Agenda and minutes

Audit Committee - Tuesday, 12th September, 2023 7.00 pm

Venue: Main Hall (1st Floor) - 3 Shortlands, Hammersmith, W6 8DA. View directions

Contact: Debbie Yau  Email:

Link: Watch the meeting on YouTube

No. Item


Apologies for Absence


There were no apologies for absence.


An apology for lateness was received from Councillor Ashok Patel (who entered the meeting at 7:20 pm)



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 Standards Committee.


There were no declarations of interest.


Minutes of the Previous Meeting pdf icon PDF 336 KB

This item includes an appendix that contains exempt information. Discussion of the appendix will require passing the proposed resolution at the end of the agenda to exclude members of the public and press.


To approve the minutes and exempt minutes of the previous meeting and to note any outstanding actions.

Additional documents:


The minutes and exempt minutes of the previous meeting held on 26 July 2023 were agreed as an accurate record.


Statement of Accounts 2021/22, including Pension Fund Accounts and Annual Governance Statement and update on 2020/21 Accounts and 2022/23 External Audit pdf icon PDF 232 KB

This report presents the London Borough of Hammersmith & Fulham’s 2021/22 Statement of Accounts, including the Pension Fund Accounts and Annual Governance Statement for approval.

Additional documents:


Sukvinder Kalsi (Strategic Director of Finance) introduced the 2021/22 Statement of Accounts (SOAs) of the London Borough of Hammersmith & Fulham (LBHF), including the Pension Fund Accounts and Annual Governance Statement for approval.


Andy Conlan (Audit Senior Manager, Grant Thornton (GT)) briefed the Committee onthe timeline and progress of the audits of the various accounts in 2020/21 and 2021/22 and noted the 2021/22 audit was substantially completed more efficiently with the Council’s current Finance team. He then elaborated on the details of a main item remaining outstanding in the 2021/22 audit, i.e., the requirement for an updated triennial actuarial valuation of the net pension fund liability which was calculated by all local governments every three years. He further highlighted the adjustments and disclosure changes identified during the audit which were fewer than those found in the previous audit in 2020/21. The 2021/22 audit also made positive progress in the implementation of prior year recommendations. 


Andy Conlon anticipated that after he and Paul Dossett (Key Audit Partner, GT) completed the detailed audit review, they would be able to give an unqualified  opinion to the LBHF’s 2021/22 SOAs, including the Pension Fund Accounts.  The Committee noted that the External Auditor had completed the field work for the Value for Money Auditor’s report for both 2020/21 and 2021/22 which, together with the signed SOAs, would be laid before the Full Council in November 2023.


Members noted that the accounts were subject to changes until they were formally signed and in the event of any further changes, it was requested that these be approved by the Chair of the Committee, in consultation with the Director of Finance and any significant changes would be notified to Committee (page 14, para. 4).  In response to Councillor Florian Chevoppe-Verdier’s concern about the procedures involved, the Chair said that he would consult the Committee on significant changes before he signed the accounts. 


ACTION: The Chair/Sukvinder Kalsi


Councillor Adrian Pascu-Tulbure asked about potential solutions to the issues that the External Auditor had in obtaining suitable analyses and populations of debtors and creditors and the need for more resources to complete the required testing (page 359). Andy Conlan clarified that whilst this was an issue identified in the 2020/21 audit findings, the Council’s responses in this area were much improved for the 2021/22 process with no problems encountered.   Chris Harris (Head of Finance) added that it was caused by the legacy balances brought forward in debtors and creditors listings provided to audit and the management had undertaken housekeeping exercise to review legacy balances which would be carried out regularly going forward.


Councillor Chevoppe-Verdier remarked that while the External Auditor had identified risk associated with Aviva Infrastructure in the Pension Fund Annual Report 2021/22, the Pension Fund Committee had already taken action to replace it. Separately, he appreciated the Council’s ability to deliver an underspend against the budget despite the increasing cost pressures due to the cost-of-living crisis, high inflation and interest rates. 


