Transcript

of us, so we've just done a round of introductions in our short pre-meeting, so we don't need to repeat that. But welcome everybody. The only other person who wasn't in our pre-meeting is Darmaid Ward, the executive member for resources and some other stuff, lead member finance, basically. So welcome, Darmaid, who's going to contribute as well to the meeting of the committee. So there's a weak script, as always. It says, I'm Councillor Paul everybody, I'll get you in tonight's meeting. You have got gathered that already. So no far alarm if they go off, head for the door, get out the building. Item five has got an exempt appendix, at that point we'll be asking people of the public press and probably also our auditors at that point to the park, some of the switch off livestream. Okay, on the agenda, we're noting that members of the reports and attachments, I can attest to that, Sara was busy reading them again just a hour or so ago. So we're all all fresh in our minds, so we're looking for brief introductions in all of the reports and the main focus, as usual, is on members' questions to the reports, but probably more than that. Also questioning the answers, I imagine, but we may well be making a number of recommendations this evening and obviously those will be recorded. Politics for absence, I believe there are none, so therefore no substitute members, any decorations of interest, anybody? No. Let's head to the minutes of the last meeting and if they are correct, they will be declared to be correct record of the meeting due course, that was the meeting of the Year of the March this year. I'm a little old-fashioned, I sort of do matters arising from minutes if these are required. I think most of the items on the last minutes, either we are covering to some extent in this agenda or there are things which will come around to us at the next meeting, for sure. I do think, in particular, item 120, just arising from that deep dive into social care market instability, I think the committee agreed that you were going to have a discussion of this meeting, so we would have a discussion at this meeting about how we would like to monitor the social care market and its instability going forward. I think that is a very live topic for us because a number of members have had a series of informal meetings, particularly in relation to children services overspend and most importantly, adult social care overspend, where it is very clear that the market is setting prices and those are unstable and placements are something like, what is it? They are about two thirds, three quarters of the entire budget, so any wobbles in that social care market has a very, very immediate impact on the adult social care budget, so therefore I think we probably will want to invite officers to come up with a format by which this committee can monitor indications of any further instability in the social care market. We agreed on that. Let me take you to number 121, where it says that we should be considering this meeting training. I think the majority of members will have gone through training, so that probably means me will need a bit of training and I think, actually, I have got a note about that already from, I think Jackie has certainly something about training anyway, but let us just do a very, very quick review of what training all members have had and just make sure that we are all up to date on that. That is all good. Let us move on to item B1. This is the point, David, where you are invited to just alert the committee to any live matters, any any problems that you think that we ought to be aware of? Yeah, nothing particularly live of great note. The out-turn report will come to executive on the, I think it's the 27th of June, so that will be obviously published the week before, and at the moment that hasn't gone to the executive yet, for example, it is very much in draft, but I think the overall position is one of significant in-year variances, which obviously has been reported through the year, which have been pretty challenging, but I think the overall position on a net basis to the end of the year is relatively positive, but we're not going to, obviously, escape some of the major challenges we've got around ongoing delivery of savings of quite some significant multitude, schools, variances, which are in a difficult place, and a number of other issues as well, both short and long-term. So the overall outlook will remain challenging for the foreseeable future, with potentially some more risks to come, temporary accommodation, for example, is something which has been quite stable and we've done rather well compared to other councils in time, but that suppression, which could easily become something more significant in the short to medium term. But generally, I think if we look at the year, when you see the report, the year-end position at that executive meeting, I think we can probably say that if you look at the bottom line, as it were, the overall position is probably pretty positive and certainly probably significantly more positive compared to a number of other councils nationally and in London. Okay. As you know, members are pretty concerned that, yeah, the bottom line is okay because we've got windfalls on interest rates, we've drawn down contingencies, and we've drawn down some balances, but we are concerned that at the operating level, certainly at the directorate budget level, those variances are very, very significant. I just wonder whether you're able to tell us whether, we know the Q3 position was, does the Q4 position indicate to me it's now seven weeks since you've closed the account or come to the end of the financial year? Is there anything at all that appears to be a little bit significantly worse or have there even been some significant improvements in the final quarter? Yeah, rather not go through the specifics because it is very draft, but there are both positive and less positive movements in there. It's not massively changing the Q3 position, but in the end it is a, you know, as I say, from a bottom line perspective, it is fairly favourable, I would say, in the round. Yes, and I completely agree there are been issues within services which, you know, certainly have given us large variances, you know, from the environment generally, but also within individual services there have been some challenges, and we need to make sure that those don't continue into the new financial year and into the future, but of course, you know, there will always be variances, that is, you know, it's in the round of around about a billion pounds, hundreds of services, greatly complexity, many factors