Agenda, decisions and minutes

1.1  There were no apologies for absence.

2.1   There were no apologies for absence.

RESOLVED:

·  That the minutes of the previous meeting on 22 April 2022 be agreed as a true and accurate record of the proceedings.

To note that Annual Council on 25 May 2022 appointed Councillor Anna Lynch and Councillor Lynne Troughton as Chair and Vice-Chair of the Audit Committee for the municipal year 2022/23.

RESOLVED:

·  To note that Annual Council on 25 June 2022 appointed Councillor Anna Lynch and Councillor Lynne Troughton as Chair and Vice-Chair of the Audit Committee for the municipal year 2022/23

RESOLVED:

To note the terms of reference.

5.1  The Chair introduced the report. In response to a question from

  Councillor Young the Governance Officer confirmed that no changes

  had been made to the terms of reference.

5.2  The Group Director for Finance and Corporate Resources presented to the Committee, highlighting the following:

·  Audit Committee and the Governance Framework;

·  The core functions of the Audit Committee;

·  The need for a robust risk management framework;

·  Internal control and governance;

·  Financial Management. A key role of the Audit Committee is to approve the Annual Accounts;

·  Internal Audit is an independent assurance function that may review any are of  the Council’s activity;

·  Role of the External Auditors – Mazars;

·  Current developments in External Audit;

·  Details of training resources for Audit Committee members.

5.1 Councillor Troughton asked for clarification on the difficulties around 

  recruiting auditors.

5.3  Suresh Patel (Mazers) told the Committee that these roles were less 

  attractive because the sector was heavily regulated and the difficulties

  related to both Local Government and the Corporate Sector.

RESOLVED:

To note the terms of reference.

RESOLVED:

To note the finance update.

6.1  Ian Williams presented the finance update, highlighting the following:

General Fund Forecast 2021/22/ Forecast variance against budget (After reserves) - £4630m

2021/22 – General Fund Forecast

·  Neighbourhoods and housing are forecasting a significant overspend of £2.9m of which £2m is COVID related;

·  The forecast as at the end of February 2022 showed an overspend of £4.9m after the application of COVID-19, Social Care and the Cyber-attack;

2021/22 Housing Revenue Account (HRA) Position 

·  Forecast of a breakeven position on the HRA but there was a forecast overspend of £4.7m which included impact from COVID-19 of £3.2m;

Medium Term Financial Plan (MTFP)

·  Balanced Budget for 2022/ 23 was agreed by Council in March 2022;

·  The MTFP indicated a budget gap of between £14m and £29m for the next year;

Assumptions and Risks

·  Risks around inflation, fairer funding, recovery from the cyber-attack, increase in demand for services and worsening economic position;

Budget Timeline 

·  The Council is legally required to balance the budget each year;

·  Work on the impact of inflation was ongoing;

The London Picture

·  High staff/ running costs. In particular, Leisure Centres were under much financial pressure;

Account Update

·  2020/21 Council and Pension Fund statement of accounts are substantially completed;

·  Plan to publish the draft 2021/22 statement of accounts by the end of June.

6.2  Councillor Troughton asked if the overspend, referred to, related to one

  of costs that would not carry over into the next financial year

6.3  The Group Director of Finance and Corporate Resources reported that

some costs were recurrent while others would require ongoing provision. Work was ongoing to support those who were in financial difficulties in their occupations. Further, there were costs arising from the cyber-attack. More detail on these costs and the location of overspends would be included in the Overall Financial Position to be submitted to Cabinet in July 2022. 

6.4  Councillor Young asked if the SEN overspend was reflected in the

  financial figures presented.

6.5  The Group Director of Finance and Corporate Resources told the

Committee that there were difficulties in funding SEN nationally. A deep dive had been carried out and a report produced. It was agreed to circulate this report.

Action: The Group Director of Finance and Corporate Resources

It was noted that SEN funding was included in the dedicated schools grant area and was not included in the figures presented.

6.6  Councillor Garbett asked for clarification on the £2m COVID-19 related spend.

6.7  The Group Director of Finance and Corporate Resources referred to the

challenge of income lost by the Council as a result of the pandemic, in  particular affecting the Leisure Service. 

6.8  Councillor Gordon asked for clarification on how the fairer funding

  proposals would impact Hackney Council.

6.9  The Group Director of Finance and Corporate Resources told the Committee that fairer funding was a term given to a review of how funding is distributed to Local Authorities, calculated on a formula driven by factors such as population, deprivation, demographics and the cost of providing the service. The formula  ...  view the full minutes text for item 6.

RESOLVED:

To note the report and the attached risk registers.  

7.1  The Corporate Risk Adviser introduced the report updating the

  committee on the current Corporate Risk Register of the Council as at

  June 2022. The report also identified how risks within the Council are

 identified and managed throughout the financial year and the approach

taken to embedding risk management. Matthew Powell highlighted the

following:

·  2 additional risks on the register: the current cost of living crisis and the recruitment issues, particularly in the area of ICT;

·  The Pensions risk had been de-escalated to Directorate level because of improvements with a new interface;

·  The pandemic risk had fallen;

·  The cyber-attack risk remained;

·  Risks related to Council owned companies remained on the register;  

·  Other risks remained in place;

·  Climate change remained a high risk;

7.2  Councillor Troughton referred the positive initiative around the Single

  Income Maximising Service. She asked for clarification on mitigation in

place to prevent fraud risk and whether there was a gateway to the service.  Councillor Troughton asked what the Council’s position was on staff vaccinations.

7.3  The Corporate Head of Audit, Anti-Fraud and Risk Management referred

to the changes that hackney had undergone as a result of the cyber-attack, the cost of living crisis and the cost of living crisis.  He confirmed Anti-Fraud involvement in new mechanisms for the delivery of support to residents introduced in terms of the design of services and the allocation of resources to deal with concerns identified once the new schemes are in place.

