Agenda and draft minutes

An apology for absence was received from Councillor Lisa Homan who was a new member of this Committee.

The Chair took the opportunity to thank Councillor Ashok Patel for his contributions to the Committee in the past.

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.

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

This item includes an exempt document. Discussion of it will require passing the proposed resolution at the end of the agenda to exclude members of the public and press.

Matters arising

Responding to the enquiry of Councillor Adrain Pascu-Tulbure, Sukvinder Kalsi (Executive Director of Finance and Corporate Services) agreed to provide the information on the Annual Parking Report 2022 to 2023 when it was published.

ACTION: James Newman

RESOLVED

That the minutes of the meeting held on 11 March 2024 were agreed as an accurate record.

This report, for information, presents the external audit plan and risk assessment for the audit of the financial year 2023/24. In addition, it provides an update on the Statement of Accounts for 2022/23 and 2023/24.

Sukvinder Kalsi (Executive Director of Finance and Corporate Services) briefed members that this report covered the external audit plan, risk assessment for the audit of the financial year 2023/24 and an update on the Statement of Accounts for 2022/23 and 2023/24. He noted that the Audit Risk Assessment 2023/24 (Appendix 2) included the following areas:

· General Enquiries of Management

· Fraud

· Laws and Regulations

· Related Parties

· Going Concern

· Accounting Estimate

Sukvinder Kalsi further noted that the external auditor had issued an unqualified opinion on the 2022/23 Statement of Accounts on 28 March 2024 after they had been approved by this Committee on 11 March 2024. The draft (unaudited) 2023/24 Statement of Accounts were published on the Council’s website on 31 May 2024 in accordance with the statutory deadline, with the public inspection period ended on 12 July 2024.  Upon the completion of external audit work, the final 2023/24 accounts would be presented to the Audit Committee for approval.

Nick Halliwell (Senior Manager – Audit, Grant Thornton) introduced the external audit plan which included separate plans for pension fund and the Council’s general fund accounts. The significant risks identified were similar to that of the previous years except the disclosure requirements following the implementation of IFRS 16 by local authorities from 1 April 2024.  Among the similar ones, the greatest risk identified was materiality. Nick then shared with members the level of materiality being determined for the Council’s fund, senior officer remuneration, and Pension Fund under which a separate materiality was set to detect errors in specific accounts (page 24).  He said that any error above 5% of the materiality levels would be reported in the audit findings.

In regard to signing off the 2023/24 audit, Nick Helliwell noted that the external audit work had started in mid-June and the report would be ready for the Committee’s scrutiny around October to be signed by November 2024. While appreciating the audited accounts, the Chair stressed the need for this Committee to review the external audit reports and sign off accounts as soon as practicable at regular intervals.  Nick agreed to take this on board. 

Councillor Rowan Ree (Cabinet Member for Finance and Reform) said he was pleased to note that the Council managed to sign off 3 years of audits within one financial year which provided reassurance to the residents that LBHF was a well-run council. He also looked forward to the early signing off of the 2023/24 audited accounts.

Councillor Florian Chevoppe-Verdier highlighted the national economic context which continued to present challenges to the local government sector.  There were also increasing demand for local government services, especially in adult and children’s social care.  As such, it was no small feat for this Council to battle significant pressures and balance the book. He nevertheless noted the need to update the name of the Pension Investment Advisor (Appendix 2, page 62) and to rectify the website links for electronic reporting under Safecall (Appendix 2, page 67).

Councillor Chevoppe-Verdier was concerned about the reasons for  ...  view the full minutes text for item 4.

The following is presented by the External Auditor for discussion and noting:

· External Audit Progress and Sector Update (June 2024)

Nick Halliwell (Senior Manager – Audit, Grant Thornton) introduced the report which included audit deliverables planned for 2023/24 and a series of sector updates. He noted that the deliverables were on track, and it was planned to bring the next Audit Plan earlier to the March 2025 meeting. The Audit Findings Report, Auditor’s Report and Auditor’s Annual Report would be presented at the next Committee meeting.

On issues in anticipation of the recent change of government and the King’s Speech as raised by Councillor Adrian Pascu-Tulbure, Nick Halliwell said they expected to see the impact of the new budget, including the claim of the £22 billion black hole, on the councils’ funding. It was also expected that a statutory backstop date for 2023/24 audits would be set probably for the end of February 2025 which should not affect LBHF. 

