Hounslow Council


Agenda and minutes

Venue: Committee Room 3, Civic Centre, Lampton Road, Hounslow. View directions

Contact: Joti Patel - telephone: 020 8583 3356; email:  joti.patel@hounslow.gov.uk 

Items
No. Item

23.

Apologies for absence, declarations of interest or any other communication from Members

Minutes:

The Chair opened the meeting and welcomed all members.  Charles Medley, Christopher Wong, Neil Thomas, Stuart Brown, Jeremy Welburn, Lorelei Watson and Clive Palfreyman were also in attendance. 

24.

Minutes of the meeting held on 22nd September 2016 pdf icon PDF 121 KB

Minutes:

The minutes of the meeting held on 22 September 2016 were circulated in hard copy to members as a late item.  They were agreed and signed by the Chair as a correct record.

25.

Matters arising from the minutes

Minutes:

Minute 20: Annual Report of Audit Committee (dissolution of Audit Committee)

In response to Councillor Malhotra’s question, assurances were once again given that, whilst there was no statutory obligation to have an Audit Committee, it was considered good practice and there was no suggestion that the Hounslow Audit Committee would be dissolved.

26.

Appointment of Auditors Report pdf icon PDF 171 KB

Minutes:

See the report at Agenda Item 4 presented by Christopher Wong, LBH Finance.

 

Chris Wong briefed members on the submitted report, drawing particular attention to the benefits listed under paragraph 4.3.  Councillor Malhotra expressed concerns that the initial five year appointment period may be too long.  Assurances were provided that PSAA (Public Sector Audit Appointments) was used by the majority of local authorities and would be responsible for both contract management and performance measures and would, therefore, have the power to break the contract early where necessary.

 

Councillor Malhotra requested a report from PSAA so that members could discuss the auditor’s performance in private to establish a clear understanding of the key performance indicators and form a view on their effectiveness. 

 

The officer’s recommendation was moved by Councillor Lambert and agreed by the majority of members present.

 

Resolved:

Audit Committee agreed to recommend to Borough Council that the Council accepted PSAA’s (Public Sector Audit Appointments) invitation to ‘opt in’ to the sector-led option for the appointment of external auditors for five financial years commencing 1 April 2018.  It is anticipated this recommendation would be included as part of the budget setting report going to February 2017 Borough Council.

27.

External Audit Annual Audit Letter Cover page pdf icon PDF 40 KB

Additional documents:

Minutes:

See report submitted at Agenda Item 5 presented by Neil Thomas, KPMG.

 

Neil Thomas provided assurances that accounts objection related to the LOBOs (Lender Option Borrower Option) from Hounslow were expected to be resolved.  In response to the query on whether LOBOs were being replaced with alternative borrowing vehicles, Clive Palfreyman drew attention to the prohibitive exit penalties and assured the Committee that the LOBOs entered into by this Council were considered low risk. Some counterparties were already taking steps to convert LOBOs to fixed rate debt. 

 

Resolved:

The Audit Committee noted the contents of the Annual Audit Letter.

28.

Risk Register Refresh Audit Report pdf icon PDF 291 KB

Additional documents:

Minutes:

See report submitted at Agenda Item 6 presented by Lorelei Watson, LBH Finance.

 

In response to questions the following points were raised:

·       Members noted concerns in relation to the ‘Brexit’ impact on new school places, however it was acknowledged that any reduction in European communities post-Brexit could be replaced by communities from other parts of the globe;

·       On the costs of temporary accommodation (Risk 8), assurances were provided that, whilst the authority had not yet been successful in reducing these costs, the demand for temporary accommodation had plateaued.  Housing staff now worked within the Children and Adults Services directorate and were able to mitigate housing demand as a result of better intelligence.  The Authority was also working together with the West London Alliance on a wider housing work stream;

·       Clarification was provided on the car lease scheme for staff (Risk 11: Staffing, including supply chain), confirming it as a salary sacrifice scheme for private vehicles;

·       It was indicated that monitoring for cyber-attacks on the Council’s website would be included in the ICT diagnostics programme and highlighted in reports where necessary.  Referring to Risk 13: IT platform implementation, Councillor Malhotra expressed a wish to discuss this matter further outside this meeting;

·       In response to questions on Risk 15: Commerciality – Lampton 360, Clive Palfreyman acknowledged there was still some level of risk in relation to future financial spending by the organisation.  However, members’ attention was drawn to the fact that Lampton 360 had commissioned external auditors and Finance colleagues had control and oversight of all spend under the existing arrangements;

·       Members were informed that a performance monitoring report on Waste 360 was due to be considered by Cabinet early 2017.  When asked whether members could attend Lampton 360 meetings, Clive Palfreyman suggested that, due to the length of detailed reports submitted for discussion at these meetings, members may prefer to receive executive summary documents to keep them appraised;

·       When asked for an executive summary detailing the Council’s financial commitment as guarantor for Lampton 360, Clive Palfreyman indicated that an overview of Lampton operations could be included in this committee’s forward plan (ACTION: Clive Palfreyman);

·       It was acknowledged that Brexit had been noted as a risk within the departmental risks but not corporately.  It was suggested that this could result from the timing of the assessments as well as benchmarking the Council against other government sectors;

·       Members noted concerns that continued staff reductions could lead to the contracts management team being under-resourced, which increased the risks that contracts would no longer receive the close monitoring required.  There was already some evidence of this. 

