The Tower Hamlets Audit Committee convened to address statutory recommendations from the external auditor, EY, regarding the 2023-24 audit results, as required by the Local Audit and Accountability Act 2014¹. The committee agreed to the recommendations relating to closing of accounts and internal controls, but requested a more detailed action plan concerning procurement and contract management. After this, the press and public were excluded from the meeting to discuss a report from PWC regarding a homecare contract and forensic audit.

Statutory Recommendations from External Auditor

The committee discussed and made decisions on the council's response to three statutory recommendations made by EY, the external auditor, following the 2023-24 audit.

Closing of the Accounts

The committee agreed to the recommendation to improve the closing of accounts. The council's action plan, detailed in [Appendix A - Closing][Appendix A - Closing], includes:

• Reassessing roles, responsibilities and resource needs for financial reporting.
• Ensuring sufficient and appropriate audit evidence is available for transactions.
• Responding to audit recommendations and implementing corrective action plans promptly.

Ahsan Khan, Head of Corporate Finance and Technical, outlined changes to ensure timely account closures, referencing [Appendix A - Closing][Appendix A - Closing]. He noted that additional training with EY would ensure staff understood expectations and paperwork quality.

Councillor Mufeedah Bustin noted that the action plan was helpful.

In response to questions, Abdulrazak Kassim, Director for Finance, Procurement and Audit, said that staff had vast experience, but would work with EY to ensure everyone was aware of what was expected. He added that standardised templates and internal peer reviews would ensure paperwork quality.

Ahsan Khan added that training would be annual and improvements would be made based on EY feedback. Abdulrazak Kassim stated that the team was stable, lowering the risk of losing organisational memory.

Internal Control

The committee agreed to the recommendation to improve internal controls. The council will put in place an action plan to address recommendations from internal and external audits, as well as other external agencies, within a reasonable timeframe.

David Dobbs, Head of Internal Audit, Anti-Fraud and Risk, referred to [Appendix B - Internal Control][Appendix B - Internal Control] and said that changes had been made to how internal audits and recommendations are captured and mitigated. He said that a further update would be provided to the committee quarterly.

Councillor Mufeedah Bustin said that she expected the actions to be owned by management, not Internal Audit. David Dobbs responded that Corporate Directors would give assurance for the recommendations made and their implementation, and would be expected to attend the Audit Committee to explain delays.

Steve Reddy, Corporate Director for Children's Services, and Simon Baxter, Corporate Director Communities, said they had a good relationship with Internal Audit and took the recommendations seriously, and would be happy to attend future meetings to explain action taken.

Julie Lorraine, Corporate Director for Resources and Section 151 Officer, said that a detailed action plan would be provided to the Audit Committee on how the recommendations were being implemented for limited assurance reports for Resources.

Officers were asked to consider if a handover process is appropriate so recommendations made by Internal Audit are not lost in organisational change.

Councillor Kabir Ahmed asked how regularly the reporting to the committee would be, referring to paragraph 3.5, bullet point 2 of the covering report. David Dobbs responded that this would be presented at each meeting.

Members asked if named officers in [Appendix B - Internal Control][Appendix B - Internal Control] could be revised to show the directorate responsible. David Dobbs said this information would be redacted in future reports.

Councillor Mufeedah Bustin summarised the discussion and said that progress would be reported quarterly so members could see the incremental improvement made. She added that Directors would be invited to the Audit Committee to explain their limited assurance recommendations and Officers needed to consider if a process was required during a handover between outgoing and incoming Directors.

Procurement and Contract Management

The committee did not agree to the action plan as presented, and requested a more detailed action plan to address the recommendations.

Julie Lorraine said that the issues highlighted by EY regarding procurement straddle the whole organisation and compliance with policies and processes. She added that the situation highlighted as part 2 of the agenda, was brought to the attention of the external auditors by officers, which had driven the statutory recommendation. She said that the information provided at [Appendix C - Procurement Contract Management][Appendix C - procurement contract management] outlined changes made by the corporate procurement team, however what the Committee required was an action plan which set out how the organisation was mitigating against the breaches to comply with procurement policies and procedures. She said an updated action tracker would be provided to the Committee at its next meeting.

Ewelina Sorbjan said the information on non-compliance in the table at [Appendix C - Procurement Contract Management][Appendix C - procurement contract management], was from a number of reports including the Procurement Act 2023 preparedness work, the Best Value Inspection² and the LGA Peer Review³.

Abdulrazak Kassim added they had been reviewing and consolidating processes across the organisation prior to the statutory recommendation and were on an improvement journey.

Councillor Marc Francis referred to the leadership theme and the reference to 4.37 and 4.38 and the use of consultants and interims, and said the Best Value Inspection report had commented the number of consultants employed in the Mayor's Office as agency workers. He quoted from the report, however Councillor Mufeedah Bustin sought clarification as to if the statutory recommendation made by EY specifically referred to agency workers.

Julie Lorraine responded stating decisions in relation to agency workers were considered operational issues and that the statutory recommendation under consideration did not refer to this. She added that the information provided in the table did not align with the recommendation made by EY and as such she'd like to come back to the committee with the correct information.

Councillor Mufeedah Bustin asked if paragraph 3.7 of the covering report had been completed. Julie Lorraine responded saying the component parts had been done, but the Committee needed to see a detailed action tracker on how it was addressing the points made as part of the statutory recommendations.

The committee agreed that a further report be provided which set out the action plan and tracked the progress made.

The committee requested clarification on whether the course of action being recommended in relation to recommendation three is in compliance with the requirements of the act where statutory recommendations are made.

The committee agreed to accept all three recommendations, the council's response to recommendation one, and the council's response to recommendation two with some additional actions. However, they did not agree to the council's response to recommendation three, and the section 151 officer has committed to presenting a more detailed action plan at the next meeting.

Exclusion of Press and Public

Following the discussion of the statutory recommendations, Councillor Mufeedah Bustin moved to exclude members of the press and public for the restricted (part 2) of the agenda, which was seconded by Councillor Marc Francis and approved. The committee then had a five-minute adjournment before proceeding to the next item.

Update from PWC re: Homecare Contract and forensic Audit

The committee received an update from PWC regarding a homecare contract and forensic audit. The minutes for this item are restricted.