Transcript

Good evening and welcome to this meeting of the Greenwich Audit and Risk Management Panel. Please be advised that this meeting will be recorded and posted on the Council's YouTube channel. Can all those speaking ensure you switch on your microphone before addressing the meeting and remember to switch it off when you have finished speaking? We have... Good evening. We have apologies for absence from Councillor Nick Williams and we've got apologies for lateness from Councillor Christine May. Around the table are members of the Audit and Risk Management Panel and welcome to officers, cabinet members and to our external auditors. So, urgent business, I've not been notified of any urgent business, so we're only dealing with what is on the agenda. And can we move to declarations of interest? Does any member have any personal or financial interest to declare on any item on the agenda? No? No? No? No? Good. Then we've got the minutes of the previous meeting on the yellow sheets or the first set of yellow sheets. And those from the 25th of February, not too long ago. Are members happy to agree those as a correct record? Agreed. Agreed. Thank you very much. I will sign those. So we then move to item five, the action log, which you will have in your papers. Oh, there we are. It's quite small, actually. So if members do have any questions, then Vivian Zuechi, the Head of Financial Governance Insurance and Risk, is with us to help us on any questions we have. I might need to open this on my iPad, actually. It's quite small. Do any members have any questions on the action log that's before us? Councillor Hartley. Thank you, Chair. My only question was on the timescale for recruitment of the additional independent member, because I think we suggested that some time ago. And we're approaching a new municipal year, and I just wondered whether we might be able to get the ball rolling, the council might be able to get the ball rolling on recruitment process in time for May and beyond the new municipal year. Well, I would certainly hope so. What I would do, if you could note this as an action, Daniel, is to, given it's what we've agreed, we know broadly what sort of personal skills that we're looking for, someone with, you know, senior accounting or audit experience. But I'm not sure, I'm not aware, I don't know whether Damon's aware of any moves that have already been made to recruit such a person. I'm not Chair. The matter is with Legal and Democratic Services. Councillor Highland, have you got any information on this? Thank you, Chair, just to say that I did speak to the Chamber of Commerce, and they were quite positive that they thought they ought to be able to recruit somebody. And I'll be chasing it up, and I'll see them again on Friday. Thank you. Thank you. So the, in terms of the process, my understanding is clearly that could either come to the annual meeting, or if we can recruit somebody before the annual meeting, we can take it to the General Purposes Committee for their approval, and they meet fairly regularly. Are there any other questions in relation to the action log? To receive and note that. Then we move to the substantive item for this evening, which is the annual audit report. Now, we did have a report to our last meeting, before the Council meeting, when the audit wasn't quite finalised. And there's particularly, there's especially a lot of, some work still to be done on the value for money. And I ought to explain to members and the public that there are, that the report on the yellow pages, which is a value for money report in the main agenda, and the other, has been replaced by the erratum, which has got some changes to the content, but I don't think there are any changes to the substance and the recommendations, to conclusions and recommendations. So, at this stage then, did you want to say something first, Damon or Councillor Hyland, before I bring in our external auditors? The only thing I was probably going to add is just a piece of information that came to light after the, after the paper was published. Um, and that is, um, uh, the announcement, uh, by the, uh, PSAA, uh, regarding the numbers of accounts that have been signed off, um, by authorities. Um, it might be that colleagues are going to cover this one, but, um, uh, so this information will appear in the Council paper, uh, which, uh, was published last night, goes to full Council next week. Um, but just to update, um, members around the room, um, the PSAA has announced nationally that only 38% of accounts, uh, were signed off, uh, with an unqualified opinion, and only 10 in London. We are one of those 10, uh, to have successfully had their accounts signed off. Um, so for obviously a number of councils, uh, that means that they haven't necessarily had, um, uh, all of the assurance. Uh, that goes with this process, uh, around their, uh, arrangements. I think the, the rest of the report is, is probably as read. Um, I don't know if the cabinet member wants to say anything before it goes across, uh, Mazar's colleagues. Um, thank you. Thank you very much. Um, uh, obviously I'd like to thank the director of resources and his team, as well as this panel, for the work that is done on, around the audit of our accounts. And I'd particularly like to thank Shuresh and Tom of Mazar's for all the work that you've done. Um, and obviously I feel very proud that we're one of 38% nationally and one of 10 in London whose accounts have been signed off. Um, and I know that we're going to see the summary of the auditor's work around financial sustainability. But in a way I would ask you, you know, how many councils have not got issues