outside of our control, there will always be variances, there's ever won't be. Yep, it was ever thus over the years, but what is unusual right now is every directorate is kind of showing adverse variance, and that is a very new situation. Okay, look, all we need at this point is insurance, that Q4 is not significantly worse, no less any better than the Q3 position, and let's look then at what gets published on the 27th of June going to the objective. Okay, thank you very much indeed. Okay, let's move on then to, oh, unless any members have got observational question at that point. No, let's move on then to item B1, choose one of the, sorry, by B2, which is on some substantive items, so the draft on audited annual governance statement, I think members probably do have a lot of observations and questions on this, but let's just hear the initial presentation. Paul, you do that? On that, okay. Go right ahead. Yeah, so just a little bit of background for some of the newer members of the committee, so the annual governance statement, we did a rebound of it in 22-23, which was advised by the audit committee of some improvements and changes that we'd like to make, so this is the second iteration of that, where we are now reporting on what happened. So this, we'll look at the backwards-looking view and a forwards-looking view of the challenges that we've had and the challenges that we're looking at and looking forward. So just to remind everyone that the annual governance statement is a statutory document, we are bound by regulations to produce this by the 31st of May, and it will be audited alongside our statement of accounts, so KNG, who it was today, they will be auditing this annual governance statement alongside the statement of accounts. It is a statutory document as much as a statement of accounts is, so late publishing of this document is the same as missing your closing your accounts deadline. So an important document, lots of content. The purpose of this document is to give a full picture of our internal controls, our governance framework, and for us to identify sort of major themes and issues that we have as a council and to show how we're actively responding to those issues. So the report itself, I'm not going to go into detail, I'm sure there will be lots of questions on it, but the main areas to highlight are the governance, despite all of the framework that's discussed in detail hasn't significantly changed, but the governance issues highlighted are probably the meat of the document, because it talks about what we think are our big governance issues going forward and the action plans that we're putting in place to address them. And we've also got the backward-looking area, which again is reported on how we've sort of done against our previous challenges and the action plan to put in place to try and resolve those issues. So those are the most interesting points for members to look at, but obviously it's a big document, I'm sure there'll be plenty of questions, so happy to take those. For the benefit of what benefit officers, our independent members, our last week circulated number of specific points in both our special own bag, we probably want to just pinpoint some of those. Can we just, there's one issue which I think for elected members is reasonably significant, and that's the overall approach to the constitution of the corporate governance, and so there's some things which are carrying over from the last meeting of the audit committee in particular, which is establishing a constitution working group, being offered scope in terms of reference for that from the head of law, and just being absolutely clear that we understand that there's a constitution review which is, well, started last year which was essentially about statutory compliance, and that's predominantly done, a little bit of clear up which went to annual counsel last week, so that's, then there's an issue about whether the constitution itself is intelligible for one for better phrase, you know, it's a it's a damned hard read, and that's about it, the logic, its structure, the logic, how it runs, and so forth, but then there is a third basic issue which is about what's the overall governance arrangements of the council, because to be perfectly honest, we've got governance arrangements which actually date back to 2002, when the current system of executive leader and executive was established, the current administration inherited that in 2010, hasn't made very many changes to it, and we've kind of, you know, we've just got along with things, but there's clearly a number of issues that we've really ought to be looking quite closely at, about the scheme of delegation, we've made some major changes to the scrutiny committees, and that's, that's, that's significant, but just understanding essentially who takes what decisions we're in when, and in particular, I'm going to be honest, it's something which comes out of this one, there is a plethora of boards in, in the council at the moment, and although the governance statement suggests that there's members on all of those boards, there really isn't, I mean, I mean, there's, I mean, there's scores and scores and panels and boards, and they are decision-taking in one way or another, some of them are forming decisions which are then taken by, through delegated authority, others are forming decisions which are then punted up to the executive, quite a lot of them are very low-level operational, and no, members don't want to be involved in that stuff, there's quite a big middle ground, so I think that's, that's actually the meat of what members really want to just sort of get, get, get dug in into, to make sure that we are, you know, generally fit for purpose, particularly as we're going into even choppy old waters when the sort of health of one's governance arrangements and how we take decisions gets put under really, really hefty pressure, so that's my quick summary of a number of conversations that we as members have had, and I think we might just want to reflect that a little bit in the draft which eventually goes to the leader and Chief Executive sign-off, but look, I'm going to ask, in particular our intervention, Alan Begg, there are a couple of very specific things that you'd identified which you're looking for answers, Alan Finch first. Thank you, Chair, I mean I think we've moved forward enormously with the annual government statement in the time I've been on the committee, and I really like the approach I couldn't this year find any major areas missing from the GHS which I have done in previous years, I like the fact that it places governance in its