Agenda and minutes

The Democratic Services Officer opened the meeting by asking if there were any nominations for Chairman. John Chesshire was nominated and seconded as Chairman. No other nominations were received.

RESOLVED: That the Audit Committee appointed Mr John Chesshire as Chairman of the Audit Committee for the 2023-24 municipal year.

The Chairman asked if there were any nominations for Vice-Chairman. Councillor Reeta Chamdal was nominated and seconded as Vice-Chairman. No other nominations were received.

RESOLVED: That the Audit Committee appointed Councillor Reeta Chamdal as Vice-Chairman of the Audit Committee for the 2023-24 municipal year.

Apologies were received from Councillor Nick Denys with Councillor Kishan Bhatt substituting.

Apologies had been received from Councillor June Nelson.

None.

It was confirmed that items of business 1-15 were in Part I and would be considered in public and item 16 was a Part II item and would be considered in private.

RESOLVED: That the minutes of the meeting dated 27 April 2023 be agreed as an accurate record.

Officers introduced the EY update on accounts.

The audit had progressed well since the last Committee to the point where EY were able to issue their draft audit results report. On other progress, the Capital Pooling certification was signed off by EY at the end of July and Hillingdon was very close to having the Housing Benefits certification signed off. This would hopefully come by mid-August, so 2021/22 was coming to a close in terms of the audit.

EY outlined their draft audit results.

It was confirmed that EY had issued the audit certificate for 2020/21, which had felt like a long time ago, however EY had had to wait for the National Audit Office to confirm that they were not going to ask EY to carry out any further work.

The report set out EY’s findings and they were close to finalising the 2021/22 audit. The report had been issued on Friday (04 August) and there had not been much progress since. EY were working through their review processes and were liaising with officers to resolve any matters that may arise.

EY had also completed their value for money risk assessment and there were no matters to report.

EY confirmed their plan to complete the report of the audit as the EY officer noted that they would be leaving EY in mid-October and they were keen to try and complete the audit as much as possible before this. EY planned to update the audit results report, which was before Members at the current meeting, with the final conclusions from the audit and to circulate to Members, and to arrange a meeting with the Chairman so that Members would receive the report about a week before EY would issue the audit opinion. Alongside this, EY would also like to issue the draft reporting on value for money by taking that approach, which would enable EY to conclude the audit effectively without being able to issue the certification for the same reasons relating to the National Audit Office. The reason for this is that the next Audit Committee meeting was scheduled for after the EY officer would have left EY and an extraordinary meeting was not the right way forward.

The main change in the scope of the audit was a change in materiality. EY had to reassess materiality levels in light of the audit differences identified and reported. With regard to the Better Care fund, planning materiality had reduced by £1m. EY were currently doing an exercise to determine the extent of that impact.

On audit differences, EY split the differences into two categories – those expected to stay unadjusted and those that have been agreed to be adjusted. However, EY were still to see an updated set of accounts which was being worked on.

The differences expected to stay unadjusted were with regards to pension liability; property, plant and equipment; and Council dwellings.

On pension liability, this was a judgemental understatement of pension liability due to the Goodwin case  ...  view the full minutes text for item 57.

Officers introduced the annual report of the Audit Committee 2022-23.

This was a draft report from April 2022 until March 2023 summarising the work of the Audit Committee. Once approved, this report would be presented to Council.

The Chairman noted that they were very happy with the report.

RESOLVED: That the Audit Committee approved the Draft Audit Committee Annual Report for 2022/23 and/ or suggests any amendments that should be made, where necessary, before the report is presented to Council.

Officers introduced the 2023-24 Q1 Corporate Risk Register.

Officers noted that the report included quarter 4 of the previous financial year and quarter one of 2023/24 as there was no Corporate Risk Register item in the previous meeting’s agenda.

The report provided evidence of how risks had been identified and managed, and what mitigating actions were in place. 

Since the previous update, which related to quarter 3, there had been only one change on the register, and lots of subsequent updates in terms of mitigating actions. This related to the coronavirus risk which had been retired at the end of quarter 4. It was acknowledged that pandemics can happen in the future and so in terms of risks, was about learning from the coping period. It was noted that while this risk item had been retired from the register, it could be re-introduced if necessary. During this time there were no new corporate risks on the register.