Echoing his appreciation, Councillor Rowan Ree (Cabinet  ...  view the full minutes text for item 4.


Risk Assessment and Audit Plan 2022/23 pdf icon PDF 6 MB

The Committee is invited to note the content of the Risk Assessment and Audit Plan 2022/23.


Andy Conlan (Audit Senior Manager, GT) introduced the document which provided an overview of the planned scope and timing of the LBHF’s statutory audit and Pension Fund for those charged with governance. He highlighted the auditor reporting delays and the reasons outlined by National Audit Office (page 405), and the New Auditing Standards by International Standards Auditing (ISA) (UK), i.e. ISA 315 and ISA 240 (page 409).


Responding to the Chair’s question about value for money of the audit service in view of the proposed increase of the audit fee for 2022/23, David Hughes (Director of Audit, Fraud, Risk and Insurance) noted that the PSAA was responsible for the appointment of local government External Auditors and acceptance of the proposed audit fees. While competition might have driven down the fees, investment to enhance the quality of staff was also essential.  In comparing the audit fees for local governments and private companies, he considered that the audit service provided by GT, which was subject to external quality assurance review, was value for money. 


In this connection, Councillor Ashok Patel recalled that at the meeting held last year, he had requested to see the other bids for the contract but the information was not yet provided. Andy Conlan pointed out that while all audit fees were publicly available, they were not directly comparable because the scale set by PSAA for each body was different and each had its own historical basis.  The Chair urged officers to provide the information requested by Councillor Patel. 


 ACTION: Sukvinder Kalsi


Replying Councillor Adrian Pascu-Tulbure’s enquiry about materiality and reputation, Andy Conlan noted that materiality was a broad concept used in financial statements to indicate significance in decision-making while reputational risk was less of an impact than materiality. It was related more to value for money.




That the Committee noted the Risk Assessment and Audit Plan 2022/23.




Treasury Management Outturn Report 2022/23 pdf icon PDF 261 KB

The purpose of this report is to present the Council’s annual Treasury Management outturn for 2022/23, in accordance with the Council’s treasury management practices. It is a regulatory requirement for this outturn report to be presented to Audit Committee and Cabinet during September of the relevant year.



Patrick Rowe (Strategic Finance Manager, Treasury and Pensions) presented the Council’s annual Treasury Management outturn for 2022/23, in accordance with the Council’s Treasury management practices. He highlighted that no new borrowing had been undertaken in the 2022/23 financial year. In view of current interest rates, it was prudent to consider the borrowing strategy carefully and utilise the Council’s cash balances as far as possible.


Councillor Rowan Ree (Cabinet Member for Finance and Reform) expressed appreciation to the work of the Treasury team in taking no borrowing under a volatile market environment of 14 consecutive Bank Rate increases.


Councillor Florian Chevoppe-Verdier asked about the Treasury Limits and Prudential Indicators.  Patrick Rowe responded that they were drawn up in accordance with CIPFA guidance and approved by Full Council.  Assessment was carried out on a quarterly basis to ensure that the Treasury function was operating within the limits set in the Treasury Management Strategy with reference to the Capital Strategy.


The Chair asked if there would be an opportunity to re-negotiate for a better interest rate upon maturity of loans.  Patrick Rowe remarked that the treasury team would continue the strategy of utilising the cash balances to fund the capital programme as appropriate.  Among the broad range of borrowing options available, the authority could access competitive rate from the Public Works Loan Board.  For short-term borrowing opportunities, consideration would be given to taking multiple smaller deals over a period of 6 months with different durations to reduce maturity and interest rate risk.


Referring to the recent S114 notice issued by Birmingham Council, Councillor Ashok Patel was concerned about the depletion of the Council’s cash balances, highlighting the importance of reserves for emergency situations.  Patrick Rowe noted that the Council’s current cash balance totalled £246 million and would be monitored in line with other strategic considerations.


