Hounslow Council


Agenda and minutes

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

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

Items
No. Item

33.

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

Minutes:

Apologies had been received from Councillor Mukesh Malhotra and Councillor Nisar Malik. There were no declarations of interest.

 

The Chair welcomed all present. The following officers were in attendance - Clive Palfreyman, Director, Finance and Corporate Services; Lorelei Watson, Head of Treasury, Pensions and Capital; Jeremy Welburn, Interim Head of Audit and Investigations; Charlotte Bilsland, PricewaterhouseCoopers (PwC); Justin Martin, PwC; Charles Medley, KPMG; Neil Thomas, KPMG.

 

 

34.

Minutes of the meeting held on 15 December 2016 pdf icon PDF 146 KB

Minutes:

The minutes of the meeting held on 15 December 2016 were confirmed as a true record.

 

35.

Matters arising from the minutes

Minutes:

There were the following matters arising from the minutes:

 

Item 28, page 2, 6th bullet point – Risk Register Refresh Audit Report

Councillor Hearn asked whether there had been any development to Clive Palfreyman’s suggestion that members might receive executive summary documents in respect of Lampton 360. Mr Palfreyman explained that a performance report on Lampton 360 would go to March Cabinet. There would also be a future presentation to the Audit Committee as proposed at the last meeting. Councillor Hearn noted that the concern related to corporate governance as the executive and monitoring functions currently rested with the same person. This point had not come across in the Borough Council Budget discussions.

 

Item 29, page 3,3rd bullet point – Treasury Management Strategy Report

It was noted that four members had attended the training on 6February provided by Capita and Lorelei Watson, Head of Treasury, Pensions and Capital.

 

Item 29, page 3, 6th bullet point – Treasury Management Strategy Report

It was confirmed that the saving from the PFI of £80,000 was an annual saving. The net saving to the authority after apportioning an element to the Department for Transport (DfT) is c. £40k p.a. over the remaining life of the project.

 

 

 

36.

Internal Audit & Investigations Progress Report pdf icon PDF 403 KB

Minutes:

See the report by Jeremy Welburn, Interim Head of Audit and Investigations, LB Hounslow – Agenda Item 4.

 

Jeremy Welburn, Interim Head of Audit and Investigations, introduced the report which provided information on the work undertaken by the Audit and Investigation Shared Service team to the end of Quarter 3 – 1 April to 31 December 2016. Table 1 in Appendix A of the report showed progress against the 2016/17 Action Plan. Whilst the percentage output to date of around 60% of the plan having been delivered was below the target, the reason for this was the delayed start to the implementation of the audit plan. With the exception of the Procurement Review, Audit were confident that the reports would be completed by the end of March. Members were asked to note that one report on Fire Safety and Legionella had been issued with the Limited Assurance opinion as there were two high risk findings in the report. However, an action plan was now in place to address the concerns.

 

Generally the Internal Audit team were performing well. A new Head of Audit would start at the end of March and one outstanding recommendation on training on the Bribery Act would be implemented once the new Head was in post.

 

In discussion members of the Audit Committee sought clarification on the following points:

 

·       Members asked for the definitions of the audit opinions and were informed that these ranged from substantial, reasonable, limited to nil. Reasonable indicated minor control issues whilst Limited indicated one or more issues. Nil would indicate no controls in place.

·       Members sought to clarify what was required in respect of the introduction of a fortnightly waste collection, as mentioned in Table 1 of the report. It was explained that this review concerned planning for the introduction, testing readiness and what needed to be in place as the scheme had not yet been introduced.

·       Members asked whether the schools financial governance audits result of reasonable assurance included a view on the role of governors as there were problems within some Governing Bodies in the training and experience of governors to fulfil the role to apply and review financial standards. The audit team did not think the role of governors had been considered but this was something which could be picked up when looking at financial planning and could be included for the next round of school audits.

 

Action by: Head of Audit

 

·       Councillor Hearn noted that the wording of the role of Internal Audit within the report and in Appendix A made no mention of corporate governance and this was felt to be a significant omission in a public document as an example of the work Internal Audit undertook. There was discussion as to whether corporate governance was covered by the term ‘internal control’. It was noted that the work done by PricewaterhouseCoopers was based on risk and that the purpose and intent was to apply internal audit standards in all the work done. However, Councillor  ...  view the full minutes text for item 36.

37.

2017/18 Internal Audit Strategy and Indicative Plan pdf icon PDF 211 KB

Minutes:

See the report by Jeremy Welburn, Interim Head of Audit and Investigations, LB Hounslow – Agenda Item 5.

 

Jeremy Welburn, Interim Head of Audit and Investigations, introduced the report which set out the Internal Audit Strategy and proposed Annual Plan for 2017/18, detailing how the Council will meet its statutory requirements for Internal Audit.

 

In discussion it was noted that:

 

·       The Internal Audit Charter would be reported to the next meeting of the Audit Committee.

·       The indicative Audit Plan was based on the risk register, the assurance map and input from the senior management team.

