The Audit Committee of Tower Hamlets Council met on Monday 22 January 2024 to review the Council's treasury management activities and risk management arrangements. Key discussions included the mid-year treasury management report, the draft treasury management strategy for 2024-25, and updates on corporate and directorate risk registers. The committee also discussed the training and development plan for its members.

Internal Audit and Anti-Fraud - Progress Report

David Dobbs, Head of Internal Audit, Anti-Fraud and Risk, presented the progress report on the 2023-24 Annual Internal Audit Plan. He noted that 43% of audit opinions issued so far had resulted in Reasonable or Substantial assurance, a decrease from the previous year's 65%. Mr Dobbs acknowledged that the delivery plan was ambitious and had been impacted by resourcing issues. Karen Swift, Director of Housing, discussed the limited assurance report on Homelessness assessments, highlighting challenges with IT systems and agreeing to review the number and relevance of forms used. Councillor Rachel Blake requested that Management of Lettings and Management of Markets - Follow up be carried forward to the next Internal Audit plan. The committee resolved to note the report's contents and overall progress.

Risk Management – Corporate and Directorate Risk Registers

Mr David Dobbs introduced the Corporate Risk Register and the Chief Executive's Directorate Risk Register. Members discussed specific risks, including FPA0014 regarding VAT reclamation from HMRC, where John Harrison, Interim Director for Finance, stated that accounting processes had been improved and the risk score was expected to reduce. Councillor Mufeedah Bustin questioned the high risk score for CSD0016 (child safeguarding), with Mr Harrison explaining that while controls were in place, the inherent risk of harm to a child could not be entirely eliminated. Ms Charlotte Webster suggested benchmarking this risk against other local authorities. Mr Dobbs agreed to undertake this benchmarking. The committee resolved to note the corporate and directorate risks, requesting further updates on specific risks requiring scrutiny.

Review of CIPFA Guidance on the management of Audit Committees

Jill Bayley, Head of Safeguarding, Legal Services and Deputy Monitoring Officer, presented a report on CIPFA's guidance for Audit Committees. Members discussed potential changes to the committee's composition and operation. Key decisions included:

• Excluding the Cabinet Member for Resources from the committee and limiting the overall number of Cabinet Members to one.
• Rejecting the option of having no Cabinet members on the committee.
• Rejecting the option of an independent chair if Cabinet members were present.
• Rejecting the proposal to increase the number of Independent Members to two.
• Agreeing to reduce the overall number of Councillors to seven to maintain proportionality and avoid exceeding the recommended maximum membership of eight when including independent members.
• Agreeing that the committee should remain a formal decision-making body, not advisory.
• Agreeing to prepare a Job Description for the Chair to ensure open and transparent debate.

It was agreed that these changes would take effect from the start of the 2024-25 municipal year, pending ratification by the General Purposes Committee and Full Council.

Treasury Management Report and Mid-Year Review

Paul Audu, Interim Head of Pensions and Treasury, presented the Treasury Management Mid-Year Report for 2023-24, covering the period from April to September 2023. He noted a typo in paragraph 3.15 of the report, which was amended. Mr Audu highlighted that total investments increased from £237.950m to £265.467m during the period. He also referred to the forecast performance and borrowing exposure. Councillor Kabir Ahmed inquired about a negative rate for the CCLA - LAMIT Property Fund, to which Mr Audu explained this related to different asset classes and that investment decisions were made by the Council's advisors, considering ESG factors. The committee resolved to note the treasury management activities, performance, and investments.

DRAFT Treasury Management Strategy Statement, Investment Strategy Report and Capital Strategy Report for 2024-25 to 2026

Mr Paul Audu presented the draft strategy documents required by the Local Government Act 2003, including the Treasury Management Strategy Statement, Investment Strategy Report, and Capital Strategy Report. He highlighted the recommendations on page 26 of the supplementary agenda that required approval from the Audit Committee and Full Council. Mr Audu referred to the balance sheet forecast and investment counterparty limits. He also explained that increased use of reserves impacted capital treasury management cash balances, potentially leading to additional borrowing if the capital programme experienced slippage. The committee resolved to approve and adopt these policy and strategy documents.

Audit Committee Training and Development Plan

David Dobbs, Head of Internal Audit, Anti-Fraud and Risk, introduced the training plan for Audit Committee members, based on CIPFA guidance. Members agreed that training on Risk Management and Treasury Management should be prioritised for the next quarter. Mr Dobbs was tasked with liaising with Democratic Services to arrange suitable training days. The committee resolved to consider and agree the training plan and nominate priority training areas.

Audit Committee Work Plan

Members noted the committee's work plan. Councillor Harun Miah confirmed that an extraordinary meeting would be held on 21 March to address accounts, with the next ordinary meeting scheduled for 18 April 2024.

Any Other Business

RIPA Policy 2023

Jonathan Melnick, Principal Lawyer – Enforcement, presented proposed amendments to the Regulatory Investigatory Powers Act 2000 (RIPA) Policies, including a new RIPA social media policy. He noted that RIPA legislation was used infrequently, but the Council was obliged to review and update the policy annually. The committee resolved to note the proposed amendments.

Report of Investigations under the Regulation of Investigatory Powers Act (RIPA)

Mr Melnick reported on the Council's use of Covert Human Intelligence Sources (CHIS) under the RIPA policy, stating that its use had been negligible since 2014/15, with partnership working and police powers being utilised instead. The committee resolved to note the information provided.