Agenda and minutes

Audit Committee
Wednesday, 6th February, 2019 5.40 pm

Venue: Committee Room 6 - Civic Centre, High Street, Uxbridge UB8 1UW. View directions

Contact: Anisha Teji, Democratic Services Officer  01895 277655

Items
No. Item

23.

Apologies for absence

Minutes:

Apologies for absence were received from Cllr Scott Seaman Digby, with Cllr Ray Graham substituting.

24.

Declarations of interest

Minutes:

Councillor Tony Eginton declared a non-pecuniary interest arising from the fact that he was a retired member of the Local Government Pension Scheme. He remained for the discussion of all items.

 

Councillor Susan O'Brien, declared a non-pecuniary interest arising from the fact that she was a deferred member of the Local Government Pension Scheme. She also remained for the discussion of all items.

 

25.

To confirm that all items marked Part I will be considered in Public and that any items marked Part II will be considered in Private

Minutes:

It was agreed that all the items on the agenda be considered in public with the exception of Agenda Item 11 – 2018/19 Quarter 2 Corporate Risk Register.

26.

Minutes of the Meeting held on 17 October 2018 pdf icon PDF 130 KB

Minutes:

RESOLVED – That the minutes from the 17 October 2019 be approved, subject to the following addition:

 

Following Members’ request at the last Audit Committee meeting for further information or a matrix on the headcount of IA staff and number of projects completed by individuals, the Head of Business Assurance informed the Committee that details would be provided in the annual report and this would come to Committee in July 2019.

 

27.

EY 2018/19 Annual Audit Plan & Pension Fund Audit Plan pdf icon PDF 70 KB

Additional documents:

Minutes:

The Committee was provided with reports which set out the initial plans for the 2018/19 audit by Ernst & Young (EY), the Council’s External Auditor. The plans set out the approach to the audit of the Council's Accounts and the Pension Fund Accounts and a broad timetable, to enable the whole process to be completed by the end of July 2019. EY took the Committee through the reports and provided a summary of the key issues.

 

Members were informed that the Key Financial Statement Risks on the External Audit Plan were:

           Risk of management override;

           Risk of in appropriate capitalization of revenue expenditure;

           PPE valuations; and

           IAS 19 valuations.

 

Other areas of audit focus not classified as significant risk, but still material when considering risks of misstatement included:

           Consideration of Group Boundary (Hillingdon First Ltd); and

           New accounting standards (IFRS 9 & IFRS 15).

 

For the Pension Fund Audit Plan, there was only one significant risk and two risks of fraud identified as follows:

           Risk of management override;

           Risk of misstatement of Investment Income and Valuation through journals; and

           Valuation of complex investments.

 

Other areas of audit focus not classified as significant risk, but still material when considering risk of misstatement included:

           New accounting standards; and

           Pooling of investments.

 

Members discussed the usefulness of the key questions for Audit Committee. Cllr Eginton requested further information on the low value errors and potential risks and whether a brief report could be provided to the Committee.

 

RESOLVED – That the Committee noted the 2018/19 annual external audit plan and pension fund external audit plan.

 

28.

Internal Audit Progress Report for 2018/19 Quarter 3 (including the 2018/19 Quarter 4 IA Plan) pdf icon PDF 63 KB

Additional documents:

Minutes:

The Internal Audit (IA) Service Manager presented the report which provided summary information on all IA work covered in relation to the 2018/19 Quarter 3 IA Plan, together with assurance levels in this respect.

 

It was reported that since the last IA progress report to CMT and the Audit Committee, four assurance reviews had concluded, four consultancy reviews were finalised, one grant claim was certified and three follow up reviews had also been finalised.

 

Key assurance reviews finalised included Emergency Duty Team which received a no assurance opinion, Cyber Security and the Positive Behaviour Support team received a limited assurance and the Youth Offending Service received a reasonable assurance opinion over the management of key risks.

 

It was reported that positive action had been proposed by management to assess all of the high and medium risk recommendations raised within each respective reviews. It was also reported that the team was operating at a good pace with new staff and further recruitment underway.

 

Officers provided the Committee with details of the Cyber Security audit which was evaluated against the Cyber Essentials criteria. The review was performed by a specialist IT auditor from Mazars with oversight from the Council’s IA management team. The Committee was informed that an IT auditor had now been appointed to the IA team.

 

It was noted that a follow up review was scheduled to be carried out on Early Years Centres. In July 2018, IA gave Early Years a no assurance opinion and raised 3 high and 5 medium risk recommendations. Members asked for clarification on the progress of this and it was confirmed that following a meeting with the relevant Service Manager, implementation for some of the recommendations had been extended to 31 March 2019. As a result, the follow-up would commence in early April 2019.

