proceeds of crime figures, in the report were notional values used for benchmarking, such as the previous Audit Commission’s assessment of the impact of subletting – the team was working on determining actual cashable values to more accurately represent the position in the borough.


Councillor Vivienne Lukey, referring to 4.3 of the report, asked how the team was enhancing the culture of fraud identification and prevention within the Council. Andrew Hyatt said the team wanted to be more proactive in this area and would be going into departments to do classroom-based fraud awareness training for staff to help them recognise and report suspected fraud to the team.


Councillor Michael Adam, asked how much money had been recovered from business rates relief for vacant properties fraud. Andrew Hyatt said he would provide that information after the meeting.

ACTION: Andrew Hyatt


Councillor Michael Adam noted that the Council seemed to have detected very few illegal  ...  view the full minutes text for item 8.


Internal Audit Quarterly Report pdf icon PDF 437 KB

This report summarises internal audit activity during the period 1 January to 31 March 2017 as well as reporting on the performance of the Internal Audit service.


Geoff Drake, Senior Audit Manager, presented the report that summarised internal audit activity between 1 January to 31 March 2017. He noted that there had been a total of 19 audit reports finalised in the period, three of which were limited assurance reports.


Outstanding Recommendations – Children’s Services


Dave McNamara, Director of Finance and Resources in Children’s Services, attended for the outstanding recommendations that related to Children’s Services. He informed the committee that recommendations 6 and 9 (Old Oak Primary and Vanessa Nursery) were attributable to a failure of process within Children's Services to pick up the outstanding recommendations and contact schools so they could resolve them. He had now confirmed with the schools that the recommendations had been implemented.


Councillor Donald Johnson asked if there was a communication problem between schools and the Council. Dave McNamara said in this case there was a simple failure to communicate between his officers and schools. Internal communications had been tightened to ensure this didn’t happen again. He added that in general his team had a very good working relationship with schools in the borough.


Dave McNamara reported that regarding recommendations 7 and 8 (Information Security), the survey was across the three shared-services areas and only three schools in the borough responded – though headteachers said that most issues were reflected in the responses. Links had been made with 3BM and the Council’s information manager and they were arranging an education programme for schools, starting in September, on data sharing and retention to ensure they had the correct processes in place.


Outstanding Recommendations - Adult Social Care


Mike Boyle, Director for Strategic Commissioning and Enterprise in Adult Social Care, attended to take questions on the outstanding recommendations for Adult Social Care and tabled an updated version of the recommendations current status. He apologised for the initial incomplete response presented in the published papers for the meeting.


Councillor PJ Murphy said he preferred the first version of the report because it seemed more honest. He felt the updated version was filled with jargon but ultimately had the same content – that the requisite training had not been done. He asked officers to use plain English in future. Mike Boyle said because of a capacity issue within the service it was not the best way to get practitioners trained. Now a joint-programme had been put in place with the CCG and it would be cascaded out between September and October.


Councillor PJ Murphy questioned whether there was also a planning issue there – if services make changes they needed to build in the time to train staff. That should have been built in when the policy was agreed. Mike Boyle said that was a fair criticism but the most important issue going forward was ensuring that as new people joined the organisations they could access the right training at the right time.



That the Committee noted the report.


Final Internal Audit Report - St Thomas of Canterbury 2016-17 pdf icon PDF 624 KB


The Chair informed the Committee that the school’s Headteacher and Chair of Governors had been invited to the meeting but were unable to attend due to prior engagements. They had requested that the item be deferred to the September meeting and the committee subsequently agreed.


ACTION: David Abbott


Councillor Vivienne Lukey asked when the school was scheduled to be inspected by Ofsted as there were some issues in the report that would likely be interesting to inspectors. Dave McNamara said he could provide that information after the meeting.


Final Audit Report - Service Charges 2016-17 pdf icon PDF 818 KB


Geoff Drake, Senior Audit Manager, presented the report and noted that because the issues found by the audit that made this a limited assurance report related solely to BT Managed Services the Chair agreed that the lead officers were not required to attend the committee.


Councillor Mark Loveday had three questions that he asked to be sent to the relevant officers for a response:

  1. Was the Council using the latest guidance (TECH 03/11) from the ICAEW? This guidance was on accounting and reporting in relation to service charge accounts for residential properties on which variable service charges are paid in accordance with a lease or tenancy agreement.
  2. Was billing major works separately to regular service charges within the terms of the lease? In the past there had been arguments made that any costs should be recovered from the normal service charge.
  3. The report stated that 40 percent of service charge receipts were initially miss-posted. He asked for an update on the current position.


ACTIONS: Geoff Drake


Annual Governance Statement Action Plan and Outstanding Recommendations for External Audit pdf icon PDF 227 KB

This report summarises progress implementing recommendations from the External Audit Report 2015/16 and the Annual Governance Statement.


Geoff Drake, Senior Audit Manager, presented the report which summarised progress on implementing recommendations arising from the External Audit Report 2015/16 and the Annual Governance Statement.



That the committee noted the contents of the report.



Head of Internal Audit Annual Report 2016-17 pdf icon PDF 922 KB

This report is a summary of all audit work undertaken during the 2016/17 financial year.