context, you know, there is a reason why we do all this stuff, and I think it's a really good document. In terms of moving it forward for next year, you know, rather than changes to this year, I think I would want to see for the benefit of any of those residents that do happen to pick it up, perhaps a bit more explanation up front of some of the more technical terms, and also to ensure that we don't sort of risk padding the document out too much with, you know, superfluous detail that's maybe only tangential to governance. For example, some of the stuff around accounting will appear again in the statement of accounts report, but I really like the GHS, and I read a lot of them. This is certainly one of the better ones I've seen. The question, which is a specific one, in relation to item five, the issue raised on page 20 about leases and concession agreements, I'm sure there are good reasons why that's not gone into in great detail, but the response to that around review of debt reporting arrangements and debt management strategy just makes me worry that perhaps that's a wider issue than just the matter of about one entity that's referred to there, so I wonder if you'd mind commenting on that. So, specifically around, I suppose, the debt management piece was how I interpreted it. So, I think the issue that was talked about around the one entity did highlight instances where part of the council is pursuing very virtuous kind of aims of liaising with the provider and looking for a resolution to that problem. However, the debt management team weren't exactly connected to that, and I think there's, I kind of see that as a bit of a symptom where actually, across the organisation, we just need those better connections, specifically around debt with strategic partners, so we talked about that a few times and we do have really good relationships in part of the organisation with those organisations, in part of the council with those organisations, and what we wanted to do was, sorry, I got a frog in my throat, what we really wanted to do was leverage those good relationships to improve on the debt management side of things. So, I've kind of danced around the specific example there to try and explain the concept actually. What we want to do is to get the debt management team less from ringing people up and saying, Please pay us, and more about leveraging different parts of the council who have a stronger link to those organisations who perhaps have as well. It made me worthwhile at some point just, I mean, really clearly explaining what is the governance issue with all of that. It is all a bit technical. Where is the governance weakness potentially there? Because that's what the report says in table two, item 15. Page 60 of the PDF, if you're looking at that. If you go to what is document number, page number 58, but on the PDF it's page 60, you see like line item 15, leases and concession agreements. What's the significant governance risk is you there? So, it's given a slightly bigger profile, which is because it's a slightly larger profile. So, I think it's just because it's a slightly positive capital in this game. Okay, that's understood. Okay, Alan Begg, you'd noted that there was still no objection to previous year accounts, which hasn't been resolved. Let's have you. [inaudible] [inaudible] [inaudible] [inaudible] [inaudible] [inaudible] [inaudible] [inaudible] [inaudible] Sorry, can we have your microphone on? Can we? Thank you. Oh, sorry. I beg for. The identifying page is 5253, and perhaps not the place to exclude them, but it's an issue where I'm not convinced this committee knows what the latest scenario is around these outstanding certificates, which go back to 2021. And we're not looking shortly to be 2425. So, well, it's a section 151 officer or someone must come up with a out of thought, a resolution to this, otherwise these wordings will continue to be in the government statement forever more. I mean, the other committee has not had any, would use the word assurance, but any commentary regarding where we stand on these. And in fact, other than some previous wording, hasn't really identified what the issue is. So, I just leave that on the table, not just in for an answer now, but I think, I think it is a slight concern. The other one which I am picking on is at the very end on page 61 and obviously views on this, as I've seen elsewhere, what can I use on these matters in terms of the conclusion, where this committee only sees the. This statement every year. And in fact, I quote and report progress and next year's annual government statement to this committee. I just wonder whether because there are new eight new governance issues, whether this committee should be receiving a progress support during the year. Question. So, we plan to bring a six month update for next year. That's definitely something we want to do due to timings and the fact that the statement came later last time. Didn't really have time to fit that in, but that's definitely something we want to do for this year. But in conclusion, I like, I like the way it's set out, particularly as I said earlier, table two on the outcomes. It's very, it's very clear. So, thank you. It will be the basis for your progress report, presumably, and each of those eight, eight governance issues, you'll be telling, you've been reporting what the progress on this is. Yes, absolutely. Okay. Other members, Nick. Two comments. Firstly, and really, it's building on what Alan Begg has just suggested regarding the six month review. Should we be putting in this statement that there will be a six month review, because it struck me, we had a very comprehensive list of the 17 items that we had identified. We'd identified what needed to be done, but what we hadn't identified was how progress was going to be monitored. And that is a hallmark of good governance, but there is monitoring. And the second observation, we have, of course, changed our scrutiny committees. In that they now have different responsibilities, different names, and the governance report ought to reflect that. I'm certainly happy after the meeting to send the slides through of the new structure. But I think the governance statement, looking at how we scrutinize going forward should reflect the new structures that we have. And I think it's worth noting that there's going to be a phase two of the scrutiny review, which is looking at the effectiveness and the culture of scrutiny. And that's an important part of our government. It's how we scrutinize decisions of the executive and the council generally, and I think it will be helpful for this report to reflect what we are going