Hounslow Council


Agenda and minutes

Venue: Committee Room 2, Civic Centre, Lampton Road, Hounslow. View directions

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

Items
No. Item

1.

Start Time of Meeting

Minutes:

It was agreed that in future all meetings should start at 7pm rather than 6.30pm.

2.

Minutes of the meeting held on 11 December 2014 pdf icon PDF 72 KB

Minutes:

The minutes of the meeting held on 11 December 2014 were confirmed.

3.

Minutes of an informal meeting held on 12 February 2015 pdf icon PDF 55 KB

Minutes:

The minutes of an informal meeting held on 12 February 2015 were noted.

4.

Matters arising from the minutes

Minutes:

(a)      Hounslow Homes (Minute 54 refers)

 

In response to questions Steve Tinkler, Head of Internal Audit and Investigation, reported that there were a number of audit reviews underway into former Hounslow Homes services and he was expecting that there would be reports to the next meeting of the Audit Committee. Prior to the transfer back into the Council, Hounslow Homes had a separate audit function and the Council’s Audit and Fraud Investigation teams were not involved. He confirmed, however, that it was now a Council responsibility and there was a framework of robust scrutiny of housing activities.

 

(b)      Corporate Risk Register – Accommodation for Looked After Children (Minute 59 refers)

 

Clive Palfreyman confirmed that the cost pressures in relation to accommodation for Looked After Children remained a concern. The Lead Cabinet Member was aware of the issues and there were regular meetings between the Finance Team and Children Services staff to monitor the situation. In response to a question from Councillor Malhotra he stated that the implementation of the Care Act was expected to give rise to a £2 million cost pressure over the next two years.

 

(c)      Internal Audit Performance Report 2014/2015 – Western International Market (Minute 66 of the informal meeting refers)

 

A query was raised regarding the context of the statement in the minutes that there were some cultural issues to be addressed at Western International Market arising from an Audit Review. Steve Tinkler, Head of Internal Audit and Investigation, undertook to check what this referred to and send an e-mail response to Councillors.

 

(d)      Internal Audit Performance Report 2014-2015 – Council Tax Suspense Accounts (Minute 66 of the Informal Meeting refers)

 

Clive Palfreyman, Assistant Director Finance, stated that action had now been taken to resolve the issue regarding Council Tax Suspense Accounts.

 

(e)      Draft Internal Audit Plan 2015 to 2016 – Use of Non-Disclosure Agreements (Minute 67 of the informal meeting refers)

 

Mike Smith, Committee Clerk reported that the Stage 3 Complaints Panel which had examined the use of a confidentiality clause in relation to a specific complaint had now met. The Panel had concluded that in the particular case under review that there should not have been a confidentiality clause and that its terms were unfair and unduly restrictive. The Panel had recommended that, in accordance with current Local Government Ombudsman guidelines, agreement settlements should not include confidentiality clauses. It was noted that there might be other circumstances where the Council would seek to include a confidentiality clause where it was part of the settlement of a formal legal claim.

 

(f)       External Audit – Progress Report (Minute 72 of the Informal Meeting refers)

 

The name of the new external auditor was Neil Thomas rather than Ned Thomas.

5.

Statement of accounts 2014/2015 pdf icon PDF 86 KB

Additional documents:

Minutes:

See report of the Assistant Director, Strategic Finance (agenda item 5).

 

Tony Brown, Head of Financial Strategy and Accounting, introduced the report. He explained that this was an early draft of the Statement of Accounts. Some figures were missing at this stage and would need updating. However, there were not expected to be any material changes when the final statement of the accounts were produced.

 

He referred to changes in regulations which would impact upon the timetable for preparing the accounts. Deadlines were being brought forward quite significantly. The purpose was to allow an earlier submission of audited figures to the Office of National Statistics. Proposals were being drawn up to pilot the new timetabling for 2016/2017 before its formal introduction. This was likely to mean that the Statement of Accounts would be considered at an earlier meeting of the Audit Committee in 2016/2017. Council officers would be working closely with the External Auditor on the planned changes.