It was noted that the Corporate Risk Register was now hosted on a Microsoft Excel document rather than the previous Microsoft Word version. It was now easier to filter and sort and had been replaced following consultation with the Corporate Management Team and Senior Management.

Members asked about risk reference CRR8 – The General Data Protection Regulations, which was noted to arise from a minority of Council staff not complying with the Council’s Data Protection policy due to a lack of awareness of lack of due consideration, and asked if this was due to repeat offenders or if it was a regular occurrence. Officers noted that the risk framed here was not necessarily residual risk. Senior Management scored risks based on financial impact and various other impacts such as the potential fine that the Local Authority could be given if it were not compliant. There were mitigating actions such as mandatory training and follow-up training built into inductions. There was monitoring from Learning and Development, and Legal Services had controls in place to monitor breaches that would be reported to the Information Commissioner’s Office (ICO) where required. Wherever this had occurred, there had been positive feedback on the actions taken by the Council.

The Chairman asked about the relationship between risks of inflation and balancing of the budget, which were closely linked. Inflation was marked as a static direction of travel, and the Chairman asked if this was changing now. Officers noted that they were currently identified separately because the current inflationary pressures were exceptional. There was a degree of overlap between the two. Inflationary pressures would feed into some of the challenges in balancing the budget but this was not the exclusive factor which was why inflation was currently on the corporate risk register but at other times it may not be. Given the volatility and the extent and variation in the forecast, inflation had remained a separate corporate risk at this this point.

RESOLVED: That the Audit Committee reviewed the CRR for Quarter 1 and suggest any comments/ amendments which will  ...  view the full minutes text for item 59.

Officers introduced the Internal Audit Progress Report.

Eight assurance reports were finalised during quarter 1: two substantial, four reasonable, and two limited. Following requests at the last Audit Committee meeting, a summary had been included for the two limited reports which were related to IR35 and Care Leavers allowances.

There were three reports in draft, and the report outlined the audit plan and the detail of those reports (Trading Standards POCA, Capital Programme, and Risk Management). There were no concerns about getting the draft reports finalised.

The forward plan of audits was a flexible plan and officers were already making changes. For example, the mortuary review had been brought forward; parking income had been moved back. A review had been added looking at budget monitoring alongside the savings programme audit. This demonstrated good engagement with different directors in terms of being flexible.

Ad hoc consultancy into Section 106 funding had taken place. The Internal Audit Annual Report, Audit Committee Annual Report and Risk Management Annual Report had been drafted, as well as the Annual Governance Statement for 2022/23.

Officers had continued to follow-up on older management actions and a summary was included within the report. This was a very high-level report due to the number of follow-up actions. More information would be included in future progress reports. Items were marked as overdue if officers had not received a response. Some of the overdue reports may have been due to officers changing roles, new appointments to services or service changes. There were no major concerns with any of these. The two oldest items were Corporate Payments and Community Safety.

There was a new Principal Internal Auditor within the Internal Audit team. A new tracker had been put together and new processes were in place within the newly expanded Internal Audit team to ensure escalation of any delays through to the Corporate Management Team. New actions from 2022-23 audits would be added to the tracker.

The External Quality Assessment that had been completed for the Internal Audit service was shared following the previous meeting and the actions from that report had been included in the progress report. All of the actions had now been completed. The Chairman noted that as the actions had now been completed, the Internal Audit team conformed with the standards.

The KPIs (key performance indicators) which were agreed as part of the annual plan and were all based on the 2023-24 work plan. The tracker was only introduced in May to monitor completion and so improvement was expected going forward.

Members asked how much involvement HR had had in the IR35 order, given that the Director of Procurement has taken ownership of it and contractors has been utilised. Officers noted that both Procurement and HR were involved in the audit, which was signed off by both together. One of the major findings was around who was going to take ownership and so HR were involved.

The Chairman commended officers for their recruitment to the team and asked for  ...  view the full minutes text for item 60.

Officers introduced the Annual Risk management report 2022-23.

