Agenda and minutes

No apologies were received from Members.

Officers noted apologies from the Head of Counter Fraud.

(Apologies had been received prior to the meeting from the Internal Audit Manager).

None.

It was confirmed that all items would be considered in public.

The Chair noted that on page seven, the minutes read “… the Committee conformed with the standards.” This should have read “… the Internal Audit team conformed with the standards.”

The Chair noted that on page eleven, the minutes read “The Onsite Immigration Officer (OSIO) had identified £233,000 in savings”. This should have stated that it was the presence of the Immigration Officer which led to that volume of savings.

Councillor Nelson advised that she had sent apologies for this meeting but they were not recorded.

RESOVLED: That the minutes of the meeting held on 08 August 2023 be approved as a correct record, subject to the above amendments

Officers noted the completion of the 2021/2022 statement of accounts audit by EY under delegated authority. The Vice-Chair and officers had a thorough meeting with EY to review the audit results and agreed on the final sign-off, which was now brought to the Committee for formal ratification.

Additionally, the completion of the 2021/2022 accounts allowed the production of the draft 2022/2023 accounts, which were published on the council website. However, due to the state of local authority audits nationwide, there was a delay in the audit process, and a government consultation was ongoing regarding how to proceed.

Officers highlighted completed audit activities for 2021/2022, such as housing benefit assurance process, teachers' pension, and capital receipts pooling, with no adverse findings to report to the Audit Committee. Officers noted an increase of £60,000 in variation fees for 2021/2022 and the consultation by the Public Sector Audit Appointments body (PSAA) proposing a significant fee rise for 2023/2024 audits.

EY then provided context on the challenges in the public audit market, citing delays in completing audits across local governments in England. There was a complex set of circumstances around system leadership, resources and capacity. To address these delays, the former Minister with responsibility for local government appeared at Parliament's Levelling Up Committee in July and issued a cross statement letter which set out a number of areas and over the summer there would be ongoing consultation between stakeholders to address these delays, but no firm guidance had been provided yet from either the Financial Reporting Council (FRC) or the department. The focus was on completing pension fund audits and value-for-money reporting. The third area was around focusing on audits that were just about to be finished but could not previously be finished due to national technical issues. The guidance was awaited before any decisions were made on 2022/2023 audits and whether it would be a sensible position to progress with them bearing in mind that one of the announcements within the ministerial statement was that where audits are not completed by 31 March 2024, they would automatically move to a type of disclaimed opinion rather than the audits continuing without a finite date. Until this guidance was received, it did not seem appropriate to commence the 2022/2023 audit because at the current time if that back stop date remained then it was unlikely that EY would get through the whole audit and Hillingdon would have to pay for the work that was completed but with no result or completion of the process.

EY presented the Pension Fund audit plan for 2022/2023, identifying key risks and changes. IAS26 disclosures were a higher area of inherent risk. There was a specific risk around the valuation of more complex level three investments which were harder to value.

There had been a minor change in the approach to auditing for two reasons: the first was that there was some testing on triennial membership numbers; the second was that EY would normally leverage some assurance from work on  ...  view the full minutes text for item 71.

The Head of Internal Audit presented the report, noting that since the last Audit Committee meeting, ten assurance reviews had reached the final report stage. These reviews were detailed in the summary table on page six (page 63 of the document). Out of these ten, three were substantial assurance, four were reasonable assurance, and three were limited assurance. The three limited assurance reports pertained to:

• The trading standards proceeds of crime act report. No significant issues had come out of this. Concerns were raised about oversight and consistency in record-keeping, however a new Head of Service was appointed at the time of the audit and positive actions were already being taken.

• The risk management report which highlighted ongoing positive risk management strategies, actively addressing known areas of improvement. This was an independent review by the external provider, Mazars, aligned with the organisation's transformation program focus on risk management.

• An audit concerning workforce planning, establishment control, and recruitment. There were a lot of findings related to having an overarching workforce strategy/ workforce plan. This again was a known area and was being addressed and should be addressed by the end of this year.

Officers emphasized the flexibility of the internal audit plan, adapting it as new risks emerged or as other sources of assurance became available. Additional reviews had commenced since the report's publication, including an examination of pool cars and various consultancy reviews, outlined in Appendix C of the report.

The follow-up on management actions had been extended, offering more comprehensive information compared to the previous Audit Committee meeting. 43 actions had been verified, and ten reports had been closed as all actions were completed. Where actions were marked as being overdue, new dates were being set. Some delays were due to the action’s incorporation into larger projects or changes in responsible officers. Efforts to align with new responsible officers for better understanding were emphasized.

