The Committee noted updates on the Council's progress on recruitment compliance, external audit, treasury management, counter-fraud, GDPR, tenancy audits, internal audit and savings delivery, making no decisions.

Recruitment Compliance

The Committee considered the Audit Update Report Recruitment Compliance and the Appendix 1 Recruitment Compliance Action Plan as at June 2024, which outlined progress being made on the recommendations of the internal audit of Adult Services recruitment practices that had been presented in November 2023.

Members sought assurance that all Adults Services employees were 100% compliant with Right to Work legislation and were told that the new online Employment Compliance System would minimise risk in this area.

Documentation was always run through the 3rd party document checking system, to validate the documentation provided, even if the new employee’s documentation was not presented in person.

Members also asked if anyone had tried to bring a claim against the council for not keeping notes of unsuccessful candidates, and were told that officers were not aware of this having happened.

External Audit Plan

The Committee noted the External Audit Plan 2023-24 and the 24 LBN Audit Planning Report and were told that the audit of the 2022-23 accounts would result in a disclaimer of opinion, in line with the approach being taken by other local authorities in England. Members were told that the council would nevertheless make representations to central government, including via the Local Government Association, arguing that it should be recompensed for the fees payable to auditors Ernst and Young LLP in respect of the 2022-23 audit.

Members were told that the audit fees payable to Ernst and Young LLP had increased by 150% as a result of the tendering exercise carried out by the Public Sector Audit Appointments.

Members asked for a greater understanding of the audit of management judgement on the recoverability of loans to subsidiary companies and were told that a variety of documents would be scrutinised including financial statements, minutes of meetings and discussions would be held with finance officers.

Members also asked about the scope of the light touch audit of Populo Living and were told that the company had its own external auditors but that the council's auditors, Ernst and Young LLP would investigate further if required.

Members asked about the absence of a Value for Money opinion, and were told that this was no longer required under the new code of audit practice.

Members also sought assurance that improvements to the bank reconciliation process had been made since the last audit, and were told that the service had been removed from oneSource, the shared service arrangement with Havering Council, and would continue to be improved.

Treasury Management

The Committee received the Treasury Management Year End & Quarter 1 2024-25 Update Report which contained the Appendix 1. Prudential Indicators and Appendix 2. External Credit loans and equity 30.06.24 Final which set out the current status of the treasury management function and the council's borrowing and investments.

Members expressed concern that some internal borrowing might be replaced by external borrowing and that the forecasts in the report did not include the years 2025-26 and 2026-27. They were told that a long-term forecast would be included in the mid-financial year report and that borrowing associated with self-financing schemes was mitigated by the income they brought to the council.

Members asked for a better understanding of what these self-financing schemes were, and asked for a list to be provided, that included more details about them.

Members also expressed concern that the Council's ability to borrow in the future would be affected by rising interest rates.

Quarterly Counter-Fraud Progress Report

The Committee noted the Fraud Progress Report AC Final July 24 which provided an update on the work of the Counter Fraud team, reporting on the Council's current position with respect to housing tenancy fraud and whistleblowing.

Members asked about the processes that enabled Ghost Workers to be accommodated at the Council, and were told that officers would brief them privately outside of the meeting. Members also asked about which directorates were involved, and were told that the information would be circulated to them separately.

Members sought assurance that the weaknesses that had led to staff fraud being committed had been addressed, and were told that recommendations had been made to the relevant services to prevent reoccurrence.

Annual Report on General Data Protection Regulation

The Committee noted the GDPR Annual Report - Newham Audit Committee V2 which outlined the work of the information assurance function at the council, and its current compliance status with the UK GDPR, highlighting the outstanding actions from the internal audit of GDPR that had been completed in March 2023.

The report acknowledged that the Council was under-resourced in this area and members asked if the Council was just lucky to have avoided fines from the Information Commissioner's Office. They were told that although response timescales were often not met, the quality of the work produced reduced the risk of intervention by the ICO, and that the impact of a breach was a key consideration for the ICO, and that therefore additional investment in the information assurance function might not be as effective as directing resource to tackle issues in the higher risk services.