with financial sustainability given the structural deficit, um, that we find in the way that we're structured, if you like. Um, and that that needs central government attention, um, we're obviously looking at governance around informed decision making and managing risks, and you seem to be satisfied with those arrangements. Um, and in terms of improving the economy efficiency and effectiveness, you know, costs and performance to improve service delivery, you give us recommendations around the clear backlog of fire safety actions and award contract for remedial works, which we completely accept. Um, and it's, uh, and it's, uh, an issue that we were very much aware of. Um, and so in terms of value for money, we have those two significant weaknesses that, again, as I say, we're aware of, and it might seem unseemly to query your bill tonight, having given you all that praise. Um, but, um, um, it does strike me that valuations should be, as far as I see, part and parcel of a basic, um, audit, really, and I don't quite understand why there's been that extra charge lumped on. Um, and the same for sustainability, really, but I'll leave you to comment on that, and chair you, your committee might want to ask some questions around any of that. Thank you. But above all, just a huge thanks. Thank you, Councillor Hyland. I mean, given I chair another audit, uh, committee, uh, that's had a disclaimed opinion, I know that that's quite a painful thing. Although it's no fault of the audited body, uh, that their opinions disclaim, because clearly they've, the audit has not been able to complete audits in previous years. So we are in a, a fortunate position, um, and, uh, you know, clearly, uh, grateful to the, uh, finance team and the, uh, auditors, but both new auditors and the previous ones, Grant Thornton, um, for, um, being able to, um, maintain the audit within year, um, and, uh, you know, actually bring it forward slightly this year, and hopefully even more, uh, next year. Um, perhaps we'll come to the audit fee later, if we might, if we can, um, firstly just address the substance of your, uh, report, uh, that would be very helpful, and thanks both Suresh and Tom for coming along this evening. Thank you, Chair, and, um, thank you for the kind words, um, Cabinet Leader for Finance. Um, just to add a bit more flavour to what Damon was providing you with the context of you being one of ten receiving a non-qualified. opinion in London, so 16 councils received this function, as well as, um, the team, the audit team have done so. Um, so it's really positive. Uh, in terms of value for money, um, you know, we'll, we'll take as read the detail that's in there in terms of the commentary that supports the three aspects of value for money that we look at. Um, when we came to you in February to talk about, um, the audit completion report, we obviously talked a lot about financial sustainability, so I wasn't proposing to repeat anything that we'd said there, and actually the, uh, the council has also stolen my thunder to talk about the health and safety item that we've also got in there as a significant weakness. And on both, both, uh, weaknesses that we've reported on, um, management have accepted what we've reported and obviously have agreed with the recommendation. Um, that's really all I wanted to say by way of, of introduction chair, but we're clearly happy to take any questions on any detail on the commentary or the significant weaknesses. Thank you very much, Suresh. Um, so I'll leave it open to, uh, members for questions and obviously I'll have one or two of my own. Um, Councillor Hartley. Thank you and certainly echo everything that's been said about hard work of both parties involved. Um, my questions about the, um, recommendation for improvement around financial sustainability, which obviously we discussed at the last meeting kind of in its interim form. The recommend, the actual wording of the recommendation is the council should ensure that savings target, targets, uh, included in its budget are realistic. And then there's arrangements to track their delivery. And I just, this just makes me wonder, obviously this is based on 23, 24 when there was 11 million pound rethinking services target, two plus million was delivered. Since then we've had a financial year of another, uh, challenging, uh, year when a significant proportion of the 33 million pounds. So 33 million pound savings wasn't delivered. Um, and you've chosen to make a recommendation that the target should be more realistic. And we should track delivery. I just wonder, can we infer from that, that your, your view is that those targets weren't realistic? If I can ask that as my first question. Um, clearly we are commenting on the fact, as you rightly said, that based on 23, 24, you had a target, you didn't even forward are realistic and you can track them. And, and I, I think everybody would agree. We'd need to set realistic targets. Um, but I suppose my, my preference would be a focus on the other side of the equation of, of, of delivering, um, against targets once they're being, once they're being set. And I, I wondered if you could comment on the balance of this recommendation. So the recommendation says should we, the council should make sure savings targets are realistic and appropriate arrangements are in place. You know, is there, is there a third part of that, which maybe it's unspoken, which is the council really needs to double down on delivery of savings against those targets. I, I, I, I think that's a logical kind of flow from that recommendation. Um, we are required to consider the arrangements that you have around financial sustainability