Regarding Councillor Pascu-Tulbure’s further question on LBHF’s productivity plan (page 99), Councillor Ree said that the plan was published after it had been sent to the new minister.

RESOLVED

That the Committee noted the External Auditor Progress Report and Sector Update.

The Council takes its responsibilities to protect the public purse very seriously and is committed to protecting the public funds it administers. This report provides an account of fraud-related activity undertaken during the financial year 2023/24 to minimise the risk of fraud, bribery and corruption occurring within and against the Council.

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

Andy Hyatt (Head of Fraud) introduced the report which provided an account of fraud-related activity undertaken during the financial year 2023/24.  He highlighted the following:

• It was reassuring to have received high number of referrals from the National Fraud Initiative (NFI) data matching exercise which had helped reduce overpayments by tackling the cases earlier.
• The Economic Crime and Corporate Transparency Act 2023 (the “Act”) had inadvertently included local authorities due to its catchment criteria. Nevertheless, the Act and the defence available provided opportunities for the Council to strengthen its policies and procedures to prevent employees committing fraud offences benefitting the council, and to roll out fraud awareness across the Council.
• On tenancy fraud, while 18 properties had been successfully recovered, there were another 16 cases due to be heard in court. An action plan was put in place with colleagues from housing and legal services with a view to moving them forward and recovering properties for reallocation to people in genuine need.

Councillor David Morton said he ran a small Housing Association of 140 flats and noted there was a current trend for young people to live with their parents. He remarked that because of the legal requirement in passing the social housing tenancy once, a young adult living with the second parent who had succeeded the tenancy would become homeless if that parent also passed away.   He asked if the Council could change the rule.

Andy Hyatt said as he understood, LBHF could award discretionary secondary succession based on the merits of each case to ensure appropriate tenants would not lose tenancy.  He agreed to confirm and provide more detailed information on this after the meeting.

ACTION: Andy Hyatt

Noting notional values helped quantify the financial benefits of counter-fraud efforts which had incurred resources, Councillor Florian Chevoppe-Verdier asked about the “optimisation point” beyond which no additional fraud cases could be recovered even with more investment.  Andy Hyatt said, in his opinion, LBHF had not reached there yet. At a recent meeting with the Chief Executive and Executive Director of Finance and Corporate Services, there was a discussion on the level of resources required to yield the most return on investment on anti-fraud activities and a business case was under preparation.  He then shared with members how the appointment of experienced officers from within the council greatly benefitted the service bringing their different perspectives tackling various types of offences. 

As regards research and study, David Hughes (Director of Audit, Fraud, Risk and Insurance) noted that before its disbandment, the Audit Commission used to do an annual counter-fraud survey.  It was estimated that nationally about 3% to 5% of social housing tenancies were being fraudulently sublet.  Such  fraudulent practice was likely to be more prevalent in London.  He agreed that the more resources being deployed effectively and appropriately, the more properties could be recovered.

Councillor Chevoppe-Verdier noted the numbers of cases for each fraud types set out in paragraph 1.5 of the report (page 107) and asked about the corresponding numbers  ...  view the full minutes text for item 6.

The purpose of this report is to provide members of the Audit Committee with an update on risk management across the Council, including the steps being taken to refresh the Corporate Risk Register and to update the Risk Management Strategy.

David Hughes (Director of Audit, Fraud, Risk and Insurance) outlined the report which provided an update on the steps being taken to refresh the Corporate Risk Register and to review and update the Council’s Risk Management Strategy.  Taking account of the stability of existing risks on the register and changes in the corporate management structure, opportunity would be taken over the summer to work with Senior Leadership Team (SLT) to

• review with the relevant Executive Director who had taken over responsibility for the reassigned areas; and
• refresh the Corporate Risk Register so that it provided more focus on planned mitigations which were intended to maintain or reduce the risk over time.

This would provide enhanced assurance to SLT, Executive Directors and Members that planned actions were being implemented, were having the desired effect and provided opportunities to take corrective action where appropriate.

David Hughes noted that the Risk Management Strategy was last developed in 2019 before the pandemic.  It was now timely to revise the Strategy to support the delivery of the LBHF Vision and quality services to the residents and communities. It was planned to present the new Strategy to SLT Assurance in November and then this Committee at its December meeting. Responding to Councillor Florian Chevoppe-Verdier’s question about SLT, David  noted that the SLT Assurance met once a month and it was a good practice for risk management colleagues to brief SLT as and when appropriate on issues about risks and their control as well as ways to make improvements in key areas.