·       Members were assured that support had already been given to the 6x4 (clarify) and that the spread of risk was now greater.

 

In light of the discussion undertaken members unanimously agreed the recommendations in the submitted report.

 

Resolved:

·       That the Committee noted the refreshed Corporate Risk Register (CRR) at Appendix 1 of the submitted report.

·       The Committee noted the revised scoring methodology at Appendix 3 of  ...  view the full minutes text for item 28.

29.

Treasury Management Strategy Report pdf icon PDF 81 KB

Additional documents:

Minutes:

See report submitted at Agenda Item 7 presented by Lorelei Watson, LBH Finance.

 

Lorelei Watson asked members to note the submissions before these were taken to Cabinet and Borough Council for decision in February.  In response to questions the following points were raised:

·       Referring to paragraph 4.12 of the submitted Treasury Management Strategy report, members were assured that the Council employed treasury management advisors and that any borrowing would be carried out at the best available interest rates;

·       It was noted that borrowing was regularly monitored with treasury management advisors to ensure the best available rates were secured;

·       Training was available on treasury management and all five members were asked to be available for the two hour training session. Lorelei Watson would provide a range of possible dates for members approval; (ACTION: Lorelei Watson)

·       On the Annual Investment Strategy document (Appendix A of the submitted report), assurances were provided that the Council would only use companies with a very high credit rating;

·       Whilst it was acknowledged that the current balance between investments and borrowing illustrated a risk averse financial strategy, attention was drawn to the capital programme of works, which would significantly reduce the Council’s financial reserves over the coming years.

·       Referring to the Statement on Minimum Revenue Provision (Appendix B) members heard that a recent refinancing initiative had generated £80,000 for the Council.

 

Resolved:

Audit Committee noted the recommendations, which would be agreed at Borough Council, namely: 

 

1. The adoption of the:

(i)   Treasury Management Annual Strategy 

(ii)  Annual Investment Strategy (Appendix A)

(iii) Statement on Minimum Revenue Provision (Appendix B)

 

2. The authorisation by Council for the Director of Finance & Corporate Services 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:

(a) to take long-term loans, as required, from the Public Works Loan Board.

(b) to 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.

(iv) Invest temporary surplus cash within constraints of normal cash flow considerations with approved counterparties.

(v) Maintain the approved counterparty list, making additions and deletions, and reviewing counterparty limits as necessary.

30.

Quarter 2 Audit & Investigation Performance Report pdf icon PDF 329 KB

Additional documents:

Minutes:

See report submitted at Agenda Item 8 presented by Jeremy Welburn, LBH Audit and Investigations.

 

In discussion the following points were raised:

·       Responding to a question on the Council’s compliance in relation to gifts and hospitality, Mr Welburn indicated that work was underway to implement the revised template for the declaration of gifts.  The responsibility for this area lay with the Head of Human Resources and the Head of Governance;

·       Referring to schools audits, Mr Welburn stated that as part of the shared service with London Borough of Ealing, three audit themes had been chosen (including financial governance).  For each of the three themes, five schools were chosen.  Each school later received the anonymised results of the audits undertaken for all other schools.  Whilst it was acknowledged that this methodology was less intensive than previous schools audits, members were informed that there was in place the option of completing a more thorough audit where necessary.  The process was under review;

·       Referring to Table 2 of the Counter Fraud Team Performance Report, specifically the “not investigated/ insufficient grounds to conclude an investigation”, Mr Welburn stated that the team received a high number of referrals, which did not include sufficient information to carry out further investigation.  There was, however, the option of keeping those referrals on the system, should further information be submitted at a later date;

·       Members suggested using HM magazine to publicise the fact that the Council had an effective fraud unit to help mitigate future fraud being committed.

 

Resolved:

Members noted the submitted report, which described the work undertaken by the Audit and Investigation Shared Service team to the end of Quarter Two, 1 April to 30 September 2016 (and to 30 November 2016 for internal audit work).

31.

Urgent business

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

Minutes:

No urgent business was raised.

32.

Date of Next Meeting

The next meeting is scheduled for Thursday 23rd February 2017, at 7.30pm, in Committee Room 3, Civic Centre.

Minutes:

Members noted that the next meeting had been scheduled for 23 February 2017.