while we're focusing on the process and the controls and the arrangements for one determining what those targets should be and then how you are tracking the delivery. The actual, but we are focused on the underlying arrangements that underpin those. Okay. If I, thank you. That's, that's helpful. If I could ask, um, then, uh, through the chair. Yeah. Apologies. Through the chair, if I may ask, um, uh, a follow up really to either, uh, Councillor Highland or Damon, uh, just for your view on this recommendation about, um, setting realistic targets. You know, we've just heard my inference that the, the view is that those targets that weren't met weren't realistic. What is your view of that, uh, conclusion? Could I just add to the, that, um, and then the observation in the incident orders report, which Councillor Hartley referred to, um, there have been a few occasions when I've queried some of the rigor that's been applied to, um, estimates of potential savings. Perhaps you could just illustrate to the panel, um, um, what type of rigor and what process you go through in order to, uh, evaluate savings. Um, and to what extent, presumably there's a range, uh, but to what extent do we always look at a conservative end of the range? Um, because often things are more difficult to implement and achieve within, um, timescales. Okay, there's, there's a bit in there and, um, some of it sort of, uh, overlaps in a way. I think the thing to bear in mind is that we're a bit of a journey and so some things have changed, uh, along the way. Um, when setting, um, uh, sort of, you know, sort of setting, uh, uh, uh, uh, we might have an overall target that we're looking at. And then that target would be, well, how are you going to balance the budget? That's your overall, uh, sort of starting point. And that's going to come from a range of measures, some of which will be about, you know, sort of income coming in. Other bits will be about, you know, changing service delivery, et cetera, et cetera. Now, in, in doing that, the way that we've done that has changed each year over the last few years. And each year we have built upon the previous year's, um, efforts and refined and improved the way that we do these things. So, in, in, you know, in sort of starting at the beginning of the year, you'll have, um, uh, a set of proposals, uh, which could be a few proposals or many proposals. But that each one of those would have been through a process which now looks like, um, you know, uh, it's, it's had, um, early, uh, sort of engagement, um, around sort of officers, senior officers, cabinet members. Um, you know, to make sure that these plans before they even sort of get off or the ideas before they get off the ground are basically something, you know, which sort of fits with the corporate plan, our Greenwich, um, at the end of the day. Um, and then it goes through a range of, um, uh, sort of processes. Now, that will be, um, you know, talking to, you know, the, the staff, um, there will be, um, various different, you know, some, there's a whole multidisciplinary team, uh, that gets involved in this process, making sure that you've got, um, sort of finance, uh, HR, digital, procurement, um, change and improvement. Um, you, you name it, each of those, um, each of those, um, are now in the room, uh, so to speak. As these proposals are being worked up, stress tested, um, you know, if there are sort of proposals on there where things could move between sort of different values. And you'll see some of these, some of these, um, proposals will come through. You'll see the actual savings pro formas. On there, there'll be a low and a high estimate. So they're actually there. They're on the public agenda. They're, they're, they're, they're quite visible. Um, so we're quite cognizant, um, of the fact that there are ranges there. Um, but we'll go with something that is felt to be prudent. Now, at the end of the day, there are all sorts of risks and we, we maintain, um, uh, you know, for, for each of those in the background, we'll look at the risks, um, and they will come in many different forms, you know, in terms of their delivery. And ultimately, things change. Some will be subject to processes that haven't happened yet. Uh, for example, there could be consultations that are yet to take place. And some of those consultations could shape things in maybe in a slightly different direction, um, than was originally intended. Um, that's not to say that they're bad, but they've been through a process. Um, but underpinning all of this, no matter what happens, is the ability to have, um, you know, if things do not go according to plan, that we have resources set aside, i.e. risk reserves, um, to, to account for that. So, early days was, uh, where, where we had that sort of, um, risk reserves, uh, arrangement in process. Oh, sorry, in place. If we, if we move on one year from where this is, and so we move to 24-25, um, we moved, and we, if I think about what the, the recommendations are here, um, which were in, in, in relation to 23-4, albeit we're only talking about them today, and we are about 10 days out from the end of 24-5. Um, for 24-5 going into that process, we actually over-programmed for the savings. So, the 33.7 million, um, looking for, which had 118 proformas behind it, um, had an over-programming rate of roughly 10%. So, we build in an extra margin, as well as having the risk reserves set aside as well. So, not just having one belt embraces, but potentially having, sort of, multiple there. Um, the other, um, sort of comment, um, was about, sort of, relying on reserves. And, again, I think that's a journey as well. So, our, that