This was a statutory responsibility and the report outlined the key actions taken to promote and embed risk management during the financial year 2022-23. The role of risk management remained unchanged. There were lots of ongoing programmes of work such as the training and risk management e-learning module and risk champions in terms of governance structure. On corporate governance, it was noted that there was a new Leader of the Council in 2021 and a new Cabinet and so risk management included awareness of roles and responsibilities. The Council’s constitution had also been remodelled and modernized to meet emerging risks and changing needs locally, and to encompass new national legislation. Internal Audit had adopted a new three-year Internal Audit strategy which was reflective of this new environment. Internal Audit continued to communicate findings of the risk-based approach of limited and nil assurance reviews to the Corporate Risk Management Group.

The Corporate Risk Register was also part of the Forward Plan. It was noted that the Corporate Risk Register had been amalgamated with the Directorate Risk Registers with a new excel template to improve collaboration between directorates. This allowed improved tracking of risks.

Recently, an independent review of risk management has been conducted and officers were working through the findings.

Members asked why School Places was still listed as a C1 type risk. Offices clarified that this was the monitoring review of the corporate risks over the 2022/23 financial year and that the main detail would be within the corporate risk register. Officers further clarified that in terms of school places, Hillingdon had a strong track record of ensuring that every child had a school place and this continued to be the ambition. There was a rising level of demand for places particularly among the special educational needs and disabilities (SEND) group and this was where the risk came from. There was a smaller level of risk around secondary school places, and in primary schools there was a small drop in rolls. Members suggested more specifics on this risk to better tie in with the Council Strategy.

The Chairman noted that the key findings on nil and limited assurance reviews were reported to the Corporate Risk Management Group, and asked whether risks identified by the Audit team and not being currently well managed were moved onto departmental risk registers. Officers clarified that it was usually a summary of the findings of the nil and limited assurance reviews that were presented to the Corporate Risk Management Group and these were up for discussion as to other risks, themes, isolated incidents, or underlying issues. Sometimes these could feed into an existing risk or could present a new risk.

The Chairman also asked about the aspiration to develop risk maturity, and asked if there was an action plan in place for this. Officers noted that one of the main priorities was looking at risk management, and refreshing the way in which it was done. This included  ...  view the full minutes text for item 61.

Officers introduced the Internal Audit Annual Report 2022-23.

The Internal Audit Annual Report summarised the work of Internal Audit undertaken during 2022-23. It also included the overall Head of Internal Audit opinion, which was that Internal Audit could provide reasonable assurance for the year despite significant vacancies and reliance on a third-party provider (Mazars). The team completed 39 pieces of work including 27 assurance reviews. 89% of those assurance reviews received substantial or moderate assurance which also led to the decrease in the number of management actions that were raised in the year. It was very positive having a lot of substantial and reasonable assurance reports and this was consistent with having a third-party provider due to the nature of their work. The work for the current year was more risk-based so it was expected to see more limited or no assurance reports or more consultancy reviews.

The Chairman noted that they were pleased with the volume of work that had been completed during the year, particularly given the staffing challenges that had been faced. The role of the third-party provider was noted. It was also noted that the depth of work that the in-house team would be able to complete going forward may lead to discussions around levels of assurance and agreed actions with management. The Chairman congratulated the team on its success and for populating the team.

The Chairman noted the survey of key stakeholders, noting that the results were slightly concerning, and asked how officers felt about this. The survey was undertaken as part of the External Quality Assessment and officers were not surprised that respondents felt that Internal Audit did not have the necessary resources – officers agreed with this. Only a small number of respondents indicated that they did not feel that Internal Audit was valued, and this was in part due to having an external provider, which may have impacted relationships with management and directors. Officers were confident in the figures improving, and there had already been good returns in client feedback questionnaires, and so officers were not concerned about this. The Chairman noted that the benefit of the in-house team was that this enabled better relationship-building. The Chairman also noted that it was good to have the new Head of Internal Audit to ensure some stability in the leadership role.

RESOLVED: That the Audit Committee noted the IA Annual Report for 2022/23.

Officers introduced the Counter Fraud Progress report for quarter 1 of 2023-24.