Replying to Councillor Adrian Pascu-Tulbure’s question on the optimal level of cash balances, Patrick Rowe suggested that this was subject to other strategic considerations at the time such as yields on investments relative to borrowing costs, and cashflow projections. He suggested that were balances to drop below a threshold of £50 million, officers would carefully consider the cashflow projections over the immediate term and consider taking new borrowing. In this regard, Councillor Ree reminded members that the purpose of Treasury was not serving hedge fund functions. It was prudent to ensure that the Reserve yielded appropriate returns with easily accessible cash when it was needed.




That the Committee noted the annual Treasury Management Outturn Report for 2022/23.



Local Government and Social Care Ombudsman Annual Review Letter 22/23 pdf icon PDF 137 KB

The Local Government and Social Care Ombudsman (LGSCO) provides all member organisations with an annual letter every July. This provides a summary of performance in the previous financial year. This report updates Audit Committee on the content of the most recent annual letter which refers to performance from April 2022 to March 2023.


Additional documents:


Nicola Ellis (Strategic Director Chief Operating Officer, Corporate Services) introduced the report on the Local Government and Social Care Ombudsman (LGSCO) annual review letter 2022/23 which was received in July 2023. The letter provided a summary of the performance of LBHF from April 2022 to March 2023 which had improved when compared to 2021/2022 and was in the top four when compared to all London Boroughs. She further noted that the LGSCO covered majority of council services excluding those under the purview of the Housing Ombudsman who usually published performance data annually in December. 


Noting that of the 28 requests investigated by the Ombudsman with decisions issued, 18 of them were upheld (representing 64%), the Chair asked about how were the lessons learnt. Nicola Ellis noted that after receiving the detailed decision from the Ombudsman, discussions were held among staff in the complaint handling and resident experience teams as well as those providing the service in question to see what individual learning could be taken away.  The management would generally focus more on decision findings with a view to initiating changes across the Council.


Councillor Ashok Patel considered that 64% of cases being upheld was not impressive and even unacceptable from the commercial sector perspective. Nicola Ellis clarified that among all the services provided by the Council during the period of April 22 – Mar 23, the Ombudsman received 88 cases and 28 of them were investigated with decisions upheld for 18 cases. In reply to Councillor Patel’s further enquiry about referring unresolved cases for external review before they reached the Ombudsman, Nicola Ellis noted that the Council had followed the Ombudsman’s recommendation for local governments and implemented a 2-stage complaint handling process.


Councillor Adrian Pascu-Tulbure noted with concern about the increasing trends on the number of full decisions made by the Ombudsman (10 in 2020/21, 17 in 2021/22, 28 in 2022/23) and the number of decisions upheld (7 in 2020/21, 13 in 2021/22 and 18 in 2022/23).  Nicola Ellis pointed out that the 2020/21 Decisions were lower as the Ombudsman had stopped accepting complaints for a period during the pandemic. For the same reason, there was a time delay in publishing the decisions. As regards the use of “disappointing” and “concerning” in the Ombudsman’s letter under “Your organisation’s performance” (page 442), Nicola Ellis noted that it referred to the same area of Housing service where improvements were happening at the moment.


Councillor Florian Chevoppe-Verdier agreed that the Ombudsman’s letter had demonstrated that performance of Hammersmith and Fulham Council had improved when compared to 2021/2022 as the recovery from the pandemic entailed a lot of changes such as working from home and hybrid working.  Nonetheless, the LBHF was doing a much better job, with 20% less decisions upheld than its neighbours. 


In reply to Councillor Paul Alexander’s enquiry about the forecast for the number of cases going through investigations and decisions by the Ombudsman for 2022/23, Nicola Ellis believed that it would be around the same level as  ...  view the full minutes text for item 7.


Dates of future meetings

The following meeting dates have been scheduled:


·       27 November 2023

·       11 March 2024


The following dates of future meetings were noted:


· 27 November 2023

· 11 March 2024