 

In response to questions and comments from committee members, the following additional information was provided at the meeting. The “additional arrangements” which were in place as part of the new business rates retention system related to dealing with surplus and deficits in the early years of the process. The London Pension Fund Authority figures related to the Council’s responsibilities to existing pensioners. It was normal to see volatility year on year in pension fund assets. The tri-annual evaluation was a more reliable indicator. Pension fund increases were based on the Consumer Prices Index rather than the Retail Price Index.

 

There were some missing figures on page 58 and page 64. Some of the commentary on page 64 would also need updating. The reference in the Housing Revenue Account Income and Expenditure Statement to exceptional change in value of fixed assets following revaluation was as a result of the impact of market recovery of housing assets. The accounts were backward looking so they would not reflect any financial implications arising from proposed changes to Right to Buy. Tony Brown undertook to provide more detailed information on the level of write?offs. Levels of housing stock were shown on page 87. Members requested that a briefing be provided on the Housing Revenue Account at the Committee’s September informal accounts briefing.  

 

The Hounslow Homes Group Accounts were not in the pack as yet. Hounslow Homes still existed as an entity and would not finally close until the 31 March 2016. There would be a separate audit of their accounts. It was requested that the full accounts of Hounslow Homes be included. It was noted that there was some rounding issues to address on pages 24 and 25 of the Statement of Accounts. One of the underlying reasons for the reduction in net assets related to pension fund liabilities.

 

Any Section 106 contributions received but unspent were shown as long term creditors. There was a note in the accounts on this issue at page 61.

 

A query was raised about the accounting treatment of receipts from  ...  view the full minutes text for item 5.

6.

Quarterly Monitoring of Corporate Risk Register pdf icon PDF 188 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. She reported that some risks scores had been reduced. There was one red risk remaining. The changes were set out in Section 4.2 of the report and more detailed information was in the attached Risk Register.

 

Further information was provided in response to comments and questions by members of the committee. The ICT Strategy had recently been updated by Cabinet and there was expected to be a further report on progress in October 2015. The Lead Member, Councillor Corinna Smart was examining the specific issues affecting Councillors. There would always be risks associated with ICT but they had been identified and were being managed. Members would be provided with a written response regarding any impact from reduction in IT staffing levels.

 

The Council was close to making a decision on the way forward regarding a waste strategy. Any recent issues regarding the wheelie bin roll out would need to be raised with the relevant Lead Cabinet Member.

 

The Audit recommendations elsewhere on the agenda regarding risk management related to departmental Risk Registers. The Corporate Risk Register was regarded as robust. The issue was ensuring that the same principles were followed within departments. There was a view by committee members that voids management should be an issue that was on the Corporate Risk Register. Officers agreed to raise this with the Assistant Director for Housing Services. Solutions were being sought to address the increasing demands for temporary accommodation. There was likely to be a report to Cabinet and it was more appropriate that concerns relating to this be addressed to Cabinet or the Cabinet Lead Member. Evidence of improvements to service performance and tenant satisfaction following the transfer of Hounslow Homes could be examined when the Key Performance Indicators were reported to Cabinet in July 2015.

 

Resolved –

 

That the amended Corporate Risk Register attached as Appendix 1 to the report be approved.

7.

Internal Audit Annual Report 2014-2015 pdf icon PDF 83 KB

Additional documents:

Minutes:

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

 

Steve Tinkler, Head of Internal Audit and Investigation, introduced the report. He stated that the adequacy and effectiveness of the Council’s overall control environment during the financial year 2014/2015 provided moderate assurance in respect of the affective management of risk. There had been a number of audit reviews with limited assurances and one nil assurance concerning fleet and fuel management. With respect to that review, and in response to the questions to Members, he stated that trackers were used on vehicles although their use was inconsistent. There were some instances of questionable refuelling practices. There were issues of compliance with HMRC requirements and there were issues with the garage arrangements. At the request of Members he undertook to circulate the Audit Report. The Committee also requested that a report be made to the next meeting by the service concerning how the assurance issues would be tackled.