Members asked if the Council had ever received a personal compensation claim under the Data Protection Act 2018, and were told that although they had not, the council's insurance team was consulted whenever there was a risk of such a claim being made.

It was proposed that a new risk be added to the Corporate Risk Register, to reflect the council's low compliance with GDPR, and a separate risk be added to the Inherent Risk Register on how the Council managed its data.

Updated Tenancy Audit Report

The Committee considered the LBN Tenancy Audit Report June 2024 v8 which contained the Appendix 1 LBN Tenancy Audit Policy v2 and Appendix 2 Tenancy Audit Form, a revised version of the tenancy audit report that had been presented in April. This contained an updated policy on tenancy audits and set out the status of the new 3 year rolling programme of tenancy audits that had started in April 2024, as well as providing further information about the housing needs assessments that had been carried out prior to the ballot of residents on the Carpenters Estate regeneration in 2021.

Members sought assurance that the ballot had been conducted correctly, and were told that it had.

Members asked for further clarity about the collection of Equality Data during tenancy audits and also if wording could be revised to reflect the fact that while tenancy audits were mandatory, this referred to the tenants' obligation to allow the audit to take place rather than suggesting that the council was able to force entry into residents' homes.

Members expressed concern that the Council had never had an accurate picture of who lived in its housing stock, and highlighted the need for a joined-up approach that involved sharing information with other services such as council tax. It was suggested that tenants be required to sign an annual declaration that confirmed who lived at the property, and that non-response would trigger a visit and potential fine.

Internal Audit Progress Report

The Committee received the IA Progress Report AC July 24 which outlined the work of the Internal Audit function and included the report on the audit of Car Pound income at the Council that had been completed in June 2024.

Members asked if the schools that received limited assurance opinions in their audits received support from the council, and were told that the new director of Education and Inclusion was liaising with them to identify recurring issues and share best practice.

Quarterly Reports on the Savings Delivery Programme

The Committee received the Savings Delivery AC July 24 Cover Report, which reported on progress being made towards the £22m savings target that had been agreed as part of the 2024/25 budget setting process. This contained Appendix 1 MTFS Savings Tracker 2024-25 as of Q1, the Council's savings tracker.

Members asked if the savings target that had been agreed was sufficient, and were told that even if the target was met, further savings would be required in the following year due to rising expenditure on temporary accommodation.

Members asked about the measures in place to address non-delivery of savings in some directorates and were told that in addition to the all-staff meeting that had highlighted the need to make savings, some staff would not receive their annual pay increment and that a quarter of purchase cards at the council had been cancelled.

Quarterly Update on Risk Management and Risk Register

The Committee received the Risk update to AC 17 07 2024 which contained the Council's Corporate and Inherent Risk Registers, detailing the council's key risk areas and proposed mitigations.

The report proposed the creation of a new Risk Manager role at the council, with responsibility for ensuring that risk mitigations were being implemented. The role would be funded from the savings made by deleting two Senior Management roles in the department.

Quarterly Report of Contract Waivers

The Committee received the Final Audit Committee Paper for Waivers Q1 2024 and Appendix 1 Waivers Record Qtr1 -2024 which set out the waivers that had been requested and approved for the period between 1 April 2024 and 30 June 2024.

Three year history of contract waivers

The Committee received the AC201 Audit Committee Paper for 3 year Waivers history and the Appendix 1 - Waivers data - 2021 - 20 02 2024 AC201 which contained a three year history of waiver requests by directorate, covering the period February 2021 to February 2024.

Year Ahead Forward Plan

The Committee considered the Forward Plan Draft 24-25 and agreed to cancel the special meeting that had been scheduled for 30 September to consider the year-end accounts.

Date of Next Meeting

The next meeting of the Audit Committee will take place on 18 September 2024.