In reply to the Chair’s enquiry, David Hughes advised that to enhance the visual representation of the Corporate Risk Register, the heat map would be kept and dashboard reporting would be brought along in the Risk Management Strategy.  As regards the Chair’s further question on the extent of consultation with the departments in terms of risk management, Jules Binney (Risk and Assurance Manager) explained that the risks at the top of the Corporate Risk Register were long term corporate risks and hence were not expected to change significantly over time. However, moving down the refreshed Corporate Risk Register to the departmental level, the risks would be weighted and rated in the same way and those with more issues of concern might be highlighted in the Corporate Risk Register. These risks and their mitigation measures would be presented in consistent terminology to enhance public understanding.

Councillor Chevoppe-Verdier was concerned whether the standards and approaches under the refreshed Risk Management Strategy and Corporate Risk Register were subject to external assessment.  David Hughes assured members that as part of the Internal Audit plan, external validation would be carried out and this Committee would also be duly consulted.

The Chair said standardising the terminology could avoid misunderstanding and he looked forward to receiving the next report.

RESOLVED

That the Committee noted the report.

This report summarises the work of Internal Audit in 2023/24 and provides the opinion of the Director of Audit, Fraud, Risk and Insurance on the adequacy and effectiveness of the Council’s framework of governance, risk management and control. This opinion is provided for the use of the London Borough of Hammersmith and Fulham and is used to support its Annual Governance Statement.

Moira Mackie (Head of Internal Audit) presented the report which summarised the work of Internal Audit in 2023/24 listed in Appendix 1. It also provided the opinion of the Director of Audit, Fraud, Risk and Insurance on the adequacy and effectiveness of the Council’s framework of governance, risk management and control. This opinion was used to support LBHF’s Annual Governance Statement. She noted that while LBHF had the most substantial assurance audits among the three councils serviced, most were inevitably satisfactory assurance audits given the wide range of work involved from an individual school to a more complex system.

Members noted that the Internal Audit Team (IAT) did regular follow-up work to make sure recommendations were implemented.  Moira Mackie was pleased to report that there was a good level of implementation of recommendations and those not fully implemented were listed in Appendix 4 (page 152). The work of the IAT was quality assessed externally to demonstrate it was in line with the internal audit standards (Appendix 5, page 154).

David Hughes (Director of Audit, Fraud, Risk and Insurance) referred to the two limited assurance audits on housing voids and adoption services (pages 148 -151) and highlighted the good engagement at a senior level through the audit work. For example, the audit work posed a lot of challenges in the housing space and substantial improvement work on void properties was going on.  The IAT also briefed more junior members of staff in terms of engagement during the internal audit process.  He remarked that both audits were making good progress.  

With reference to the final report of External Quality Assessment of the Internal Audit performance prepared by London Borough of Lambeth (Appendix 5), Councillor Florian Chevoppe-Verdier applauded at the conclusion that the internal audit services for the three councils generally conformed with the Public Sector Internal Audit Standards which was the highest available rating (page 155). He noted from the survey of key stakeholders that the results were very positive and a testament to the professionalism and expertise of the internal audit service. He found the survey results at Appendix B very encouraging, in particular about 80% of respondents agreed that internal audit activity promoted appropriate ethics and values within the organisation (page 168).  In response to his question, David Hughes advised that around 40 survey questionnaires were sent to senior officers and chairs of Audit Committees across the three councils. The anonymous responses went directly to the external assessor.  David considered the feedback very helpful and positive.

Councillor Chevoppe-Verdier noted audit work on election readiness was in progress and asked whether further report would be provided in future.  Moira Mackie said due to the short notice of the General Election, the related audit work had to be paused.  IAT planned to work with the election team in summer and present a further report at the next meeting.

ACTION: Moira Mackie

Councillor Adrain Pascu-Tulbure noted from limited assurance audits that at the time of audit (October 2023) 310 properties were voids and  ...  view the full minutes text for item 8.

The following meeting dates have been scheduled:

· 16 September 2024

· 9 December 2024

· 10 March 2025

The Committee noted the dates of future meetings:

· 16 September 2024

· 9 December 2024

· 10 March 2025

NOTE: The September meeting has been rescheduled to 6 November