sort of planned use of reserves, as, as we go into a year, has markedly reduced. Again, from 23-4, as highlighted in the report. Again, if we look at 24-5, the planned use of resources for 24-5 was around 5 million. We've just set the budget for 25-26. The planned use of, uh, uh, reserves, uh, in that one is less than a million. So, I think I'll just go back to the, the, the point at the beginning. Bit of a journey. Um, we've refined the way that we do things, um, trying to build in as many safeguards as we possibly can, you know, to protect the, uh, sort of council's overall position. And I think, as the, the cabinet member said at the beginning, financial sustainability across the entire country, uh, across all, you know, all councils across the country, it's very difficult at the moment. But we, we are doing as much as we possibly can, um, to, to ensure that we are taking decisions, um, which are in the long-term good for the council medium term. Yep. I mean, I, I think it's slightly unfair, really, because first of all, I mean, the earlier you do the cuts, the more bounce you get from it. Uh, the, the better off you are, the earlier you do it. And with the best will in the world, not everything comes to fruition. So if you take parking charges, it wasn't, it wasn't this council's fault that the last government didn't actually bring about the legislation to provide the uplift in parking charges. We had every, um, with the best will in the world, we, there was an assumption on behalf of the transport department that the government had pledged to put up parking charges and then didn't do it. So it fell short. And there, there will always, and I'm not, I'm not picking anybody in particular, it will always happen. You know, the, the road to hell is paved with good intentions and God laughs when man makes plans, all of that. So I think that we have brought home the savings that we needed to bring home and, and just echo everything the director of resources has said, really. But I think it's, it's had unfair, really. This year, as, as the director has said, we've gone for much bigger projects to cut. But how long we can keep, keep that up, I just don't know. Because the situation does get worse. Unless the government restructure local council funding, I can't see the situation rapidly improving. Can you? Right. Um. Yes. Uh, sorry. Can I take Councillor Sullivan, please? Don't go through the chair. Are you chairing? Well, please, please, please. We'll take Councillor Sullivan and then we'll come back. Um, I was just slightly taken aback, um, Chancellor Hyland, because I thought we set the parking charges, not the government. But I'll look that up. Yeah. Fixed penalty. Oh, right. Fixed penalty. It's not, okay. I think Councillor Sullivan. I think, uh, Councillor Hyland in a normal manner politely, uh, responded by saying that your comments were unfair. I think they were cheap and snidey. Uh, I think, I think to actually, it's the sort of, the sort of comment you'd expect from, from an opposition councillor who doesn't actually understand the process that we go through in terms of setting our budgets. If you think, you actually, well, you made the comment earlier and I'm surprised that, um, Mr. Patel didn't, uh, challenge it. He almost concurred with you that, that unachieved savings were in effect a result of being over ambitious or whether these cuts were unachievable. And I don't think that's the case. It is extremely difficult exercise that you go through the process of setting a budget with, with such challenges that we actually have and to actually make them. And with, with so many moving factors month in, year in, year out, I think just to suggest simply because something wasn't achieved, it was over ambitious, um, or, or was unachievable in the first place. I think in the best one in the world, the best endeavors, the great deal of endeavor across the council within the palms, trying to manage very, very, very challenging budgets, making the best decisions they can. And they don't think we need comments like yours. It's a very, very difficult process. And I think the fact that they weren't achieved doesn't mean they weren't achievable. If I could just say, I mean, this isn't a debate at full council, and I think it's important that we treat, we might disagree with other members and make that clear, but treat other members with, uh, with respect. I think that's, that's important. I'm sure everyone's got the, uh, best intentions. Um, so, but, but, but, uh, that's noted, uh, Councillor Sullivan. Um, Councillor Harley, back to you. Thank you, Chair. And I'll respond in a measured way, way, Chair. This isn't a budget debate. It's an audit and risk management panel. We, we have done very well over the years to avoid that kind of exchange. Um, the question I raised was very much within the scope and the ambit of audit and risk management. There's a recommendation that's been made about the realisticness, the realism of targets that have been set. My question was about that. Um, the cabinet member used the word unfair. I don't think it's an unfair question. And I've got a follow up, uh, if I may, Chair. Um, and then, you know, the idea that it's cheap, it's not. This is what we're here to do, all of us. It doesn't matter what party or whether we're an independent member. We're here to ask questions based on the auditor's report. I think my question was extremely reasonable. Um, so, uh, and I want to thank, uh, uh, Damon for his response and the cabinet member. And, you know, apart from the word unfair, I agreed with everything that she said. Um, my question off the back of the recommendation in