Agenda and minutes

Apologies were received from Councillor Richard Lewis with Councillor Henry Higgins substituting. Apologies were also received from Councillor Naser Abby with Councillor Stuart Mathers substituting.

None.

It was confirmed that all items would be heard in Part I.

RESOLVED: That the minutes of the meeting held on 31 January 2023 be approved as a correct record.

The Committee considered the reports of the EY audit update for the London Borough of Hillingdon and the London Borough of Hillingdon Pension Fund.

Officers noted that good progress had been made. The previous Committee was informed that there had been a national issue with regards to disclosure and treatment of infrastructure assets. Subsequently, regulations and CIPFA accounting guidance had been issued and all issues, including the revised disclosure had now been closed off from an audit perspective. There was now a new national issue relating to pensions, however this was not seen as a big issue and progress had been made on this.

In other outstanding areas, officers continued to work with EY.

Regarding the Pension Fund, the audit was completed, noting the national issue. The draft results report was attached.

Council Audit

EY noted areas of audit focus. Fraud risk work had been completed since January on management overrides, generic risks and journal entry testing, and also on the risk of inappropriate capitalisation of revenues and expenditure. There were no findings to report. EY were still assessing their view to apply across other Local Authorities. On the valuation of land and buildings, progress had been made with officers since March 2022. Work had been agreed on infrastructure assets since January. On the pension liability valuation, there had been a national issue, and now the triennial valuation report had been issued since the last meeting. This was considered as subsequent information to be taken into account by management and by EY to determine if there might be a material impact on reported values as at the end of March 2022.

Management considered that the difference in the valuation of assets and liabilities related to the Pension Fund was not material compared to values recorded in the accounts. EY was still assessing their own view and was working on a consistent approach to apply across other Local Authorities.

On the valuation of Council dwellings, internal reviews had progressed, and the Council was working on a couple of follow up questions. New central government COVID-19 grants testing had been completed.

With regards to disclosures on going concern, these would have to be re-assessed as the audit was finished. The draft financial statements had been prepared on a going concern basis. Management’s assessment of going concern had been provided to EY, who will perform their planned procedures closer to the completion of the audit. This was an open item.

With regard to value for money, progress had been made, EY were reviewing responses from officers. Value for money was an area that EY had to re-visit. This was also an open item. No risks of significant weaknesses had been identified.

Members asked that when the audit was finished would there be a quick sign-off. EY noted that they were looking for a consistent approach. There was some uncertainty around the timeframe to resolve queries around the valuation of property, plant and equipment. It was noted that EY had other responsibilities with, for  ...  view the full minutes text for item 45.

The Committee considered the Internal Audit Progress report for quarter 4 of 2022/2023. During this quarter, fourteen assurance reviews were completed to final report stage, including six awarded a SUBSTANTIAL assurance opinion, six which received REASONABLE assurance, one LIMITED assurance and one NO assurance. Also during this quarter, Internal Audit had completed two consultancy reviews into a Domiciliary Care Provider and the Mayor’s Charity Account. At the time of the report, there were a further five assurance reviews at a draft report stage, once of which had now been finalised. At the date of the report, 91% of the plan was at least at draft stage. Details of the reviews were listed in the report. The limited assurance item related to purchase cards. The no assurance item related to a small number of legacy accommodation agreements. There was a very detailed action plan to take this forward. A separate report in Part II could be brought to the next Committee.

The External Quality Assessment (EQA) had been delayed but officers had now received the draft report. Officers had provided comments and the final report would be shared outside of the Committee to avoid waiting until August.

Recruitment was ongoing for the Internal Audit team. There had been three new appointees, with one further post being advertised for.

On the follow up process for recommendations, requests had been issued for updates which would be verified and included in the Annual Report at the next Committee in August.

Members asked if the service was still short of a Senior Internal Auditor. Officers noted that the service had not appointed to this post but had appointed two internal auditors instead. It was noted that there had been a restructure. The Chairman noted that they would be happy to see the briefing on the no assurance items in Part II of the next Committee and was also happy to receive the finalised External Quality Assessment outside of a meeting. The Chairman congratulated officers on exceeding their targets. The Chairman also congratulated officers on the recruitment.

RESOLVED: That the Audit Committee noted the IA Progress Report for 2022/23 Quarter 4

The Committee considered the Internal Audit plan for 2023/24 and the Internal Audit Charter. The plan was developed to reflect the key risks and the Council’s strategic objectives. It was an annual plan to help with planning further ahead and it was not a fixed plan, but a flexible one to allow for any new risks or projects that arise. Any changes would be reflected through the progress reports. The plan had been reported to Senior Management Team and Corporate Management Team.

The Internal Audit Charter was a requirement under the Internal Audit Standards and the Public Sector Internal Audit Standards. It was required to define the roles and responsibilities of the Internal Audit service, previously presented as part of the 5-year Internal Audit strategy last year. This Charter had been updated but there were no significant changes.

Members asked officers how they prioritised with fewer resources. Officers noted that they started with key risk areas; looked through the corporate risk register and directorate risk registers; looked at other sources of assurance to avoid duplicating work that, for example, External Audit or Counter Fraud were looking at. Officers met with each of the directorates and asked what their priorities were and how the service could support them. There was an outsourced provider (Mazars) who could assist where necessary.

