The Audit Committee of Tower Hamlets Council met on Monday, 22 January 2024, to review progress on internal audits, discuss risk management, consider changes to the committee's composition, and approve key financial strategies. Decisions were made regarding the committee's membership and the adoption of the Treasury Management, Investment, and Capital Strategy reports for 2024-25 to 2026-27.

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 resulted in Reasonable or Substantial assurance, a decrease from 65% in the previous year, attributing this partly to resourcing issues. Karen Swift, Director of Housing, discussed a limited assurance report on homelessness assessments, highlighting IT system challenges and agreeing to rationalise assessment processes. The committee resolved to note the report's contents and assurance opinions. Councillor Rachel Blake requested that Management of Lettings and Management of Markets - Follow up be carried forward to the next Internal Audit plan.

Risk Management – Corporate and Directorate Risk Registers

David Dobbs introduced the report, which included the Corporate Risk Register and the Chief Executive’s Directorate Risk Register. Members discussed the VAT reclaim risk (FPA0014), with John Harrison, Interim Director for Finance, explaining improved accounting processes and monitoring, aiming to reduce the risk score. Regarding the risk of harm to a child (CSD0016), Councillor Mufeedah Bustin questioned the high score, and Mr Harrison explained that while the risk cannot be eliminated, it is being managed. Charlotte Webster, Independent Person, suggested benchmarking this risk against other local authorities. Mr Dobbs agreed to benchmark the risk. The committee resolved to note the corporate and directorate risks and request detailed updates on risk treatment and mitigation where further scrutiny is required.

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 reviewing the Audit Committee's composition and membership in light of CIPFA guidance. Following discussion and voting, the committee unanimously agreed to exclude the Cabinet Member for Resources from the committee, limit the overall number of Cabinet Members to one, and reduce the total number of councillors to seven, appointed proportionally. They also agreed that the committee should remain a formal decision-making body and that a job description for the Chair should be prepared. 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, tabled an updated version of the report, noting a typo in paragraph 3.15. He presented the Treasury Management mid-year report, covering April to September 2023. The report indicated that total investments increased from £237.950m to £265.467m. Mr Audu highlighted the forecast performance and borrowing exposure. The committee resolved to note the treasury management activities and performance, and the Council's investments as set out in Appendix 1.

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

Mr Audu referred to the second report, explaining the Council's legal obligations under the Local Government Act 2003 to adhere to CIPFA and DLUHC guidance. He outlined the three required strategy documents: the Treasury Management Strategy Statement, the Investment Strategy Report, and the Capital Strategy Report. He directed members to the balance sheet forecasts, investment counterparties and limits, and treasury management indicators. Councillor Kabir Ahmed questioned the negative rate shown for the CCLA - LAMIT Property Fund in Appendix 1 of the mid-year report. Mr Audu explained this related to different asset classes and that investment decisions were made by the Council's advisors, adhering to ESG frameworks. The committee resolved to approve and adopt the Treasury Management Strategy Statement, recommended investment counterparties and limits, the Investment Strategy Report, the Capital Strategy (including the Minimum Revenue Provision Policy Statement), the Prudential and Treasury Management indicators, and the Treasury Management Policy Statement. They also noted that the draft report might be subject to further changes.

Audit Committee Training and Development Plan

David Dobbs presented the proposed Training and Development Plan for Audit Committee members. Following discussion, members agreed that training on Risk Management (option 3) and Treasury Management (option 4) should be prioritised. Mr Dobbs will liaise with Democratic Services to arrange suitable training days. The committee resolved to consider and agree the plan's contents and nominate priority training areas for the next quarter.

Audit Committee Work Plan

Members noted the Audit Committee work plan. The Chair, Councillor Harun Miah, confirmed an extraordinary meeting on 21 March to address the Accounts, with the next ordinary meeting scheduled for 18 April 2024.

Any Other Business

There was no other urgent business to discuss.