front of us from the auditor was about whether we are getting better at setting targets. And really what I'm just looking for, Chair, is, you know, in all acknowledgement of the difficulties and the external factors, I just want an, looking for an assurance really, which I think I've, I distilled from what Damon said, that his view as the director of resources is that the council is getting better at setting targets. You know, it's hard stuff, this. Can you just confirm, is that, is that his professional view that over time the council is getting better in the realism with which targets are being set? Thank you. Um, in, in a word, yes. Um, and, uh, I think, as I said earlier, um, it's a process that's just been refined over the last couple of years. Um, and we will always seek to improve, uh, the process as much as possible. Um, you know, by learning, we, we, you know, for the second, you know, second year running, we, we, we, we do a reflective, sorry, retrospective look at the process for the last year. How, you know, how do we go about it? Who was involved? You know, how effective actually was it? Um, so we, we, and we've just had that backward look again. So as one 26, 27. Could I ask, um, there was a slippage, according to this report of 10.2 million last year, and there was also a slippage in the previous year. But is that, is it assumed in the budgets for forthcoming years, particularly 25, 26, that much of that slippage will be recovered? Uh, or will that, if we do, if there's slippage, is it a slippage because, um, in the end it wasn't achievable, or we changed decision, or was it a slippage because, uh, just a delays in the timescale of achieving those, uh, investor-safe efficiencies? Okay, so can I just check, are we on page 16? Page 16, yeah. Excellent. Right, okay, penultimate paragraph. Um, so the 33.7 is obviously 24, 25, um, and, uh, that's the current financial year that we're in at the moment. I think the, the, the, the, the commentary that I would say there is, I mean, obviously that was at our point in time. We're now, as I say, we're now sort of almost like, around about 10 days, uh, away from the end of the year. So we'll know fairly soon where we are in terms of, um, overall, um, uh, delivery for this year. If I look at that slippage and I segment it down, and going back to, again, to the recommendations earlier, which was, are we tracking them? When those financial, um, sorry, when those revenue, uh, monitoring reports come through to Cabinet, there is a detailed tracker that sits on the back of that as an appendix. And that then goes on to scrutiny as well, allowing members additional, um, sort of time to actually interrogate those areas further. So there is, there is much more robust, um, ability to scrutinize. But within that figure of, um, uh, sort of, uh, slippage for this year, the vast, vast majority of it is actual slippage. I think, as the Cabinet member mentioned earlier about, um, uh, what, what fixed penalty charges or, or, or, or PCNs and, and that value. That is part of a very, very small, I think it's less than a million pounds worth of pro-formas, which we take the view at the moment are just not deliverable. And clearly that's not deliverable for the reason that, um, the Cabinet member mentioned. But the residual, the other sort of 9 million odd out of that 10 is slipped, but it's just re-profiled. It's deliverable, just not in the original year that was intended. And all of that is taken into account in setting the 25-26 budget that we've just set. Um, great, um, at this point on the financial sustainability issue, sustainability, um, weakness that's been identified. Do, do Mazars have any further comment? Um, then, could I just ask, um, I presume that we will get a, um, at our next meeting, we, with the completion of the, um, draft accounts, presumably we'll have that in time for our, our next meeting. Uh, when's our next meeting, Daniel? It'll be after the, uh, annual meeting. Uh, and we presume, when are we expecting to have our draft accounts? So we'll know what the position is, the final position is with 24-25. Yeah, I'd have to go by and look at the, uh, sort of, uh, time table. It'll obviously depend when that meeting is in June as to whether they will be available, but, um, yeah, I'd have to go back and check. Okay. So perhaps we can liaise on that because I think ideally it would be useful to have, um, an outcome report, although obviously that will be in order to do that stage. There'll be draft accounts, but, nevertheless, uh, we'll be able to see, um, what the state of progress is. So on financial sustainability, are members minded to, um, to obviously note and accept the recommendation from the external auditors? And, um, which is, as you can see, to ensure that savings targets, including the budget, are realistic and appropriate arrangements are in place to track their delivery to reduce the need for the council to rely on one-off resource, um, reserves and resources. So people happy to note and support that recommendation. Thank you very much. So there was a second, uh, recommendation in relation to the three E's, economy, efficiency and effectiveness. And that was purely in relation to the actions, uh, from the, uh, given to us by the regulator of social housing. Um, and, um, I think members have read this, um, and I think talking to the cabinet member just to, uh, uh, today, uh, for housing, um, it seems that great, more progress has been made, but it's not been completed. Um, more progress since February has been made, but not been completed. And therefore, um, I think they are happy to accept those recommendations. I assume that's