The team had picked up from where it had left off in the previous year and had achieved another £1.8 in savings during quarter 1. The team had mainly focused its efforts on fraud risks within housing and had recovered 27 properties due to tenancy fraud, which was the highest figure achieved to date during one quarter. The risk of tenancy fraud would remain high for some time which was demonstrated by the team’s current caseload of 127 live investigations. There had been unprecedented demand on housing due to homelessness which had led to an increase in the need for emergency accommodation and the team had been working closely with the Housing Service to check all emergency accommodations to ensure they were being used appropriately. The team had closed four cases so far worth £33,000 and this project was ongoing.

In Social Care, officers had identified financial savings totalling £106,000 across a variety of service areas including financial assessments, section 17 and special guardianship orders (SGOs).

Officers also took part in the first National Blue Bade Day of Action. 82 Councils attended and tackled misuse. 10 blue badges were seized due to misuse. Officers had prosecuted a resident for using a blue badge that had belonged to a deceased resident, and during the court case the offender received a fine, a victim surcharge and full costs to the Council of £2,900.

It was noted that there had been an increased risk of fraud over the last 18 months, particularly due to COVID-19 and the cost-of-living crisis. This had had a vast impact on the service and its workload. Officers had reviewed the structure and resourcing of the service moving forward and a new structure had been agreed with the Corporate Management Team. This included posts of a Counter Fraud Manager, Counter Fraud Investigator and two apprentices. Recruitment was progressing well and officers expected to be fully staffed by the end of August 2023.

The Chairman noted the £5m financial target, and that officers had already delivered £1.8m of this during quarter 1. This was evidence of the increasing levels of fraud. The Chairman also noted the 127 live cases of tenancy fraud and asked how many team members were dedicated to this area of Counter Fraud. Officers noted that officially there were four officers dedicated to this, but in reality, the service was deploying more resources into this area, and it was high on the agenda with the Corporate Management Team. On the new appointments to the team, officers clarified that a structure chart would be included within the agenda for the next Audit Committee meeting.

The Chairman asked, on Social Care, whether the types of Social Care fraud were as expected. Officers noted that there was a yes and no answer to this. There had been positive engagement from the Social Care service which had been very beneficial, and so there were areas that officers had not  ...  view the full minutes text for item 63.

Officers introduced the Counter Fraud Annual Report 2022/23.

The report provided an overview of the previous financial year and gave a statistical view of the year in terms of its activity.

The team had achieved £12.3m in savings across the year, mainly in housing, revenues and social care against a target of £3.5m. This included recovering 84 Council properties due to tenancy fraud and closing 24 emergency accommodation placements due to non-occupation saving £193,000.

In Social Care, officers had identified savings of over £235,000 which was an 11% increase from the previous year and the majority of these savings were in section 17, direct payments and financial assessments.

Revenue maximization work identified businesses that were undeclared for rates or that they should have an increase in rateable value which led to billings issued of nearly £6m from the Council and the Council retained 15% of that income.

The presence of the Onsite Immigration Officer (OSIO) had contributed to £233,000 in savings, which was a 202% increase on the previous year. This was where the Immigration Officer had identified applicants that were not eligible for support due to their immigration status.

Officers highlighted appendices D and F. Appendix D included benchmarking for the previous year and was going back two years because all annual reports for last year were currently being reported to the Committees. Appendix F gave a snapshot of some of the communications that officers had sent out over the last year to residents.

Members asked where the savings were allocated to. Officers noted that a large portion of the savings were denoted as notional savings and was not cash returning to the Council. For example, in housing, this related to managing the current demand. Reducing tenancy fraud would free up Council housing which people from the waiting list could then be moved into. On Business Rates, while some big returns had been achieved, these were one-offs and the Council only received a small portion of this as the savings went back to the Government. These helped to balance the budget. Officers also noted that the relative performance to other Councils justified the slightly larger than average Counter Fraud team in Hillingdon.

Members also asked if there were areas where the Council would see a physical return of money that could possibly justify an even larger team. Officers noted that they were constantly reviewing resource allocation within the team, for example whether officers should employ additional resources and whether there was a business case for this. One area to investigate further was Social Care where there may be some returns to the Council such as the special guardianship orders (SGO).

The Chairman noted a good year’s performance by the team.

RESOLVED: That the Audit Committee:

1. Noted the Counter Fraud Annual Report for 2022/23; 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.