The meeting of Hounslow Council's Audit and Governance Committee included discussions about the Council's financial status, risks, and accounts. Councillors were also scheduled to receive reports on the performance of the internal audit team and the external audit of the 2022/23 accounts.

Audited Statement of Accounts 2022/23 and External Audit Update

A report was scheduled to be received that asks the committee to note the completion of the audit for the 2022/23 financial year. The report notes that the deadline for publishing draft accounts under the Accounts and Audit Regulations 2015 was 31 July 2023, with sign-off from external auditors due by 30 September 2023, and that Hounslow, in common with a majority of English local authorities, has been unable to meet this deadline. The report contains the external auditor, Forvis Mazars, Draft Audit Completion Report for Hounslow Council, which summarises the key findings from the audit.

Annual Report on Audit & Investigation including Head of Audit's Opinion and Audit & Investigation Performance Report Quarter 4.

A report by Mike Pinder, Head of Audit & Investigations, was scheduled to be presented on the performance of the audit team and investigation service during quarter 4 of the 2023/24 financial year (1 January to 31 March 2024) and the whole financial year (1 April 2023 to 31 March 2024). The report contained the Head of Internal Audit's Annual Opinion for 2023/24. Mr Pinder's opinion was that:

Reasonable assurance can be given that there is a sound system of internal control, designed to meet the organisation’s objectives and that controls are applied consistently.

The report states that this was based on 20 assurance projects conducted during the year, of which 65% received positive assurance (substantial or reasonable) and 35% received limited assurance, and that no significant external assessment reports were received. It includes a schedule of all reports finalised during that period, which identifies the level of assurance given to the system of control in each area that was reviewed, and states that 15 of the 18 high-risk findings from the 2022/23 audit have now been completed, leaving three in progress. It details the work undertaken by the anti-fraud team and the work to review outcomes from the 2022/23 National Fraud Initiative data match.

Quarterly Monitoring of Corporate Risk Register - March 2024

A report by Sarah Filby, Director of Strategy, Performance & Commissioning, asked members of the committee to consider a quarterly update to the Council's corporate risk register. It describes three changes to the register since it was last considered by the committee in the third quarter (1 October 2023 to 31 December 2023) of the 2023/24 financial year:

1. The addition of a new risk: Insufficient electricity network capacity, graded as 'Significant' (impact) and 'Likely' (likelihood), with a residual risk score of 16. The report describes delays and cost increases caused by electricity capacity constraints in west London, impacting the development of new housing and the decarbonisation of the Council's own buildings. It lists 9 mitigations being employed by the Council to manage this risk, many involving engaging with sub-regional, regional and national bodies, including the Greater London Authority and electricity distribution network operators.
2. The disaggregation of the pre-existing risk Climate change, graded as 'Significant' and 'Possible' with a residual risk score of 12, into two separate risks, one focusing on the impacts of extreme weather events and the other on achieving net zero:
   1. Failure to respond to immediate climate risks (the impacts of extreme weather events – heat, cold, flood etc. – on Council services and activities) and adverse effects of climate change on the Borough. This retains the same grading and residual risk score as the original Climate change risk. The report says that this risk is managed through existing business continuity and emergency planning arrangements, and cites the Council's Surface Water Management Plan and the Strategic Flood Risk Assessment, both approved by Cabinet in February 2021.
   2. Unable to achieve Net Zero by 2030 from Council operations, graded as 'Moderate' (impact) and 'Very likely' (likelihood), with a residual risk score of 15. The report notes the Council's commitment to reduce its operational carbon emissions to net zero by 2030 and expresses concerns about the risks that a lack of funding and financial barriers could delay its achievement. The report says that this risk is being managed through a Pathway to Net Zero that addresses financial barriers, and Robust governance processes in place to monitor and track progress.
3. The removal from the register of two pre-existing risks: Pandemic impacts adversely on young people and Failure to implement Adult Social Care legislative reforms. The report says that both of these are now being managed at a directorate/ operational level.

The report asks members to agree the proposed approach and focus for refreshing the Council's Risk Management Strategy, last updated in March 2022.

Draft Annual Governance Statement 2023/24

Members were asked to review and comment on the Draft Annual Governance Statement 2023/24 before it is finalised for publication. The Statement sets out how the Council has complied with its Code of Corporate Governance, based on the six core principles of the CIPFA/SOLACE Delivering Good Governance in Local Government framework published in 2016. The Statement identifies four issues that have been included because they have been identified as potential governance risks through the Council's risk management approach:

1. The risk of the Council's financial resilience being weakened by Financial pressures and uncertainty with regards to the wider economic context, inflation, demand and local government funding (including future reform). The Statement lists seven mitigations being employed by the Council to manage this risk, including its Medium Term Financial Strategy process, robust monthly financial management, a rigorous capital investment process, regular benchmarking of financial resilience, value for money assessments, collaborative financial planning, and a refreshed financial planning process being designed for 2024/25.
2. The risk of the Council being unable to implement the requirements of the four new Social Housing Regulation consumer standards that came into force on 1 April 2024 as a result of the Social Housing Act 2023. The Statement says that the Council has carried out a desktop review of its compliance with the standards and is planning a final assessment. It cites the Council's programme of work to address any outstanding issues, and its work to benchmark against peers to ensure that it meets quality standards.
3. The risk of failing to deliver the Council's regeneration ambitions, which the Statement says will bring greater business opportunities, increased number of jobs and homes to improve residents employment prospects, the environment and public realm. The Statement lists four mitigations being employed to manage this risk: the implementation of the Property and Place Strategy, a new structure and recruitment process to increase officer capacity, Progressing work on the local plan, and the Production of masterplans and guidance.
4. Insufficient electricity network capacity, as described in the Quarterly Monitoring of Corporate Risk Register - March 2024 report.

Audit and Governance Committee - Recruitment of Independent Members of the Audit and Governance Committee

The committee was scheduled to consider a report by Mike Pinder, Head of Audit & Investigations, on the recent recruitment campaign to appoint two independent members to the committee, as agreed at the meeting on 6 March 2024. The report states that the recruitment campaign, in which the roles were advertised as voluntary and unpaid, was unsuccessful, attracting only one applicant who subsequently withdrew their application. The report states that:

It is understood that these roles are quite specialist and hard to fill. As a result a number of authorities have introduced a remuneration package for this role.

Mr Pinder recommends that the committee agree a remuneration package of £2,000 per annum for each of the two roles, representing a total cost of £4,000 per annum, to be funded from the approved budget for the provision of internal audit services. The report notes that a second recruitment campaign, running in parallel with this report, is being undertaken, but says that if this is unsuccessful the committee should consider offering remuneration to make the role more attractive.