 

It was highlighted that a consultancy review of Introduction of Universal Credit (UC) had concluded within the quarter and a significant amount of work had been undertaken to ensure that the Council was prepared for the introduction of UC. The review found that satisfactory, interim measures were in place but a greater focus needed to be on establishing sustainable long term measures. During the Social Care, Housing and Public Health’s Policy Overview Committee’s review into Universal Credit, it was highlighted that a leaflet entitled “Your Guide to Universal Credit” was published giving residents the wrong information about making claims. Officers informed the Committee communications in relation to UC formed part of the review and improvement actions had been identified. Further, the Deputy Director of Exchequer & Business Assurance Services (Acting) agreed to review the aforementioned leaflet and take corrective action if required.

 

Officers drew Members attention to the 2018/19 Quarter 4 IA Plan, which was circulated to the Committee (in advance of this meeting) and agreed by the Chair on the 21st January 2019.

 

Following recent changes in staffing, Members were assured that independence would be maintained during audit processes and results and action would be reported to the relevant bodies.  ...  view the full minutes text for item 28.

29.

Oral Update on Counter Fraud Policies

Minutes:

The Committee was provided with an oral update on Counter Fraud Policies. These were circulated to Members prior to the meeting for comment.

 

The Committee was informed that the policies had undergone the proper process and had been signed off by the relevant Directors. Subject to any Committee amendments, the policies would come into effect immediately and teams would be required to adhere to these policies going forward.

 

RESOLVED – The Committee noted the policies, with no additional comments or amendments.

 

30.

2018/19 Quarter 3 Counter Fraud Progress Report pdf icon PDF 60 KB

Additional documents:

Minutes:

The Counter Fraud Manager presented a report giving details on the work being undertaken by the Business Assurance Counter Fraud Team (BACFT) in relation to 2018/19 Quarter 3 and assurances in this respect.

 

In summary, it was reported that during this quarter the team had achieved three successful prosecutions relating to Housing Fraud, Council Tax Reduction and Blue Badge misuse. The Committee was informed that one of the cases was prosecuted jointly with the Department of Work and Pensions and Home Office Immigration Service resulting in the defendant receiving a three and half years custodial sentence. The other two cases also required the defendants to pay considerable costs. There was an emphasis on the ability to be able to publicise these outcomes to raise awareness and act as a deterrent to potential fraudsters.

 

It was highlighted that since 16 April 2018, the BACFT had a Home Office IEO working as part of the team and this provided invaluable assistance in counter fraud work and other service areas in the Council.

 

It was confirmed that in 2018/19, the BACFT had successfully recovered 14 Council properties and were actively pursuing a further two cases for eviction. A further 29 investigations for suspected tenancy fraud were ongoing.

 

Members welcomed the news that a further principal officer had completed their BTEC 'level 7' in investigations, two other officers had commenced professional studies and ten officers had completed professional studies to become accredited counter fraud technicians. Members commented that the prosecutions were a good result and commended officers on their hard work.

 

RESOLVED – That the Counter Fraud Progress Report for 2018/19 Quarter 3 be noted.

 

31.

Oral Update on Member training sessions

Minutes:

The Committee received an oral update from Democratic Services on Member training sessions. The first Member training session took place prior to the meeting and was conducted by Ernst & Young. The training session focussed on the role of external audit.

 

The next training session would cover the area of Financial Reporting including Pension Requirements. This would take place on 25 April 2019 and be conducted by the Head of Pensions, Treasury and Statutory Accounts.

 

Democratic Services would email Members the proposed topics for upcoming meetings. Any feedback and particular areas to be covered should be reported to Democratic Services.

 

RESOLVED – That the oral update on Member training be noted.

32.

Audit Committee Forward Programme pdf icon PDF 67 KB

Minutes:

The meeting on Thursday 17 October 2019 would be moved to the Monday 21 October 2019. Democratic Services to update diaries with this date.

 

RESOLVED – That the forward work programme be noted.

 

33.

2018/19 Quarter 2 Corporate Risk Register

Minutes:

This item was discussed as a Part II item without the press or public present as the information under discussion contained confidential or exempt information as defined by law in the Local Government (Access to Information) Act 1985. This was because it discussed ‘information relating to the financial or business affairs of any particular person (including the authority holding that information)’ (paragraph 3 of the schedule to the Act).

 

The Corporate Risk Register for Quarter 2 (July to September 2018) report was presented to Members. The report provided evidence about how identified corporate risks were being managed and the actions which were being taken to mitigate those risks.

 

RESOLVED – That the Committee reviewed the Corporate Risk Register for Quarter 2 (July to September 2018), as part of the Committee's role to independently assure the strategic risk management arrangements in the Council.