to be doing in 2425. Sorry. Annan, can you turn your microphone off? Thank you. Thank you. The first one's just a kind of comment, not a question, really, on page 41 at 3.23. It lists the work of the committee and the penultimate bullet point talks about the deep dives that we've done. And for me, in the last year, we significantly did on the new bill program and the social care market, and I just think for this to be accurate. They need to be added in because if we're doing our job properly, we do deep dives into things. I mean, we listed a significant, I don't want those to be missed. So that's more of an editorial point. And then the other thing I just wanted, yeah, the table was really helpful for people who do not work in order like me. And because this is an area I'm slightly more familiar with in the rest of life, page 59, 16 equal pay legal claims. In other settings, I'm in, people are very aware of the scale of risk attached to that. And I guess it goes to the point that's been made about six months of monitoring, but I just didn't know if you could say anything verbally. There is obviously some detail here, but I just, the scale of that for some councils is significant. And I mean, threat is quite the right, but it's really could destabilize finances. And obviously there's some assurance given here, but could you just say a few more words on that particular issue? Thanks. I mean, or do you want to bring something back? You know, if you don't know the answer, I think it's fine to come back. Okay, great, because it's such a hot topic and lots of other things I'm in. And I wondered where we're actually up to on it. I'll say something, I just, I don't know if Alison might want to just say something else, but so there's no evidence that we have a equal pay kind of issue. Specifically, there's nothing like that. We've never agreed to any kind of equal pay. You know, as a council, we've never agreed from HR perspective to things which should bring an equal pay claim. Certainly not that we're aware of that I'm aware of, but we are going through a comprehensive and systematic review of our pay and grading at the moment, which is quite a big exercise. We are a large employer, obviously, but a lot more staff than a lot of the councils because of the nature of how we set up. So we are going through those issues at the moment and we hope to conclude on that within a period of certainly months from where we are now as opposed to longer than that. But yeah, there's nothing, there's no evidence of anything else that Alison wants to add, I don't think. Now just sort of confirming what Dave says that we're actually going through a constructive exercise to ensure that there's not, as you say, there have been many local authorities that have gone through that. So we are looking, but at the moment there's nothing to suggest that there is a particular issue in this organisation. [BLANKAUDIO] [BLANKAUDIO] [BLANKAUDIO] [BLANKAUDIO] [BLANKAUDIO] [BLANKAUDIO] [BLANKAUDIO] [BLANKAUDIO] [BLANKAUDIO] [BLANKAUDIO] [BLANKAUDIO] [BLANKAUDIO] [BLANKAUDIO] [BLANKAUDIO] [BLANKAUDIO] [BLANKAUDIO] There are a number of things that we specifically want to just raise with you in relation to the external audit plan, but who's coming forward to present that? Listen, you're good up there, don't worry, otherwise we're moving furniture and people, yeah, thank you. Thank you, Chairman. So I'm going to say some more opinion words, and Bada is going to just build on that a little before I close the presentation, but just going to pick up on the salient points. We have two documents here today, the audit plan for the financial statements, sorry, the audit plan for the council and the audit plan for the pension fund. Now, the first thing I want to say is this plan is not something you do at the beginning of the audit. You have to undertake a series of work around understanding the entity and the pension fund. So we've been walking through systems, understanding controls, and so on to be able to get to this particular point where we can produce a plan. The second thing I want to point out is you will note both plans of the word indicative in front of them. Now, that's for a couple of reasons. Firstly, we've not been able to do all of the planning activity because some of those walkthroughs and understanding processes relate to activities you only do at the year end when you're putting your accounts together. So we naturally will complete those as we come to do our final substantive visit. Also, you'll be aware that there are a number of consultations live regarding the audit code practice, which is something we've got to comply with. And the looks consultation around the accounts and audit regulations. So we're just waiting for those to land. And then again, we can finalize this. And finally, your outgoing auditors GT who presented our last audit committee signed off at the end of May. We've got to review their file, which takes a period of time because they've got to close out the file before we can review that, but steps are underway to do that. So that's why it's an indicative document, just in case you were wondering there. But we've been able to progress our planning work with the support of officers, take key decisions such as materiality, page five of the hard copies we've set our materiality using international auditing standards. But you're well within the range there. We do set talk about nearly 2% of expenditure. We are allowed to go up to 3%, but we think about the risks in the sector and we set an appropriate level. We then design our procedures to look for errors at a lower level. And of course, report issues that we identify at an even lower level as well. The other thing I wanted to identify is that a number of TBC to be confirmed, so on page 6 of the document, for instance, and that relates to just timings because we are outstanding those accounts and audit regs, confirmations around the consultation, so we will finalize those. But very much our discussions with officers have been, we want to start in the summer and try and get you back on track in terms of signing off at an appropriate time. We've also been able to identify our significant risks. Now, you may be alarmed when you see the word significant risk, but actually, Bada is going to talk a little over each of those significant risks. These are quite typical of the sector. So I'm just going to allow Bada to talk through those risks before I just complete the presentation of the item. Thank you. So coming to our first significant risk of valuation of line and buildings on page eight of the pack. So we assess that there is significant risk