the case also for, for you. Do members have any questions or comments on the, that, um, the recommendations on the, um, three E's? Councillor Harley. Thank you, chair. Um, just a process question, really. So this recommendation has been made. It seems that until a hundred percent compliance is achieved, it is likely to be an area of focus in future audits. Just a process question. What happens next in terms of getting that to the service? Clearly they're already working on this. Maybe it's a question more for RBG. Um, you know, what, what lever is now pulled to, to kind of, to, to translate this recommendation into service, any change in service delivery? Okay. So the, I mean, there's effectively sort of two parts to this, which was, um, around, uh, the backlog and, uh, the awarding, um, um, of a, of sort of a contract. The, um, you know, the process of whittling down, um, that backlog continues. Um, that is, that is monitored on an ongoing basis. Um, a, a contract was, um, awarded for, uh, sort of fire remedial works, um, you know, after, obviously after 22, 23. So, again, that's, that's in, that's in progress as well. Um, the next part for the council will be, obviously, subject to making, you know, whittling number, you know, um, uh, and getting that, uh, approaching to zero. Um, and the works, um, uh, proceeding is a conversation, obviously, with the, uh, the regulator. Um, thank you. Uh, welcome to Councillor May. That's okay. Are there any further questions in relation to the three E's, uh, recommendation? No? Again, our members happy to, uh, accept and support that, uh, recommendation from our external auditors. Could I just ask, uh, Councillor May, did you have, um, any questions at all on the report from the external auditors on value for money? No? Okay. So, we also have the, um, report on the, to the, about the pension fund, uh, audit. Um, is there anything that you wish to add? I think you did, you have brought it up before, but any, any further? No, no, that is literally just a summary of the, what we reported earlier. Thank you very much. So, we're happy to note, uh, the report on the pension fund. And, um, that then brings us to the question of fees, which I don't actually think is in our papers. It is, is it? Right. So, could I firstly, um, because there has been a very substantial increase in the scale fee from the PSAA, uh, as we know. It's about doubled, if not more than doubled. Um, so, could, could I ask you to justify, um, what you're proposing as the, I mean, we have no choice about the scale fee. That's set by the, um, by the PSAA. But, but in terms of the, um, the additional fees, I, I don't see why we should be paying for new ISA because that is something that you should be prepared for. Uh, and, uh, the point has already been made about the valuations as well. Uh, so unless there was clear fault on our part, I don't see why we are, uh, presented with additional fees beyond the base fee. Um, and, but obviously give you a chance to explain. Yep. Yep. Thank you, Chair. Um, and totally understand the, the questioning given the size of the increase in the scale fee. Um, as you rightly say, PSAA set that scale fee, so we, we don't set that fee. Uh, PSAA also make it crystal clear, uh, and it's published on their website that there are aspects of the auditor's work that fall outside of that scale fee. Um, so they have specifically listed changes to auditing standards. So the changes that I've referred to, uh, around, um, the numbers, numbers don't mean anything, but essentially there was two key changes to auditing standards. They recognize that that wasn't included in the scale fee that they set. If you recall, they set the scale fee probably about 18 months before the actual year of audit. And in their, on their website, they actually publish the expected additional fees for each type of authority. So the fee for changes to auditing standards is totally in line with the PSAA expectation. Similarly, around value for money, significant risks, they acknowledge the, the, the base work to carry out the value for money risk assessments and to produce commentary is part of the scale fee. Where there are significant weaknesses and recommendations that auditors need to make, the additional work that is required to do that also falls outside of the scale fee. Hence the reason why they are additional. In relation to property, plant and equipment valuations testing, um, there is an elements of that work that is now baked into that scale fee. So that's, I don't disagree with that. The reason why we are charging you additional is because of the, what the number, the number of items of testing that we are having to carry out for you as a first year audit, where we had to use a lower level of materiality. So the numbers that we've reported in, um, both the completion report earlier in February, but we've, I think we've, uh, repeated here. And I've got the numbers. So we tested 83 items within your general fund and 67 within your HRA. That is probably three or four times more than we would do normally. So on a typical London borough, I'd expect to be testing about 20 of both HRA and general fund. But because of the lower level of materiality, because of the issues that we did identify and we've reported both misstatements and a controlled recommendation around property valuations, we had to carry out sufficient procedures to satisfy ourselves that the accounts that were signed off eventually were materially correct. So that, that additional fee relates to that. And then there's a small element of additional fee around where we've engaged our own expert to support us with some of the more