Hounslow Council


Agenda and minutes

Venue: Committee Room 1, Civic Centre, Lampton Road, Hounslow. View directions

Contact: Mike Smith telephone: 020 8583 2069; email:  mike.smith@hounslow.gov.uk 

Items
No. Item

54.

Hounslow Homes Update Report - Fraud Investigation and Improvement Measures pdf icon PDF 179 KB

Additional documents:

Minutes:

See report of the Head of Audit and Investigation (Agenda Item 11).

 

Stephen Tinkler, Head of Audit and Investigation, introduced the report.  He summarised the keys areas of on-going focus for audit reviews in 2014/2015.  He would be able to provide details of audit plans in respect of housing related services for the Audit Committee in early 2015.

 

He provided the following additional information in relation to questions from Members of the Committee.  He stated that nothing had been identified in audit reviews of Hounslow Homes undertaken in 2013/2014 which were relevant to the fraud investigation.  The review of housing repairs had been superseded by the investigation.  The Auditors at the time did not find any instances of manipulation of voids figures.

 

Whist there was a robust process for Directors and Assistant Directors within the Council to be accountable for assurance statements, similar requirements did not apply for Hounslow Homes.  This would change when the service was brought back in to the Council.  The accountability arrangements were in line with the CIPFA/SOLACE framework.  The audit plans for 2015/2016 would be presented to the Audit Committee for endorsement.  The proposed audit reviews would focus on areas of highest risk.  The Audit Action Plan was the responsibility through the Head of Audit to the Corporate Leadership Team.

 

The Hounslow Homes fraud investigation was not undertaken by the Council and the Council was not able to confirm the veracity of all the statements and findings in that report.  It was, therefore, important that Members at this meeting did not make any statements which would put the Council at legal or financial risk.

 

The Council had no control of, and was not a party to, the police investigation and, therefore, could not comment on why it was not possible to recover or secure hard drives of personal computers, or obtain backups.  There was also no knowledge as to whether the Police had a warrant to examine hardware.  The Council’s Section 151 Officer did not have a role to intervene or challenge the mechanics of the police investigation.  In terms of the audit process, Hounslow Homes provided an assurance statement as a service supplier.  The Council’s external auditor was not the auditor of Hounslow Homes as an individual body.

 

Members then went on to make the following observations and comments on the issues in the report.

 

Councillor Malhotra suggested that there may have been a weakness or a failing in the auditing process. The Council’s external auditor, Tony Crawley, felt that this was unfounded and not an appropriate comment to make.

 

Councillor Malhotra suggested that there was a need, generally, to consider how the Council ensured that money was spent effectively by suppliers and service providers and that there was a more effective assurance mechanism in place.

 

Councillor Hearn felt that there was insufficient information available to the Committee to form an opinion as to the adequacy and effectiveness of the investigation and subsequent actions which were taken.  There was significant missing information as to  ...  view the full minutes text for item 54.

55.

Minutes of the meeting held on 22 September 2014 pdf icon PDF 85 KB

Minutes:

The minutes of the meeting were confirmed subject to detailed amendments to be supplied by the External Auditor concerning minute 47 (Annual Governance Statement).

56.

Matters arising from the minutes

Minutes:

Objection to the Accounts – Minute 47 refers

 

Tony Crawley, External Auditor, reported that he was seeking the Council’s observations and also had some further questions to ask of the Council.

57.

Whistleblowing Policy pdf icon PDF 91 KB

Minutes:

See report of the Assistant Director, Transformation and Human Resources (Agenda Item 4).

 

Jacky Sorrell, HR Business Manager, introduced the report.  She stated that the Council did not subscribe to an independent hotline for whistleblowing. However, there were various mechanisms available to staff to raise concerns independently.  The number of whistle blowing cases appeared low, but were similar to other organisations, and to independent whistle blowing schemes, in terms of the number of cases per employees.  The Whistle Blowing policy was available for Councillors to use.

 

Councillor Malhotra questioned whether there should be any external facing awareness of the whistleblowing scheme - perhaps linked in to fraud reporting.  It was explained that there was a fraud hotline for members of the public.  Whistleblowing was normally regarded as an internal mechanism available to staff of the organisation.  This was perhaps an issue for the Communications Team and Jacky Sorrell agreed to refer the issue on for them to consider whether it was appropriate to include mention of whistle blowing arrangements in a public facing context on the website.

 

Resolved -

 

That the annual review of whistleblowing complaints be noted.

58.

Treasury Management Strategy, Investment Strategy and Minimum Revenue Provision Policy 2015/16 pdf icon PDF 164 KB

Additional documents:

Minutes:

See report of the Lead Member for Finance and Citizen Engagement (Agenda Item 5).

 

Lorelei Watson, Head of Treasury, Pensions and Capital, introduced the report.  She gave the following information in response to questions from Committee Members.  Short term borrowing and investment was approved by the Treasury Management Officer and counter-signed either by herself or the Assistant Director of Strategic Finance and then another Head of Finance.  This would occur on an almost daily basis.  The improvement works at the Treaty Centre related to leased space used by the Council.  Individual papers would be reported to Cabinet with proposals for schools capital funding.  Capita were the Council’s Treasury Management advisers.  They had no direct Councillor involvement, although quarterly reports were made to Cabinet.  Training was offered to relevant Councillors on treasury management, as required.  It was confirmed that overnight markets were used.  The capital element of the Highways PFI was £2.9m.