that the fair value of console line and buildings will materially differ to the carrying amount as a tier and our assessment is based on the understanding that the council adopted a rolling revaluation model, which sees all line and buildings revalued over a five year cycle. This creates the risk that carrying value of those assets not subject to revaluation is materially different to their current value. And also for those assets which have been revalued in the year, given the significant judgments involved behind the process to determine their fair value. To address the risk, we have listed down the audit procedures on the right side of the each section and our key procedures for this risk will involve review of the console valuation report with the help of our in house real estate valuation team and assessing the variable less of the assumptions used to arrive at here and fair values. On the next page, we have our second significant risk, which is respect to valuation of pension obligations at year end. We identified this risk in relation to the council's local government pension scheme. The risk is mainly derived from the complexity of the valuation of pension liabilities estimate as it involves selection of complex actual real assumptions. We would also like to highlight that, given the market conditions, some councils are seeing that their schemes are moving into surplus position from the liability position. In response to the significant risk, our key procedures will involve assessing management review control over valuation. And we will also challenge the reasonableness of key actual real assumptions with the help of our specialist actual team and the pension team. Next risk on the next pay on page 10 is management override of controls. We have our this is the risk inherent risk, which we are required to apply on all engagements as per the requirements of the ordering standards. And we have not identified any specific additional fraud risk relating to the councils audit. Our response to the risk will include mainly the review of any significant, unusual transaction and testing of high risk journals identified by our data analytics team. Thank you. That's all from my side, but happy to take any question from the members on this. The document then continues with a rebuttal over our expenditure recognition risk and revenue recognition risk because principally there's not any complex recognition criteria regarding those. And again, that's not uncommon in the sector. We've also outlined on page 17 and 18, our approach to value for money as this is an audit under the local audit code and local audit using the NIOs national code of audit practice. We have responsibilities regarding value for money and we've set out a diagram, how we undertake those and good progress has been made on that work already regarding our risk assessment. There's no significant risks to identify today. It will formally complete that with the auditors and your report. The report then continues with some appendices. The only ones are going to mention are the team appendices on page 21, which outlines key members of the team. The fees appendices on page 22, you will notice significant increase in fees, which are set by PSA. Those PSA ran a consultation program towards the end of 2023, which advised councils of the nature of those, but happy to take any questions and a confirmation of our independence. We do state in our confirmation of independence. We are independent, but we have highlighted three areas of other work that we do. There's a piece of work that auditors typically undertake at local authorities and the level of fees associated with that. I don't have any concerns in regards to our independence requirements. Conscious, that's the council's audit plan. We do have the pension, the pension fund audit plan. I think the councilors want me to stop at that point. I think the initial audit of the council itself is pretty substantial. Firstly, welcome as our new auditors. I think that welcome has been extended before, but yourself, Rashpaul and Badar and also Anna are going to be the three principles leading the audit. So we very much look forward to a very productive relationship. It's probably fair to say that we are looking for a number of distinct improvements on our previous audit experience with another company. The timeliness of the audit is very, very important to us. It has been awkward for the council in the past. I'm going to spend too much of this committee's time saying how terrible grand thought and work, but there were delays and it was publicly embarrassing when we were not able to present, funnily enough, to present the pension, which is not very complicated or relatively uncomplicated. The thing that we are, I think, all very conscious of is this quite a significant increase in the fees that we're going to be paying to the previous auditor and clearly we're expecting a lot more for that. Can you maybe just give us a little bit of a hint about where you see the some added value from your approach to our audits? Thank you for the question. So principally our role is to deliver an audit opinion into a desired quality to the appropriate quality meeting all the requirements within the time scales. So that's the ultimate aim of our audit and we will be providing regular updates on that in particular on timeliness. In terms of one of those things that we've tried to turn around is by doing planning work at what we'd say is an appropriate time. Typically before the end of the financial year, so walking through those systems, as we undertake getting to the latter stages of the audit, we'll be seeking to compare and contrast some of the practices that we see at Islington, compared to our other audit identities, to in terms of share good practice and other insights that we can provide. We will be using our data analytics tool, which by that I mentioned around our journals and that often identifies other issues. So when you do that without getting too technical journal screening, you know, you can find out trends around the time that journals occur, the level of journals, which parts of the business are generating more journals and stuff. And those we have shared in the past are audit identities that can lead to efficiencies. We'll also be seeking to, as we get into the latter stages of the audit, produce a regular auditors update report, which brings together news from different parts of the sector, which are appropriate in terms of like a technical update report and host technical seminars on events. One of the issues we have at the moment is, you know, there's not a lot of audits that