complicated assets that you, uh, have in your portfolio that we, to ensure that they were also materially correct in your account. So I recognize the challenge and I understand this, but each of those items of additional fee are in line with the contract that PSA managed on your behalf, um, to support those fees. We provide, and I've provided to Damon, I think chair, you, you might have seen it, a de-cell analysis of the hours, uh, the grade of staff that carried out that work and the cost associated, which then obviously drives the fee. Uh, as you probably know, we submit that to PSA themselves. They carry out a review process, which involves talking to the section 151, but also looking at our work to ensure that when we say we carried out an extra 120 hours on property valuations or whatever it was that we have indeed done that work. Um, so, you know, from my perspective, these are valid, uh, additional fee areas that I'd be seeking agreement and, and the, um, and the panel. Okay. Um, I did have some points to come back on, but it'd be, I think, good at this point to bring the director of financing. Okay. Can I ask the chair if there's anything in particular you'd like, uh, a comment on? Well, um, the, the, the quantum that they have quoted in terms of, uh, the revised ISAs seems, uh, quite high. Uh, in your opinion, is that, um, is that, um, is that, is that justified? Um, and, um, um, you know, is, um, secondly, um, the number of valuations that were done, 80 rather than 20 odd, well, surely the auditor would have had, um, has confidence in the work of the, the previous auditor, Grant Thornton, uh, if they, you know, um, and that they could have used the work that they had done in terms of valuations rather. Um, so treated it like a continuing audit, um, given that Grant Thornton were here a number of years. Um, and thirdly, um, it would just be useful to have some idea, uh, as to whether other councils, um, are being, uh, levied the same, broadly the same level of, um, you know, over about 12, 11, 12% extra in terms of additional fees above. Okay. Okay. Okay. We've got four additional items. So, so these are the items that are on page 32 of the, um, uh, of the appendix, and it's the errata version, um, that, that has them in, uh, listed. The first one, revised international auditing standards. I, I'm not really sure that there is, there is much point in, in making much comment on this one. It's set by the PSAA. Now, whether the PSAA set it in their scale on day one or they brought it in later, I'm not sure that there is much. Yeah. Sorry. I mean, it's, it's, it's embedded in next years, but for the purposes of 23, 24, if they didn't have it in on day one and they, they've now brought it in on day two. I'm not sure there's a lot that Mazars can do about that. Um, it is in next years as, as, as, as I've just been sort of reminded. If we move to the next one, which was about property, uh, plant and equipment valuations testing. Um, and the, um, uh, if we sort of think about the, um, uh, you know, the work that was sort of carried out there. I, I know that obviously, um, um, it's been mentioned about the analysis and the breakdown that's been sent through. Um, I think really for this and, you know, the, the value for money sort of weakness. I think my, my, my only question I can ask on this one really would be about the amount of time, uh, that was taken, you know, uh, across those. Um, and I'll, I'll, I'll ask the question specifically at the end, but just coming back to the chair's points. At the end of the day, this is the independent auditor's view. Um, I can give an opinion, but I, I respect, um, I respect the independent auditor. Um, I'm sure that they will make a comment about a, in inverted commas, continuing audit. And I'm, you know, I'm all too aware, I'm sure as others, um, as a new auditor, uh, coming in to audit a client. Um, I, I totally understand the fact that there will be, you know, additional work that will need to be undertaken. However, my only comment on that would be whether that should be built into PSA's arrangements. Because, ultimately, there will always be a year one everywhere, um, for when an auditor comes along. So, perhaps, um, a, a comment, and, and I have today only just been, um, uh, messaged by the PSA, uh, to ask, to give some feedback. Um, and I will be giving some feedback, um, and it will include what I'm saying at the moment, about including that year one arrangement. It's common across the board. So, it just makes life difficult at the end of the day. If somebody has to come here and say, well, there is some more work because it was year one. Well, it was known about. Um, so, I have sympathy, um, in, in respect of that. Um, I would go back to, um, the cabinet members comments right at the very beginning about financial sustainability and who hasn't got financial sustainability at the moment. Um, so, so really the question, I suppose, is about the number of hours. Um, uh, that were undertaken. The analysis that we've, we've seen through, um, you know, sort of talks about, um, also on PPE valuation, you've got 80 hours of a senior, 27 of a, of a manager, and the VFM risks 71 hours of, of a manager at the appropriate rate multiplied up. Um, I suppose my only question is, you know, is, is, is that really, uh, an appropriate length of time? If we think about a number of assets, yes, there were, you know, sort of, you know, that, that number that you mentioned. Uh, the process, I mean, I know it's not utterly mechanical, but once you get into it, you get a little bit faster. Um, so my question really is about, uh, the, the justification around the time