 

It was confirmed that there was no provision to claw back the funding from schools which converted to academies.

 

Resolved -

 

a)       That the following documents be formally adopted:-

 

The Treasury Management Annual Strategy.

Annual Investment Strategy.

Statement on Minimum Revenue Provision.

 

b)       That the Council authorise the Assistant Director of Strategic Finance to:-

 

i)        Use short term temporary borrowings.

 

ii)        Use cash held in internal funds to offset the need to borrow externally.

 

iii)       Use long term borrowings subject to interest rates at the time of offer.

 

iv)       Take long term loans, as required, from the Public Works Loan Board.

 

v)       Take long term loans from the Money Market, using any of the loan instruments available to the Council as deemed most appropriate, at the time of borrowing.

 

vi)       Invest temporary surplus cash within constraints of normal cash flow considerations with approved counter-parties.

 

vii)      Maintain the approved counter-party list, making additions and deletions and reviewing counter-party limits as necessary.

 

viii)     Review and appoint external cash fund Managers, if appropriate, if one-off lump sums are received, subject to specific conditions for investment.

 

ix)       Review and implement all prudent debt management functions which are required to produce advantages to the Council’s long term interest rate liabilities.

 

x)       Subject to available rental levels, finance appropriate expenditure through leasing arrangements.

59.

Refresh of Corporate Risk Register pdf icon PDF 144 KB

Additional documents:

Minutes:

See report of the Lead Member for Finance and Engagement (Agenda Item 6).

 

Lorelei Watson, Head of Treasury, Pensions and Capital, introduced the report.  In response to a question, Clive Palfreyman explained that the risk concerning accommodation for looked after children was that although the cost of placements was coming down the numbers were going up. This was an issue which was being kept under close observation.

 

Resolved -

 

That the refreshed Risk Register, set out at Appendix 1 to the report, be agreed.

60.

Internal Audit Performance Report 2014/15 pdf icon PDF 336 KB

Minutes:

See report of the Head of Internal Audit and Investigation (agenda item 7).

 

Steve Tinkler, Head of Audit and Fraud, introduced the report.  He highlighted that there was an increase in the number of audit assignments where there was limited assurance, both in terms of the design of controls and the operation or the effectiveness of controls.  He also referred to the fact that there were a number of outstanding responses from departments concerning the implementation of audit recommendations.  These had been escalated to Senior Management and, if necessary, he would report back in more detail to the Committee.  At this point, his team were behind in the production of draft reports. However, he was confident that they would be delivered.

 

Councillor Hearn questioned whether there would be a need for any extra resources in audit terms as a result of the work required around housing/Hounslow Homes services coming back into the Council.  Steve Tinkler stated that he would look very carefully at whether there was a need for extra resources, but there would be a planning process first.  He did state, however, that it was clear that Hounslow Homes would be a significant area of focus.  There were currently 8 audits planned and he would be reporting on these to future meetings of the Committee. 

 

It was noted that there were a number of recommendations arising from the review at the Western International Market.  It was stated that there were some cultural issues to be addressed.

 

Councillor Malhotra requested more detailed information regarding the proposed audit on the procurement of social care contracts.  The Committee also wished to see a broadening of the audit of fuel and fleet management within Hounslow Homes, to test whether there was an adequate fleet management strategy. Clive Palfreyman responded that the fieldwork for this audit was already complete but the Committee’s comments would be considered as part of the development of future audit plans.

 

Resolved -

 

That the progress of internal audit for the period 12 September to 28 November 2014 be noted.

61.

Counter Fraud Performance Report September 2014 to November 2014 pdf icon PDF 178 KB

Minutes:

See report of the Head of Audit and Fraud (Agenda Item 8).

 

Steve Tinkler, Head of Audit and Fraud, introduced the report.

 

Resolved -

 

That the team performance during the period 1 September to 30 November 2014 be noted and that the Managing the Risk of Fraud and Corruption report be noted.

62.

External Audit - Annual Audit Letter 2013/14. pdf icon PDF 56 KB

Additional documents:

Minutes:

See report of the External Auditor (Agenda Item 9).

 

Tony Crawley, External Auditor, introduced the report.  He highlighted that the Audit Commission was proposing a 25% cut in fees for the external Auditor for 2015/2016.  However, consideration would have to be given to any additional cost arising from the transfer of Hounslow Homes functions to the Council.  The external Auditor would examine the financial consolidation process.

 

Resolved -

 

That the Annual Audit Letter for 2013/2014 be noted.

63.

External Audit - Progress Report pdf icon PDF 70 KB

Additional documents:

Minutes:

See report of the External Auditor (Agenda Item 10).

 

Gary McLeod, External Auditor, introduced the report.  He also highlighted that the fee letter did not take account of the return of Hounslow Homes to the Council and that there may be a need for a revision, but this would be kept to a minimum.  He commended the joint report between KPMG and Shelter concerning building homes for the future.  It was requested that a link to the report be forwarded to Members of the Committee.  With regards to the transfer of Hounslow Homes’ functions, it was confirmed that Finance staff were transferred into the Council.  Clive Palfreyman stated that there would be a difficult process to consolidate financial and accounting processes, but this work would be undertaken in close co?operation with the external Auditor.

 

Resolved -

 

That the External Audit Progress Report be noted.

64.

Urgent business

Any other items which the Chair accepts for consideration on the grounds of urgency 

Minutes:

Councillor Hearn raised a question regarding the financial arrangements between the London Borough of Hounslow and Chiswick House Trust.