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Audit and Risk Management Panel - Wednesday, 18th June, 2025 6.30 pm

June 18, 2025 View on council website  Watch video of meeting Read transcript (Professional subscription required)
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Summary

The Royal Borough of Greenwich Audit and Risk Management Panel met in June to discuss internal and external audit plans, performance, and strategy. The panel approved the audit work program and the internal audit plan and charter for the upcoming year. They also reviewed the audit strategy memorandum for both the council and its pension fund.

Right-to-Buy Fraud

Councillor Nick Williams raised concerns about potential fraud in right-to-buy applications, recalling a previous report that indicated a high proportion (around 20%) were seen as fraudulent. He noted that the housing team may not have had the resources to tighten procedures at the time due to a surge in applications. The panel discussed the need to ensure procedures were tightened to prevent fraud in these cases.

External Audit Strategy and Materiality

Tom Greensill, external auditor from Forvis Mazars, presented the audit strategy for the 2024-25 financial year. He explained that materiality, the threshold above which something could misstated or omitted from the accounts, was set at 1.9% of gross revenue expenditure, an increase of 0.1% on the previous year. Performance materiality, a lower threshold used to reduce the risk of missing a material misstatement, was raised by 5% to £14.5 million.

Greensill outlined significant risks identified for the audit, including:

  • Management override of controls, a mandatory risk due to the potential for management to manipulate accounting records or perpetrate fraud.
  • Evaluation of property, plant and equipment (PPE), due to the large balance and complexity of valuation.
  • Valuation of the net defined benefit liability, as it relies on financial and demographic assumptions.
  • Implementation of IFRS 16, a new leasing standard.

Councillor David Gardner, Chair of Audit and Risk Management Panel and Deputy Mayor, asked about the timeline for audit completion, expressing a desire for it to be completed earlier in the year to inform the budget process. Greensill indicated that the timeline was being moved back to November, with substantive work done by December and finalisation by January. He cited changes in team structure at Forvis Mazars to service audits across London boroughs as a reason for the extended timeframe.

Councillor Williams questioned the increase in proposed fees for the pension fund audit, and Greensill explained that it was due to the PSAA contract and an inflationary uplift.

Councillor ‘Lade Hephzibah Olugbemi asked about emerging risks observed through the audit, and Greensill responded that there were no specific trends of concern, though valuation misstatements could occur due to complexity.

Councillor Gardner raised concerns about materiality, noting that while the formulaic calculation was based on gross revenues, the resulting figures were significant in terms of council tax. He gave the example that £22 million was equivalent to a 20% increase in council tax. Greensill clarified that errors affecting the general fund would be reported above a trivial threshold of £635,000.

Internal Audit Performance and Plans

Vivian Uzoecchi presented the internal audit and anti-fraud performance for April 2024 to March 2025. Key points included:

  • 60.8% of the internal audit plan was delivered to draft report stage by 31 March, below the target of 90%.
  • 93% of draft reports were issued as final reports within 5 working days of client response, exceeding the target of 75%.
  • The average client satisfaction rating was 4.6 out of 5.
  • 95 referrals relating to allegations of housing benefit/council tax support fraud were received, with 72 referred to the Department for Work and Pensions (DWP).
  • 5 council tenancies and 1 Registered Social Landlord (RSL) property were recovered due to investigations into tenancy and housing-related fraud, with a total value of £558,000 based on Cabinet Office estimates.
  • 111 corporate-related matters were investigated, with 34 cases closed.

Dr Susan Blackall asked for insight into why one of the client satisfaction scores was lower than the rest, and Uzoecchi agreed to provide feedback on the issue.

Councillor Williams asked about the partnership with the London Borough of Bromley for fraud investigation services, and Uzoecchi confirmed that Greenwich provided the services under a service level agreement (SLA). Councillor Williams asked how client satisfaction was measured, and Uzoecchi agreed to seek feedback from Bromley and report back to the panel.

Uzoecchi then presented the 2025-26 internal audit plan, highlighting the new mandatory internal audit strategy required under the global internal audit standards.

Councillor Gardner inquired about the role of internal audit in reviewing progress towards the council's net-zero 2030 goal. Uzoecchi said that she would consider this as part of the risk assessment process.

Councillor Williams asked about the Green Bond financial product launched last year and whether internal audit would validate related activities. He also raised concerns about contract standing orders (CSOs) and their review.

Councillor Olugbemi raised concerns about cybersecurity and data breaches, and Uzoecchi confirmed that this was an area considered in the audit plan. Councillor Olugbemi requested a presentation from the IT team on cybersecurity preparedness. Councillor Williams noted that he could not see an actual internal audit review of cybersecurity, and asked about the frequency of reviews and whether it should be increased. Uzoecchi agreed to review the risk and report back on the program for internal audit review of cybersecurity.

Finally, Uzoecchi presented the internal audit charter for 2025-26, another mandatory requirement under the global standards. Councillor Gardner requested training on the audit charter for panel members and other interested councillors.

The panel approved the audit work program, the internal audit plan and charter, and noted the reports.

Other Business

The panel noted the end of Hitesh Jolapara's period as interim assistant director of finance and deputy section 151 officer, and thanked him for his service.

Attendees

Profile image for CouncillorDavid Gardner
CouncillorDavid Gardner  Chair of Audit and Risk Management Panel and Deputy Mayor •  Labour and Co-operative •  Greenwich Peninsula
Dr Susan Blackall
Profile image for CouncillorChristine May
CouncillorChristine May  Labour and Co-operative •  Middle Park and Horn Park
Profile image for Councillor‘Lade Hephzibah Olugbemi
Councillor‘Lade Hephzibah Olugbemi  Labour and Co-operative •  West Thamesmead
Profile image for CouncillorDave Sullivan
CouncillorDave Sullivan  Labour and Co-operative •  Kidbrooke Village and Sutcliffe
Profile image for CouncillorNick Williams
CouncillorNick Williams  Labour and Co-operative •  Greenwich Peninsula
Profile image for CouncillorMatt Hartley
CouncillorMatt Hartley  Leader of the Opposition •  Conservative •  Mottingham, Coldharbour and New Eltham
Head of Financial Governance, Insurance & Risk

Topics

No topics have been identified for this meeting yet.