are at this particular stage that the prior has been signed off. So, you know, to get everybody in a room and have those technical discussions is a difficult thing because there's not that many bodies in that position to do that. Those are just some of the areas, but ultimately, you know, the fees that you're paying, you'll be getting a quality audit opinion, as we set out in the appendix, in a timely way. Anything less, but a little alarming. Can I just, I'd like to encapsulate a view that a number of members have expressed part of this meeting about the audit risks that you've identified. So, there are four particular risks. Forgive me saying this. There's a feeling that this is a little bit generic that you could probably say all local authorities probably are facing these sorts of full risks, and the knowledge of land and buildings, the post-retirement benefit obligations, possibility of management fraud, and then the balance between revenue expenditure and sort of the scale of capital budget and the risk of using, of capitalizing revenue and effect. What have you done looking at Islington already that leads you to those sort of four risks? If I can pick on the first risk of the valuation of land and buildings, as part of our planning work, we actually got the fixed asset register and actually analyze that with our real estate valuation team to kind of look at outliers, to look at buildings that perhaps shouldn't, that we think, well, that's unusual, that should be based on a DRC valuation, a decreased air to replacement cost, as opposed to a market valuation. We've looked the prior valuation reports to understand the big devaluation and how you do that. We've understood the nature of, for instance, one of the big hot topics in the sector is about investment properties. Now, you do have investment properties, but actually the value of your investment properties isn't significant, like some of the local authorities. So some of our work has been about ruling out issues, you know, that's not an issue. We've looked at your PFI schemes, a number of PFI schemes that you've got. That valuation of land and buildings includes the land, the asset record in there. But actually we've stepped back and thought, do the liability side require a significant risk? And it doesn't, so it's about understanding of your organization to make sure you've got the appropriate risks there. I mean, the valuation of post-retirement benefit obligations, for instance, you actually have two LGPS schemes, but one of them, we're not treating as a significant risk because that's quite an old scheme. It's quite an old scheme with relatively small values. So we've, again, engaged with our pension center of excellence who've sought to understand how these figures are put together, the assumptions the actuaries use to design appropriate procedures when we do get the financial statements. So there's a lot of work in terms of scoping that and making sure the right risks are here. But again, it's sometimes about the risks that aren't here because we've been able to say that doesn't represent a significant risk. I've got to be honest with you, there's a phrase in here which we call some people to take a shot and take a breath. Actually, his management is in a unique position to appropriate for fraud. I hope that is a slightly generic phrase that you've sort of picked up. What is it that you specifically identified in Islington that there is this unique position to protect fraud? I think the third bullet point says we haven't, we've not identified any specific additional risk. What we're very clear around is that there's, of course, a risk of fraud and override. And those are the words from the International Auditing Standards. We're very deliberate about that's the risk that we have to guard against and design appropriate procedures to make, for instance, making sure about our talks about the journals we do and the journal screening and the risk testing of high-risk journal criteria. Of course, management could put in a journal which changes the financial position. But it's about the controls that you've got in place to stop that and us designing appropriate procedures to be able to detect that. So there's ways that management do, but what we've also said is there isn't any specific risk indicators, but we do have to guard against that risk. And I'm sorry, it is a presumed significant risk that our audience requires. In relation to risk number four, again, have you trawled through the capital program to identify things where you think revenue is being dressed up as capital? Or you're just saying that that's a risk because of the scale of the capital program? So one of the things we have identified from our understanding, and I mentioned, there's certain activities that only happen at year end in terms of how those entries get into the financial statements. One of the things we'll be walking through is understanding how capital expenditure is then allocated and then included in the asset register. So we'll be doing some detailed testing. So our procedures, they're not just designed at looking at, for instance, testing all the capital expenditure. We step back, looking at the nature of the schemes and look at qualitative factors, so things that may be dressed up where you think actually that seems more like a repair scheme. A repair is a maintenance, which wouldn't be a capital scheme. So there's some very distinct procedures, but of course, we have to fit in with how you run things as an organization and how you make postings in terms of the capital side as well. First topic I want to ask you about timetable. When can this committee expect to be presented with a set of audited accounts, all things being equal? In other words, our team getting the accounts to you promptly in the usual way that they would do? If I can just say one thing around, we're still waiting for the final deadlines to be approved in terms of the deal of consultation, but I'm wanting to start in the summer and aiming to sign off in the autumn. As we get into the next month or so, we'll be able to chat that out with officers and say that's the date that we'll be going to audit committee with the IC2-62 report, saying we're in a position to sign off, but it's very much this side of Christmas, ideally autumn, as opposed to March, for instance. Of course, all things equal, I think it's appropriate thing in terms of issues can be identified and so on, but cooperation, no significant issues, that's where we're designed, that's where we're aiming to get to. Then the second topic that I want to really push you on is the quality of the report that you