 

There was then a discussion of the broader issue of the role of the Audit Committee where there were identified instances of a breakdown in control mechanisms. It was noted that as part of the review process these would be reported to the Audit Committee. However, Members felt there was a case for reporting significant and urgent shortcomings to the Chair of the Committee. Steve Tinkler stated that he would do this in the cases where the concerns were raised by Audit were not being addressed within a reasonable timeframe. The Committee felt that it would be helpful if a process could be developed where officers were required to attend the Committee in those situations where there was a failure to improve or address issues raised through the audit process. It was noted that a balance had to be struck and that to some extent it was the responsibility of the Lead Cabinet Member to address performance issues in the first instance.

 

The Committee requested that a proposal be put to the next meeting for a process of inviting Directors to future meetings to talk thorough their departmental risks.

 

Resolved -

 

That the Internal Audit Annual Report be noted.

8.

Counter Fraud Annual Performance Report 2014-2015 pdf icon PDF 93 KB

Minutes:

See report of the Head of Internal Audit and Investigation (agenda item 8).

 

Steve Tinkler, Head of Internal Audit and Investigation, introduced the report.

 

The Counter Fraud Team had met its targets for 2014/15. It had engaged in a proactive counter fraud campaign and a Counter Fraud Conference that was organised for schools. Members requested information in relation to the various outcomes summarised in the report.  Future reports will seek to provide further explanatory information as circumstances allow.

 

Resolved -

 

That the Counter Fraud Annual Performance Report 2014/2015 be noted.

9.

Draft Annual Governance Statement and Annual Review of the System of Internal Control pdf icon PDF 74 KB

Additional documents:

Minutes:

See report of the Assistant Director, Strategic Finance (agenda item 9).

 

The report was circulated as a separate late item. The Chair agreed that it be considered on the grounds of urgency that it was the only opportunity for the Committee to consider the report of in its draft form before formal consideration in September. Clive Palfreyman, Assistant Director Strategic Finance introduced the report and summarised some of the key governance issues to which it referred.

 

Councillor Purewal was concerned that this year the Head of Internal Audit was only able to offer an opinion of moderate assurance in terms of the control framework in the Council. Steve Tinkler, Head of Internal Audit explained that there had been some audit reviews which had had an impact on the opinion; particularly in relation to the control environment. It was noted, however, that the governance statement was more positive on risk management and corporate governance.

 

Councillor Hearn suggested that the Audit Committee should produce its own Annual Report briefly stating what it had done over the year, when it had met and its own views on controls and audit issues. This could feed in to the Annual Governance Statement.

 

Resolved -

 

(a)      That the outcomes of the review of the effectiveness of internal control outlined in the Draft Annual Governance Statement be noted.

 

(b)      That the Draft Annual Governance Statement be noted.

10.

External Audit Plan for 2014-2015 pdf icon PDF 487 KB

Additional documents:

Minutes:

See report of the External Auditor (agenda item 10).

 

Gary McLeod, External Auditor, introduced the report. He highlighted some of the key points as set out in the report regarding the key financial statements audit risks, the value for money audit approach, the audit team, deliverables, timeline and fees. He gave an explanation of the concept of materiality. He confirmed that the external audit team did use work from the Internal Audit to inform the external audit process and there was also a level of testing of the Internal Audit controls. He stated that the elector challenge to the 2013/2014 accounts should be resolved soon. Clive Palfreyman, Assistant Director, Strategic Finance, while accepting that a challenge process was necessary, pointed out that the current legislative arrangements were very costly and time consuming.

 

The question was raised as to whether there were any concerns about meeting the new deadlines for preparation of the accounts for auditing. Clive Palfreyman stated that there were some concerns that the draft accounts  would include more estimates.

 

Resolved -

 

That the 2014/2015 External Audit Plan be noted.

11.

External Audit Fee Letter 2015-2016 pdf icon PDF 30 KB

Additional documents:

Minutes:

See report of the External Auditor (agenda item 11)

 

The report was noted.

12.

Urgent business

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