Members asked officers how they could be confident in being told what needed to be audited. Officers noted they referred to KPIs and monitoring reports. Officers also noted objective setting and the risk registers. External factors such as the private sector and other authorities were noted as a guide on areas to audit or things to be aware of.

Members noted new data projects and new technology, and asked how this would change ways of working or what impact this had. Officers noted that there was more data available and more of a focus on data analytics. There were fewer manual processes and less manual testing of those processes. There was more auditing of the accuracy of the data and data quality reviews, which had IT elements. Telecare was noted in terms of keeping, storing, sharing and accessing data.

Members asked about the high, medium and low risks and how officers planned to get the high risks down. Officers noted the risk registers which were managed by the different directorates. The risks on the risk registers had action plans with a view to reducing the risks. If something was listed as high risk, it should be looked into more regularly. In terms of the risk ratings within the plan, that was an internal rating when looking at areas to review.

Members asked about follow ups on old risks and where these fit into the plan alongside new risks. Officers noted that the follow up process was separate. If a review identified any high or medium recommendations, these would be followed up as they became due. If it were a no assurance item, this would be followed up. If actions were not being  ...  view the full minutes text for item 47.

The Committee considered the Counter Fraud progress report for 2022/23 quarter 4.

The Counter Fraud Team had achieved savings of around £1.6m during the quarter, which took the year-to-date total to £12.3m against a target of £3.5m. The main focus had been on housing and another 22 properties had been recovered due to housing fraud, which brought the year-to-date total to 84, which was the highest yearly total to date. There were 119 live investigations relating to tenancy fraud.

The service had been very pro-active in their project work including the Bed & Breakfast residency check project which had been going on for four to five months. A further 14 cases were noted of emergency accommodation being closed down due to non-occupation. This brought the year-to date-total to 24. A regular visiting programme was due to start in the new financial year.

Revenues maximisation work had continued to identify businesses that needed to pay business rates. Billings had been issued for £120,000, and a current Cabinet Member decision to take up the second-year option with the suppliers was noted. There were nine new cases under investigation across Council Tax (CT) and National Non-Domestic Rates (NNDR). There were six new cases across Social Care which took the case load to 11. It was noted that although the case load of 11 may seem small compared to the 119 in housing, social care cases were much more complicated and were high value.

There was a new onsite immigration officer. £106,000 of savings had been identified through applicants attempting to access services without the correct immigration status. The team was looking to improve its communication package to better engage with residents in terms of achievements, and not just risks.

Members asked about beds in sheds, and how the team were made aware of these. These were several ways in which this happened. There were some communications from the team to residents, which then lead to some referrals. Internal data, such as from the planning team and building control was utilised.

The Chairman commended the team’s high level of performance, not just in figures but also with KPIs. Members noted the team’s good partnership working with other departments. Members further noted the team’s performance despite resourcing issues. Members further asked if these resourcing issues were persisting or if they had eased. Officers noted there was one existing vacancy. The Chairman noted the transformation work within the service. Officers noted that it was an ambitious plan, with lots of streams, but mainly focused on efficiency and effectiveness. The transformation work also looked at case management, data analytics, reviewing options for disposal decisions.

RESOLVED: That the Audit Committee:

1. Noted the Counter Fraud Progress Report for 2022/23 Quarter 4; and

2. Suggested any comments/ amendments

The Committee considered the Counter Fraud plan 2023/24.

There were a couple of changes from the report presented to the Committee the previous year. One of the changes was to support Internal Audit, and Counter Fraud had undertaken some consultancy work – there was an officer qualified in Counter Fraud and Internal Audit. The financial loss prevention target for 2023/24 had been set at £5m. The updated fraud risk assessment in Appendix A, and the Counter Fraud Work Plan in Appendix B were noted. The three biggest service areas were Revenues, Housing and Social Care.

Members asked why the target for 2023/24 was set at £5m when £12m had been achieved in 2022/23. Officers noted discussions with the Cabinet Member for Finance and noted that of the £12.3m achieved in 2022/23, £6m was the billings through NNDR which was difficult to build into a target as there were a lot of unknowns. It was further noted that Counter Fraud had undertaken some work on behalf of Tenancy Management, to the value of £1.5m.

Members asked about IT & Procurement of Goods and Services, where the report noted “an increased need to win government contracts because of financial pressures on businesses due to the cost of living leading to the fraudulent manipulation of procurement processes”. Officers noted that this related to external businesses and the cost-of-living crisis, and related more to external factors than to the service itself.

Members asked how resident benefit could be built into the plan. Officers noted reputational risk and operational risk for the organisation, as well as financial risk. It was noted that the service took referrals from residents. It was noted that while Housing was a financial risk, it had a resident benefit in that it freed up much needed accommodation.

The Chairman noted that it was a good plan.

RESOLVED: That the Audit Committee

1. Noted the Counter Fraud Annual Operation Plan for 2023/24; and

2. Suggested any comments/ amendments

Consideration was given to the work programme, and the dates and planned agenda items of future meetings were noted.

RESOLVED: That the Audit Committee:

1. Confirmed the dates for the Audit Committee meetings; and

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