will ultimately be providing us. The session that we've just had of Councillor Convey asking you questions about the risk has really identified the, I suppose, the challenge of differentiating between generic risks and Islington specific risks. What I want to know as a Councillor, and what I suspect a resident picking up, a report from yourselves, is our finances sound, are the statement of accounts containing figures that we can rely upon. Is there anything that we as Councillors need to worry about bearing mind we are the custodians of this Council's financial security. Too often, in past reports, it's been like wading through treacle to actually find those key conclusions that we as Councillors need to know in order to have confidence that this Council is financially stable. Can you make a commitment tonight to making it absolutely clear in the report that you have, as part of your audit process, address the question, the fundamental question of are our accounts sound. Is there anything that we as a Council need to be worried about as far as financial security is concerned and that you will state that in plain English, as opposed to the jargon that inevitably will be used by auditors, because we're not auditors. And we have to understand in very simple lay friendly terms where we're at with the external audit report. Thank you for the question. So in terms of inevitably there's some jargon involved. We will be signing audit opinion, but in ISO 260, there will be a clear statement on whether we're in a position to say the accounts give a true and fair view of your financial position. So income and expenditure and assets, you know, so that that comes through in ISO 260 report in terms of the accounts. In terms of the financial stability point you were talking about the value, our auditors annual report as a section of financial sustainability and that will report our views about your financial sustainability. Now we're required to make matters, write that in plain English. That's a stipulation under the NIOs code. We'll endeavour to do that. Now, before we present the auditors annual report, we'll be bringing our full risk assessment, which mirrors that auditors annual report so officers and members of the audit committee have an opportunity to scrutinise that and consider the language we're using in that as well. So I'm not saying that's a trial run, but that gives you an insight of what our auditors annual report will look like that the risk assessment commentary regarding that. Now, we'll, our reports and auditors reports will say these accounts are 100% correct because you're dealing with materiality as we've talked about in the audit plan, but they will say whether the accounts give a true and fair view on whether we can sign a clean audit opinion to that effect or not. Well, just coming back on that point. I've been asked by councillors effectively what confidence can we have in our external auditors being rigorous about the both accuracy of our accounts. I think more fundamentally, whether there is anything that you have uncovered, be it in terms of value for money, be it in terms of potential liabilities down the road that we as councillors ought to be worried about. And I'm sure that council the contrary will get inquiries from members, and he will want to be able to give the unqualified assurance. Yes, we have had a comprehensive report from our external auditors. They have provided this committee with all the assurance that they need that there is nothing to worry about. And when I hear words like true and fair, sure, they are technical terms, but to a lay person picking up a report from yourself, they may not understand what that actually means. So it really is a plea on my part to you to frame things clearly in a, we understand that the report has to be framed using audit industry language that goes without saying, but there is always scope within a report for a simple plain English couple of paragraphs setting out this is where we're at. And it's really a plea for that so that a member of the public or a councillor can have the assurance that they may well be seeking as to the financial stability of isn't a council. Welcome to our venture. It's also worth telling us our new auditors. We have a fine traditional in Islington of individual citizens at the opening of the accounts, burying deep and finding all kinds of stuff and asking really difficult questions. One or two of those most ardent inquisitors have either left or passed on, but it's a fine tradition, and it's one that he was a management as well as you see auditors need to be aware of. And let's be honest, they're not cranks. And they often ask really pointed questions about things in our accounts for which answers often are hard to obtain. But we get them in, we get there in the end. Thank you. Just to pick up on something you said, in answer to Councillor Wayne on the timetable, you mentioned the DLAC consultation and it made me so understand that it stood the point you were making, but just to be clear, you're not waiting for the DLAC consultation in order to start the audit of accounts. No, we're not. We haven't started for any of that. We haven't waited for any of that to start the planning. We're not waiting for any of that to start final. We just need to agree days and agree the timetable so that naturally the end date should fall out of that. Thank you, Chair. So, the opening remarks that I made regarding the audit plan, those are equally pickable here in terms of waiting for the confirmation of the code and waiting for the review of the outgoing auditors file. We over on page 35 of the hard copy pack have set out our materiality for the pension fund and, you know, the level at which we design audit procedures. We've then set out our risks. So the same risk appears management override of controls because that is a standard risk. But again, we've not identified any specific or specific conditional risk factors at the end at the pension fund. And again, very much how we, the procedures to address that are outlined there. And I'm not going to go into too much detail because bad as all really talked about those procedures in respect to the council. The key work around the pension fund is around the investments and the valuation of those investments, whether they're level one, two or three investments and making sure we undertake appropriate work regarding those. And you'll see risks two and three are focused on that in terms of the the misstepments and making sure they're complete and accurate as well. We are utilizing the reason why when you would get onto the team slide, you'll notice a different