Members asked about any risk regarding trading standards records not being completed and stored appropriately. Officers clarified that it was not that they were not stored appropriately, but around consistency. There were two financial investigators and they had separate portfolios and were stored separately. So, this was around making sure that there was some consistency between the two to improve access in case of absence.

The Chair asked about changes to the plan, and where there were significant changes, did these have to be agreed/ approved again by the Committee, or simply noted. Officers noted that this would usually be for noting, unless for example if there were vastly significant changes such as cutting out a full Quarter from the plan.

Members suggested putting a key into the tables of information within the report. Officers agreed to provide a clearer key for better interpretation of the numeric representations.

The Chair raised a query about the Cemeteries and IR35 management actions. Officers noted that these were in part due to a change of responsible officer.

On ‘Planning Enforcement’, officers noted that there were two high findings  ...  view the full minutes text for item 72.

Officers introduced the first draft of a new risk report, part of their ongoing transformation work. They aimed to transition from merely presenting a risk register at a specific point in time to assessing how effectively officers managed risks within their respective areas. This approach intended to identify trends and proactive risk management strategies.

Officers explained that a comprehensive corporate risk register was not provided for two primary reasons. Firstly, the Council had shifted to a centralized Excel register, which contained a substantial amount of data, making it challenging to present in a readable format. Secondly, efforts were underway to ensure the corporate risk register aligned with operational-level risk recording and escalation processes, ensuring significant risks from various areas were escalated effectively. This meant that the centralized risk register was very much an operational tool, continually being updated and to be a useful tool.

The focus was on developing a strategic framework aligning corporate risks with the Council's strategic objectives. While plans to unveil this framework were underway, challenges with formatting and the need for additional time to ensure its usefulness were highlighted. This may be brought to the next Audit Committee.

Officers emphasized the inclusion of key performance indicators (KPIs) in the report and invited suggestions for incorporating more useful information. The report highlighted significant changes in Q2, including the migration to a centralized risk register in Excel, re-allocation of risks due to internal service movements, and the ongoing refreshment of register content. The report indicated a substantial change in the corporate risk register, with six risks removed and ten added, some of which were still under evaluation and likely to undergo further modifications. The new system was hoped to be implemented by the next Audit Committee.

It was noted that specific high-risk areas such as meeting housing needs and fraud had lots of different aspects to them.

The Committee acknowledged that these issues were part of broader systemic challenges rather than isolated to Hillingdon.

Members appreciated the report's structure and visual representation, suggesting it would help identify areas that needed more attention or improvement.

Overall, the Committee acknowledged the work in progress, highlighting the need to track improvements. Members appreciated the efforts towards enhancing the risk management framework.

RESOLVED: That the Audit Committee noted the Risk Management Report and progress to improve the risk management arrangements

There had been a lot of activity across a variety of risks which had led to further savings of £1.7M, bringing the year-to-date total to approximately £3.5M.

Housing remained a focal point with 21 properties recovered due to tenancy fraud, totalling 48 properties recovered for the year. A proactive B&B residency check project had led to the investigation and closure of 15 cases, primarily due to non-occupancy, resulting in savings exceeding £134,000. The team had diligently worked through the national fraud initiative data, cancelling numerous single person discounts valued at £70,000.

Collaborating closely with the housing department, the management team conducted training for over 90 staff members on interview skills and techniques, aiming to support and enhance the capabilities of frontline staff. Additionally, after a successful recruitment campaign, it was confirmed that all positions within the team were filled, as of 04 December. An updated structure chart was provided in Appendix D of the report, fulfilling the request from the previous Audit Committee meeting.

The Counter Fraud team had been nominated for the Public Finance Awards and was shortlisted in the category of outstanding fraud prevention, detection, and recovery for their achievements during 2022-2023. The awards ceremony was scheduled for the following week, and the Committee wished the team luck.

The Committee congratulated the team for the nomination, highlighting the achievement as well-deserved.

Members expressed their appreciation for the well-drafted and informative report, acknowledging the team's sustained performance. Overall, the Committee commended the Counter Fraud team for their work.

RESOLVED: That the Audit Committee:

1. Noted the Counter Fraud Progress Report for 2023/24 Quarter 2; and

2. Suggested any comments/ amendments

Officers asked that Members, if they had not already done so, complete and return the Skills Matrix, which would be used to compile Member training for 2023-2024.

Members suggested that it would be beneficial if future pre-meets could be added to Members’ calendars.

RESOLVED: That the Audit Committee:

1. Confirmed the dates for Audit Committee meetings; and

2. Made suggestions for future agenda items, working practices and/ or reviews