Geoff Drake, Senior Audit Manager, presented the report that provided a summary of all audit work undertaken during the 2016/17 financial year and provided assurances on the overall System of Internal Control, the System of Internal Financial Control, Corporate Governance and Risk Management. The 2016-17 year opinion stated that internal audit could provide reasonable assurance that the system of internal control in place at Hammersmith & Fulham Council for the year ended 31 March 2017 generally accorded with proper practice with the exception of the entries listed at section 8 of the report. This section listed the limited assurance audit reports issued plus the details of the significant control weaknesses included in the draft Annual Governance Statement for the year to March 2017.


Councillor PJ Murphy said it would be helpful for members of the committee if, in future, the assurance levels table in Appendix 1 had an end column that gave a number of recommendations still outstanding.


Councillor Michael Adam noted that Pensions Sub-Committee had discussed issues related to the problems with the transfer of data between Capita and Surrey County Council and asked why there hadn’t been an audit of an area of know weakness. Geoff Drake responded that internal audit was aware of the problems and felt an audit would simply surface problems that the Council was already aware of. There would however be an audit of pensions regulations compliance and the current data transfer from payroll should be addressed as part of that audit.


Councillor Guy Vincent asked if the Council’s audit function had the resources necessary to be effective and what the committee could do to support it. Geoff Drake said he appreciated the support given by the committee. He added that now David Hughes, the new Director of Audit, Fraud, Risk and Insurance, was in post he would be reviewing processes and reporting back on potential improvements shortly.



That the committee noted the contents of this report.


Internal Audit Charter 2017 pdf icon PDF 318 KB

This provides an updated version of the Internal Audit Charter and Strategy following a review in 2017.


Geoff Drake presented the updated version of the charter and strategy following a 2017 year review.



That the committee noted the report.


Risk Management Update pdf icon PDF 461 KB

This report provides an oversight of the Council’s key service risks and the processes to facilitate the identification and management of those risks.


Mike Sloniowski, Risk Manager, presented the report that provided an oversight of the Council’s processes to identify and manage its significant corporate business risks. He acknowledged that recent months had seen a number of dramatic and tragic events – the Grenfell Tower Fire, terrorist attacks in London and Manchester, the NHS ransomware cyber-attack, and a snap-election – and noted that corporate risks were being reassessed as well as the Council’s business resilience and continuity arrangements in view of them.


Councillor Michael Adam noted that the Royal Borough of Kensington and Chelsea Council was, until last week, widely considered to be a well-run and efficient organisation but their response to a major civil emergency was clearly lacking. He asked what officers were doing to understand what went wrong in Kensington and check their processes against our own. Mike Sloniowski said they were looking at lessons learned and following recent events were looking to use new processes to ensure the Council had a dynamic and agile continuity response. David Hughes said the team would be look closely at emergency planning and business continuity arrangements in the event of major incident.


Councillor PJ Murphy noted that Hammersmith and Fulham Council was historically closely linked with RBKC through the shared services arrangements and asked if our response to a similar incident would have been different. Mike Sloniowski said that Hammersmith and Fulham had a sovereign emergency planning and business continuity function, with its own response plan and the Emergency Planning Service would be assessing the lessons from Kensington and Chelsea’s response.


Councillor Vivienne Lukey noted that she was working for Westminster City Council at the time of the 7/7 bombings and the legacy of that event was a set of clear government guidelines on emergency response – but they didn’t seem to be used in relation to Grenfell. Mike Sloniowski said officers in the Council’s Emergency Services and Business Continuity Teams did look at the latest guidance from the Government as well as best practice from business and other local authorities.


Councillor Guy Vincent, referring to Appendix 1 on the exempt agenda, asked if a financial value could be determined for the risks presented. Mike Sloniowski said values could be attached to help articulate the severity of those risks – but advised that some departments were very risk-averse and some of those risks were likely to be moderated down. Training would be given to staff to help them more accurately assess the level of certain risks.


Councillor Nicholas Botterill, noted the high degree of risks associated with the new ICT service and asked if it was not achieving the desired outcomes. Mike Sloniowski advised that at the start of projects officers tended to mark risks as fairly high because there were so many unknowns – but he expected them to come down over time as the new team settled in.


Councillor Mark Loveday observed that the collapse of the Tri-Borough arrangements had been announced before these risks were collated but none of the Directors  ...  view the full minutes text for item 15.


Date of next meeting

The next meeting is scheduled for 20 September 2017.


The next meeting was scheduled for 20 September 2017.


Exclusion of Public and Press

The Committee is invited to resolve, under Section 100A (4) of the Local Government Act 1972, that the public and press be excluded from the meeting during the consideration of the following items of business, on the grounds that they contain the likely disclosure of exempt information, as defined in paragraphs 3 and 7 of Schedule 12A of the said Act, and that the public interest in maintaining the exemption currently outweighs the public interest in disclosing the information.



That under Section 100A(4) of the Local Government Act 1972, that the public and press be excluded from the meeting during the consideration of the following items of business, on the grounds that they contain the likely disclosure of exempt information, as defined in paragraph 3 of Schedule 12A of the said Act, and that the public interest in maintaining the exemption currently outweighs the public interest in disclosing the information.


Risk Management Update - Exempt Elements

This items contains the exempt elements of Item 15.


Discussion of this item can be found under Item 15.