senior manager and a different assistant manager is that make sure using the appropriate staff and the appropriate specialism within the KPM cheek. Do KPMG team, so the people that are used to auditing pension funds. So I'm using the same techniques there. We've also completed this identified a number of the other areas we are, I am considering in terms of our risk assessment, and where we'll be taking detailed work more for information, rather than significance of those risks. And again, the appendices, I mentioned the team slide. The audit fees are there and they're set on the same basis as the the council's audit fees and our independent statement. We're not required to, but for completeness, we have said we do undertake a number of non audit services at the London. And said, which, you know, given your scale involvement is important to highlight, but actually doesn't technically constitute non audit services, because it's not as if it's a wholly on subsidiary for instance or something is you're one of 32 members as I believe so. So, but we've raised that there for completeness, and there's no other reasons to flag in terms of our independence. I didn't cover it on the last one. And another question members have asked questions around audit quality. How do we ensure audit quality. There is a diagram on page 20 of the pension fund plan. It's replicated in the council plan around, you know, how do we ensure quality. How do we ensure we're doing the right work. And we kind of talk about there around the standards we've got within the firm, our recruitment policies in terms of promotion and in terms of recruitment and retention, so on and training and in terms of our. The way that we undertake reviews on jobs post completion and during the work to ensure it's appropriate standard before we issue our audit opinion. Again, I'm happy to take any questions, Jim. I mean, I am for disclosure, chair of the pension committee, and I'm hopeful that we're not going to find conflicts between your valuation and what the actually determines for us. We have a trinial valuation coming up sooner rather than we'd like to be perfectly honest. So the risks that you've identified again sets in question. Are you saying these are potential risks or actual risks that you've already seen from sort of initial troll. So that these risks that when we think about the issues that we need to identify to those charged with governance, given the assumptions that involved in these and the judgments and then the size of the liability. You know, you're talking about even very small swings in the discount factors of a quarter of 1% can have a multi million pound impact. You know, many times materiality. So those areas that we do consider with our actuaries very carefully. And again, we've done some pre work around that, but even, you know, there's nothing specific identified, but just the inherent nature of these issues means where it's appropriate to raise those. Here in a report. I mean, that is extremely helpful. In fact, pension committee has identified some fluctuations in the reported valuations to us on quarterly basis. So I think we'll very definitely benefit from that some additional oversight. It's 1.7 billion of funds under management and some very substantial liabilities alongside them. So that's really helpful to hear indeed. And I think further. No, good. Well, the recommendation is in 2 parts. First, just to note the, the fees, the fee structure. And to note the index of old plans, we're happy to agree those as in the reports. Yeah, thank you very much. Okay. [BLANK_AUDIO] [BLANKAUDIO] [BLANKAUDIO] [BLANKAUDIO] [BLANKAUDIO] [BLANKAUDIO] [BLANKAUDIO] [BLANKAUDIO] [BLANKAUDIO] Thank you, Chair. So a number of councils do have that. And with regards to the sort of prevalence of things that happen on social media, it's difficult to sort of provide a threshold as to what they're actually looking for. But I think they want to make us aware that we should have a separate policy to deal with it. And ultimately, any decision that we make in that regard is subject to legislation in terms of human rights and the and Ripper. So in terms of answers to the question about directed surveillance, it can be for investigatory purposes. If it's covert, but not intrusive, conducted for the purposes of a specific investigation operation, and likely to reveal private information. So sometimes we may have seen there's instances where you have possibly an officer claiming compensation for injuries that he said he's had at work and then you find him on holiday somewhere else. Those are the sort of things that they look at whether actually is a social media active to sort of give information around that. As I say, it could be sometimes it could be has to be carefully considered to make sure you're not trying to have any sort of level of entrapment. So I sort of take the point in terms of trawling through social media for not having any particular reason. But in that respect, it is direct. It is used for very many different reasons. And I think what they were saying is that actually we need to have an independent policy to do that. And we're planning to put one together and bring it forward into this committee in July, that would be acceptable. On that, it needs to be done sensitively, obviously, I mean, the kind of example you've just given, yeah, the town hall staff and others might suddenly be really quite alarmed at the possibility that their managers are checked through the social media. Does he exactly what they're up to without any clear sort of direction, why that would be done. Okay, well, members are happy with that. We're at the level of directed surveillance reported and they have to come up with the inspection. Oh, I'm sorry, Alison, go on. Sorry, Chair, I'm conscious I didn't answer Councillor Burgess's question. Yes, you can be either rather doing very, very well. And there are things that we need to look into more and we will be doing that as we move forward in terms of, as you talked about earlier on in this committee monitoring. It's important that we make sure that we're on track and that we are doing using our powers effectively, but appropriately. Thank you. Okay, thank you. Good. If we agree those recommendations then. Thank you very much. Good. At this point, we're now going to clear the gallery. And, or particularly, I should say to Rashpal and Badra, thank you very much for coming. Indeed, I should have said you're free to go already, but now you must go because we're taking the exempt item, which is all about our vulnerability to cyber attacks and similar. We're going to turn off the transmission.