The meeting approved the Council's draft work programme for 2024/25, with an additional item to conduct an in-depth review of the capital programme. The panel noted the Annual Performance Report for Internal Audit and Anti-Fraud and noted both the Internal Audit Plan for 2024/25 and the External Audit Plan for 2023/24 and the Pension Fund. They also noted the launch of the Council's Community Municipal Investment to fund green projects and the draft Green Finance Framework.

Community Municipal Investment

The panel noted that the council plans to launch a Community Municipal Investment (CMI) in early September 2024 through the Abundance Investment crowdfunding platform. This will allow residents and local businesses to invest in green projects. The council will aim to raise £1 million, with investments starting from £5, and will ring-fence all borrowing for green initiatives.

The money will be used to fund green initiatives, with priority given to projects that both reduce carbon emissions and save money. The report cited decarbonising the existing built estate and replacing fossil fuel systems, such as gas boilers, with air source heat pumps, as an example of the type of project that might be funded.

Councillor Hyland stated that:

When I first saw this report, I was a bit worried, given that we're a kind of blue chip company and we want our residents to invest in this, and we don't want reputational damage about this warning, if you like, that your investment can go down as well as up. But I understand that that's an FCA condition and that obviously there is actually a fixed rate. There will be a fixed rate of return for people and that in effect, people's capital would not be at risk unless, of course, abundance went to the wall, in which case I'm sure we'd be, you know, assuring it.

Councillor Gardner expressed interest in:

see[ing] some sort of table of the recommendations from reviews and to what extent they've been implemented or when they haven't been implemented, there may be a good reason why they've not been implemented from the reviews because that's the key, really. There's no point having a review if the recommendations from it are, you know, widely ignored

He also expressed an interest in blue badge fraud, having:

witnessed someone last night in my ward actually getting out of their car and passing a blue badge to someone else.

Internal Audit and Anti-Fraud - Annual Performance Report

The Internal Audit and Anti-Fraud - Annual Performance Report for the financial year 2023/24 was presented to the panel. The report showed that the target for draft report completion was not met, and that this was the lowest performance achieved since this measure was introduced.

Mr Costello, The Assistant Director for Governance and Audit, explained the reasons for this low performance as follows:

Obviously, we've had one member of staff who unfortunately is in long-term sickness absence, and that individual, for example, would have undertaken some of the school reviews, which would have been done quicker, would have been completed, et cetera. They've had to be given to other members of staff to make sure that they get done within the timeframe, so we've lost some resources there. We've also had, and it touches on the next item as well, but we've had an internal audit apprentice. That involves auditors actually mentoring and looking after that apprentice. We've got another apprentice who's due to start later on in the year. We're just going through a recruitment process for that at the moment. And again, it's a double-edged sword, really. I would say, as a panel, you would want us to find, want us to make sure that we're diligent and we find areas that are problematic and we help management put those right. The counter side of that is that those audits become more complex and take more time and more results and means that some of the other audits would have to slide to be able to accommodate those. The other thing I should say, and I was going to touch upon it in the next report, we do have a shortage of staff. One of the good sides of that is that we report an underspend in the budget and we contribute towards the underspend. The bad side of that, obviously, is that sometimes we struggle to get our audits completed. Without going on too much with the next item, we have gone through a recruitment process and we will have more auditors later on in the year, so the plan itself will be extended and I don't think we'll have the same problem for this financial year.

Dr Blackhall expressed concern about:

a kind of growing, underlying failure in some areas for the director to actually deliver on what was agreed and to report back on time to give you the information that you need, and this appears to be increasing the risk of the council failing to deliver on its strategic plans, financial plans.

Mr Costello responded:

I'm not going to sugarcoat it and say it's not a problem. It is genuinely a problem for us sometimes to get information back from some of the directorates and some of the teams, and that causes us problems.

He stated that he had escalated this issue to the Greenwich Management Team (GMT).

The report also highlighted the continuing partnership with the London Borough of Bromley for the provision of a fraud investigation service, which is to be extended to the end of the financial year.

Internal Audit Plan for 2024/25

The panel noted the Internal Audit Plan for 2024/25. Mr Costello explained that the plan had been constructed based on current staffing levels and that recruitment was ongoing. He stated that the plan would be extended once three new internal auditors started, which was expected to be in the next few weeks.

External Audit Plan

Mr Greensall, from the external auditors Mazars, presented the external audit plans for 2023/24 for both the Council and the Pension Fund.

He stated that there would be a slight change to the timetable for the audit with field work now starting in September 2024 and running until January 2025. This was to accommodate another client. He also highlighted three significant risks:

1. Management override of controls. This is considered a significant risk for all audits because of the potential for those in management roles to override controls and commit fraud. Mr Greensall explained that:

Management at various levels within an entity are in the unique position to perpetrate fraud. And that's because they can manipulate the accounting records and prepare fraudulent financial statements by overriding controls that otherwise would appear to be operating effectively.

1. Valuation of property, plant and equipment. This is considered a significant risk due to the size of the Council's property, plant and equipment portfolio, which is valued at £3 billion, and the complexity of the valuation process.
2. Valuation of the net defined benefit liability. This is considered a significant risk because of the complexity of the actuarial valuations and the potential for material misstatement.

Mr Greensall explained that in terms of value for money arrangements Mazars would be engaging with management to assess progress on the two significant weaknesses in arrangements identified in the previous year's audit by Grant Thornton. These were:

1. An overreliance on reserves and other short-term measures to deliver services
2. The failure to regularly assess the risk of fire and take precautions

Mr Jalapra, the Interim Assistant Director for Finance, informed the meeting that:

Greenwich has not had problems historically

with the three significant risks identified by the auditors.

Councillor Gardner noted that:

there has been significant issues with the public sector audit market, particularly in local government ever since the pandemic, really

He expressed concern that the audit was starting in September, and asked Mazars to provide details of their performance against statutory reporting timescales.

Councillor Hyland noted that

there's been a lot of delay because of the valuation of property, which has caused a lot of local authorities to be late in the production of this.

Draft work programme 2024/25

The panel considered the draft work programme for the year 2024/25. Councillor Gardner proposed two additions to the work programme:

1. Rolling reports on cases not implemented following internal audit.
2. A deep dive report on the capital programme, which he proposed Councillor Sullivan lead on.

The panel agreed to both additions and approved the draft work programme.

Audit & Risk Management Panel Self-Assessment & Evaluation

The panel noted the Audit and Risk Management Panel Self-Assessment Evaluation report and agreed to undertake the evaluation in the next couple of months, reporting back to the meeting in September. Councillor Gardner noted that the current panel was relatively new and had not yet had the opportunity for training. He stated that:

it's going to be quite difficult therefore to look at our effectiveness when we're relatively new and before we've had the relevant training and so forth.

Mr Costello reassured Councillor Gardner that:

It's not that detailed, the assessment, really, I think. Yes, I think it might be simpler than it looks, like fingers crossed, but if we don't make September, obviously we'll have to do it at a later meeting.