spent, because that's what has generated the overall cost. Suresh. Do you like that specific question, the last specific question about time? Uh, yes, time and, um, if, if you could also answer my point in terms of why we couldn't, why you couldn't relied on valuations from Grant Thornton. Well, let me take that one first. Yeah. So, um, auditing standards and my own risk management prevent me from relying upon another auditor's previous year's work. We review it. So we did do that as part of our engagement, initial engagement with the council and Grant Thornton. So we spent the whole day looking through their files, uh, to help us inform our own risk assessment. But we are not allowed to just rely upon what another auditor's done. Essentially, it's my and the firm's opinion at the end of the day. And we need to be satisfied that we have done sufficient work to be able to give you that opinion. So, um, so that isn't possible to do. Um, and Damon's right about the year one, the PSA fee doesn't take you into care on year one engagement. And it's been like that from the start, despite the feedback that we've given. So when I've, when I've taken on the new NHS client, for example, we normally have about between 10 and 15% additional inputs for the first year to recognize what's needed. Um, in terms of the actual time itself. I mean, on one hand, we have to balance the need to ensure that we've done the sufficient work to, like I say, to give us the right assurance. So, and that takes time. I think in your case, it took a lot, it took a bit longer for the property planning equipment work because one, the first year engagement. And I wouldn't expect us to be doing that level of work next year. Um, two, um, I think this, this, this different types of assets that we had to test. So, and the basis of valuation that they had, again, created a bit more for 2425. We, I will expect to increase materiality to reflect one. It's no longer a first year engagement, but two, and probably more importantly, um, aside from movement in the, I think the, the, the, the property, the equipment discloses the reality, which then reduce the number of samples that we need to test. Thank you very much. Um, are there any other points on the audit fees or questions from other members? Well, what I would suggest is we, uh, um, I don't know whether that regret, but note the, um, additional audit fees, um, and, um, welcome the assurances that many of these are related to fees. Um, and that materiality thresholds will increase, uh, in the second year audit and therefore look forward to, um, the commensurate reduction in the additional fees next year. Appreciating of course, uh, that, you know, if, if, if you find other major issues, significant issues that may lead to other additional fees. Uh, I, I, I, I do appreciate that. Um, but we, our members happy broadly to, to note the fees, but to welcome the assurances about, um, reduction next year in additional fees. Right. Lovely. Thank you very much. Um, so if we could move on to, uh, on the agenda, uh, I think that concludes our consideration of the, um, report of the, um, of the annual audit report. Uh, and I think at this stage where you can say thank you to Suresh, you're, you're welcome to stay as members of the public, if you wish. There's only one other substantive item, but it, as I've mentioned before, it would be useful to have a, a, a, a, a meeting, uh, online, uh, at a convenient point to just reflect on your, um, just as chair of the audit and risk management panel to reflect on the first year. Which is one thing that we did put in our, um, audit, um, you know, our, our, our plan. Thank you very much. Um, so if we could, uh, move on to the next item on the agenda, which is the final item, the draft report on the work of the audit and risk management panel. Uh, this is something that is presented to, um, to council, uh, every year. Um, and, um, this is going to be presented by Vivian. So welcome Vivian. You've been waiting very patiently at the back. Uh, would you like to take us, uh, through the report? Thank you, chair. So, um, in accordance with the position statement, uh, a key output for the arm panel is an annual report, which provides assurance to full council that the panel discharged its responsibilities effectively. Um, this report details how the panel fulfilled its terms of reference in the year. And it also provides a summary of the specific work, the reports that were considered, um, by panel, um, in the year. And that's in appendix B. And yeah, I'm happy to take any questions on, on the paper. I can't see. Is there a mention of our decision to, um, to, to, or recommendation rather to increase the, uh, number of independent members from one to two? Is that referred to in this report as part of, you know, ensuring that we follow the, um, internal audit standards set by, um, SIPFA? Um, no, the report doesn't specifically mention that. And the reason is that it didn't go into specific details of each of the actions or things that were agreed. Um, but, you know, it's something that I can note for, you know, and we could take that away for the next time and, and do that. I, I, I, if it's possible, I would like that item to be included in the, in the report. That would be very helpful. Do, um, do members have any comments or questions on this, uh, draft report to go to full council? Are we happy to accept this then? Agree this? If no comments? Lovely. I think, uh, that, uh, if there's no further business, I think that concludes the meeting. Um, so thank members, uh, over an hour. That's not bad going, is it? Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.