·       In respect of schools, there would be thematic audits as there were similar issues in a number of schools and full probity reviews of a few schools to be decided as the year progressed.

·       Reviews would be to the relevant Executive Director but the Committee could request those they wished to see.

·       It was suggested that the relevant Lead Member should see the review as the Lead Member was accountable for that area and there should be visibility for stakeholders.

·       However, it was noted that there was already the opportunity for Lead Members to discuss with Directors as a routine part of governance for the Lead Member and the Director. Lead Members were aware of the audit programme and the end of year review listed all the audits undertaken and the opinion. All reports were available to members.

·       It was clarified that internal audit was a dialogue throughout the year. Much was routine but there would be escalation and engagement if limited assurance was given. The end of year Governance Statement was signed off by the Leader.

·       It was suggested that Lead Members might be included on the circulation list with summary actions to ensure they were informed. Alternatively, a periodic summary report with key findings and identification of any high level risks might be the best means of keeping Cabinet members informed.

·       Members suggested that it would be appropriate to ask the Cabinet whether they would wish to see all internal audit reports or only selectively where there was limited assurance. It was proposed that the Chair might raise this point in one of his regular meetings with the Leader.

 

Action : The Chair

 

 

Resolved:

 

That the Audit Committee approved the Internal Audit Strategy and the  indicative Audit Plan for 2017/18.

 

38.

2017/18 Fraud and Corruption Strategy and Plan pdf icon PDF 477 KB

Minutes:

See the report by Jeremy Welburn, Interim Head of Audit and Investigations, LB Hounslow – Agenda Item 6.

 

Jeremy Welburn, Interim Head of Audit and Investigations, introduced the report which asked the Committee to approve the new strategy set out in Appendix A of the report. Appendix B was the Investigation Plan.

 

The Committee discussed communications. Councillor Lambert pointed out that he had seen notices in Council blocks of flats which lost their effectiveness when the messages were not changed over time. It was noted that there were discussions with the Director of Communications with ideas around posters but it was suggested that posters needed to be refreshed at least twice per year to be effective.

 

Action: Jeremy Welburn would raise the need to review external communications with the new Head of Internal Audit.

 

Councillor Hearn asked whether improved recovery rates and hence more money coming in would allow for improved resources and greater detection of fraud. It was acknowledged that proactive work was more efficient. All referrals were being managed with current resources. The London Borough of Ealing was participating in a trial of advance diagnostics via the London Fraud Hub. This might be something in which Hounslow might participate in the future if successful.

 

The Committee discussed the value of referrals. Officers noted that most results were based on referrals and it was important to develop a culture of zero tolerance to fraud and to publicise cases. So it was essential to deal with referrals even though around a third had no evidence to pursue further.

 

Resolved:

 

That the Audit Committee approved the Fraud and Corruption Strategy and Plan for 2017-18.

 

 

 

39.

Annual Audit Plan 2016/17 pdf icon PDF 39 KB

Additional documents:

Minutes:

See the report by External Auditor, KPMG – Agenda Item 7.

 

Neil Thomas of KPMG introduced the external audit plan. He drew attention to two new significant risks in respect of the revaluation of pension liabilities and the change to the presentation of the top income of the comprehensive income and expenditure account. In respect of value for money, one area of high end risk was the sustainability of the financial position given the pressure on local authority funding. There were conclusions on how to manage the risk and the Medium Term Financial Strategy.

 

Councillor Hearn enquired about the risks around ongoing projects such as the development of the Lampton 360 companies and the Civic Centre move. Mr Thomas responded that these would be considered as part of the auditors’ value for money responsibilities. They were not of material significance by 1 April 2017 but would be looked at over the life of the projects, together with the procurement decisions behind the projects.

 

Resolved:

 

That the Audit Committee noted the annual audit plan for the external audit of the London Borough of Hounslow and Hounslow Pension Fund 2016/17.

40.

Grants Annual Report 2015/16 pdf icon PDF 43 KB

Additional documents:

Minutes:

See the report by the External Auditor, KPMG – Agenda Item 8.

 

Charles Medley of KPMG introduced the report. The summary showed the results of the work undertaken over the 2015-2016 period under the Public Sector Audit Appointment certification arrangements. Three claims had been certified with no adjustments necessary and unqualified certificates issued in each case. It was also noted that the Council had been charged less for the work so this was positive all round.

 

Members asked about the scale of the testing and were informed that this was set by the grant awarding bodies. Samples were extended if there were deficiencies. There were detailed instructions from government about what needed to be tested. The work of internal audit informed the understanding of the risk.

 

It was noted that it was difficult to get such a clean opinion in this area so this was positive news for the Council. Members congratulated officers on this result.

 

Resolved:

 

That the Audit Committee noted the contents of the external audit grants annual report.

41.

Urgent business

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

Minutes:

There was no urgent business. It was noted that the next meeting was expected to be in June but the Council calendar for the next Municipal Year was still to be confirmed at Borough Council.