7.4  The Group Director of Finance and Corporate Resources stressed the

importance the Single Income Maximisation Service and of residents getting all the support they can get. He stressed that teams worked closely to ensure that necessary arrangements are in place and that the approach that the council was taking benefited residents. He referred to the good work of the council’s housing needs section in this area

7.5  Councillor Billington questioned the term ‘temporary accommodation’ as

many people remained in this accommodation for long periods of time. She asked for clarification on the associated long term risks and whether numbers were expected to rise and what mitigation was in place. Councillor Billington suggested a deep dive into climate change, in particular, in relation to flooding and mitigation. She confirmed that there had been presentations to the Scrutiny Committee on this matter but the matter was still at the early stages and there was a need to ensure that this was addressed in a more systematic way.

7.6  The Chair agreed that a climate change deep dive be discussed under the Audit Committee’s work plan. She asked for clarification on whether ‘temporary accommodation’ was a statutory term. It was confirmed that this was a statutory term. The Group Director, Finance and Corporate Resources suggested a member drop-in session on temporary accommodation.

7.7  Councillor Young suggested that fuel poverty be a separate risk because of the relationship with climate change and sustainability and the government’s definition of fuel poverty, allowing for risks to be assessed separately with different solutions. She asked  ...  view the full minutes text for item 7.

RESOLVED:

·  To note the report of the Internal Audit’s performance and opinion of the Council’s framework of governance, risk management and internal control;

·  To approve the updated Internal Audit Charter and Strategy;

8.1  The Corporate Head of Audit, Anti-Fraud and Risk Management presented the report providing details of the performance of Internal Audit during 2021/22 and the areas of work undertaken, together with an opinion on the soundness of the control environment in place to minimise risk to the Council. The following were highlighted:

·  Based on audit work carried out during the year it was clear that the Council Control Framework was found to be adequate, continuing to achieve the required level of assurance;

·  Less audits had been carried out over the previous 2 years as a result of the pandemic and the cyber-attack;

·  A number of audits had to be deferred because of the cyber-attack with the majority of the work rescheduled to the current year. Assurances had been drawn on previous work and other methods of assurance;

·  All Key Performance Indicators had been met;

·  There had been a low percentage of adverse audit opinions, comfortably within the previous year’s threshold;

·  There were similar levels of good audit opinion to previous years, albeit, based on a small sample; 

·  A high number of recommendations arose from audit work, fewer were higher priority recommendations;

·  There was a risk based audit plan that determined what was considered but there were no direct comparisons year on year;

·  There had been significant changes to the Charter from the previous year.

8.2  Councillor Selman asked for clarification on the distinction between deferral and cancellation of audits.

8.3  The Corporate Head of Audit, Anti-Fraud and Risk Management confirmed that deferrals resulted from issues such as the cyber-attack while cancellations resulted from changes to service such that the audit is no longer necessary.

8.4  Councillor Smyth asked what lessons had been learned from the pandemic and the cyber-attack and what could be built on to ensure a better service. The Corporate Head of Audit, Anti-Fraud and Risk Management confirmed that the Audit Plan was subject to change during the year and was a risk based plan with input from the Audit Committee and Senior Officers. A number of audits had been combined to consider the Council’s response to the pandemic, providing positive feedback. It had not been possible to take these steps in relation to ICT given current demands on the team. However, the current Audit Plan contained audits in the area of ICT.

RESOLVED:

1.  To note the report of the Internal Audit’s performance and opinion of the Council’s framework of governance, risk management and internal control;

2.  To approve the updated Internal Audit Charter and Strategy;

9.1  Michael Sheffield presented the status report on the Annual Fraud and

  Irregularity 2021/22, highlighting the following:

·  The volume of referrals of fraud matters had increased in the current year, in particular, blue badge and tenancy fraud;

·  In regard to No Recourse to Public Funds (NRPFs), there had been less applicants in the current year;

·  34 housing units were recovered; 

·  9000 properties had been recovered and provided to temporary accommodation;

·  Blue Badge fraud was seen as importance because of the impact on disabled people.

9.2  Councillor Garbett asked if the NRPFs was a permanent team. She

 asked what measures were taken to prevent Blue Badge fraud.

9.3  Councillor Young asked if the purpose of ‘NRPFs’ to identify alternative

  sources of support in circumstances where there is no recourse to public

  funds and whether the team supported access to charitable support.

9.4  The Head of Audit, Anti-Fraud and Risk Management told the Committee that the Audit Service worked in partnership with children services, assisting in carrying out enquiries. He confirmed that the ‘NRPFs’ team was permanent. Funding for investigations was received each year. If support is available elsewhere, then it is not the Council’s responsibility to provide support. In circumstances where is no other support, the Council would assist, signposting to other services.  The Council was proactive in the prevention of Blue Badge. The parking enforcement office refer matters to the Audit team and ensure that misuse is targeted.

9.5  Councillor Selman asked for clarification on the decision to characterise as a fraud work stream and what was done to mitigate risk of this becoming a deterrent. She asked for clarification on the figures in relation to claims cancelled after a positive finding or due to those withdrawing from the process as a result of anxiety about verification.

9.6  Councillor Troughton asked if the Council employed Finance Intelligenc Officers to support investigations.

9.7  The Head of Audit, Anti-Fraud and Risk Management confirmed that when it was discovered that an individual is no entitled there is then a withdrawal.  One case was withdrawn in the previous year following the applicant becoming aware of the level of checking involved in the process. He confirmed that the Audit Section made use of the skill set of the team

RESOLVED:

To note the report.

RESOLVED:

To note the work plan.