The Audit Committee unanimously approved the Annual Governance Statement for 2023/24, the Internal Audit Plan 2024/25 and the Terms of Reference for the 2024/25 municipal year. They also noted the Internal Audit Annual Report 2023/24, the operations of the Audit Committee for 2023/24, the draft Statement of Accounts 2023/24, the Internal Audit Activity Report, the 2023/24 Information Governance & Caldicott Guardian Annual Report, the 2023/24 Anti-Fraud & Corruption Annual Report and the outline of business for 2024/25.

Annual Governance Statement

The Audit Committee reviewed the Annual Governance Statement which is a legal requirement under the Accounts and Audit Regulations 2015. The statement summarises how the council is meeting its legal obligations and best practices for corporate governance.

The statement includes an action plan (Annex 1) to ensure that existing governance arrangements are continually improving.

The council's Local Code of Good Governance is consistent with the principles of the CIPFA/SOLACE Framework – Delivering Good Governance in Local Government.

The statement confirmed that the Council had sound financial management, had produced final accounts on time and that its financial statements complied with statutory requirements and gave a true and fair view of the Council's financial position. The statement gave details of where the Council had excelled and gained awards. Examples included:

• A CQC inspection of special educational needs and/or disabilities (SEND) services resulted in the highest possible outcome: stating that Telford & Wrekin Council’s services typically lead to positive experiences and outcomes for children and young people with SEND and that the local area partnership is taking action where improvements are needed.
• The Customer Contact Centre won the Best Efficiency and Transformation APSE national award.
• Telford was awarded Tree City of the World status by the United Nations for forestry practices.
• The council was awarded a record six Green Flags for its borough’s parks and green spaces.
• The council is ranked in the top 10 of the Green Cities of England index

The opinion of the Audit, Governance & Procurement Lead Manager, Robert Montgomery, was that the council’s current arrangements gave a reasonable level of assurance.

Internal Audit

The committee noted the Internal Audit Annual Report 2023/24 which confirmed that despite a number of unplanned audit assignments, deferred audits and resource challenges within the audit team, the team achieved 90% of the planned work.

The report contained information on Internal Audit’s annual opinion which provides reasonable assurance in respect of the adequacy and effectiveness of the Council’s framework of governance, risk management and internal control.

Draft Statement of Accounts 2023/24

The committee noted the draft Statement of Accounts 2023/24, which was presented to the Committee who have delegated authority to review it. The statement was a complex document including the consolidated group accounts.

Members were encouraged to contact the finance team if they had any queries and it was confirmed that a training session for members would be provided, prior to the presentation of the Audited Statement of Accounts.

Internal Audit Activity Report

The committee noted the Internal Audit Activity Report, which reported on audit work undertaken between 1 January 2024 and 31 March 2024. The report provided an update on the progress of previous audit reports issued.

During the reporting period, nine reports were issued, six yellow (reasonable) and three green (good). Internal Audit intended to follow up, where necessary, within three to six months to check that recommendations had been implemented and were confident that management would implement the controls to bring about an improvement. There were no other issues to bring to the attention of the Committee at this time.

A number of Members enquired about areas where a second follow up was planned in order to understand how “limited” improvement was being managed.

The Principal Auditor, Tracey Drummond, confirmed that Internal Audit were working with the teams involved and that testing would be undertaken when there was information to test.

Robert Montgomery explained that limited or poor reports are reported to the director of the service and the chief executive who also take these reports very seriously and that if requested, directors could be called to appear before the Audit Committee.

Information Governance & Caldicott Guardian Annual Report

The committee noted the 2023/24 Information Governance & Caldicott Guardian Annual Report, which governs the Council’s management of information.

There were 100 more Freedom of Information (FOI) requests in 2023/24 than the previous year and this had led to the response rate being slightly down to 85%, against an Information Commissioner’s Office (ICO) target of 90%. The number of appeals against decisions also increased. In addition to FOI requests, the council received 89 Environmental Information Regulations (EIR) requests.

The council received one complaint from the ICO, which was resolved by releasing additional information to the requester.

In 2023/24 the council received 104 subject access requests (SARs) which is 34 less than the previous year. Processing SARs was challenging, with four requests comprising over 10,000 pages of information to be redacted.

No data breaches met the threshold for reporting to the ICO. To help prevent data breaches, the council introduced a new system called Zivver.

2023/24 Anti-Fraud & Corruption Annual Report

The committee noted the 2023/24 Anti-Fraud & Corruption Annual Report which gave details of the activity for 2023/24. The investigation activities within Telford & Wrekin Council were driven by the Investigation Team along with Internal Audit and IDT.

A number of complex investigations were undertaken in 2023/24. Some of these are continuing into the next financial year.

The Investigation Team have now started joint working with the DWP where there are matters of Council Tax Support fraud and fraud related to other relevant DWP benefits.

The Investigation Team concluded 147 investigations in 2023/24 with 83 having a positive outcome. This figure does not include 47 open investigations which have been carried over into the next financial year.

Measures to prevent fraud were a key aspect of the Council's work, including face-to-face induction training for new employees with further training opportunities available on the Council’s intranet.

Revenues and Benefits, IDT and Public Protection provide information to Internal Audit in relation to fraudulent activities. The Investigation Team have a good partnership and working relationship with West Mercia Police in the fight against crime.

Members enquired why social care had a higher rate of suspected fraud and if there were adequate controls in place in relation to cyber fraud. Other Members asked what savings had been made from the £121,000 spent on fraud prevention.

Robert Montgomery explained that direct payments for social care create an opportunity for fraud. These are payments made directly to people who need care so they can organise their own care. If this involves third parties, they must ensure that the contracted work is honoured. Expenditure in social care is therefore a boom area and a bigger fraud risk.

In relation to cyber fraud, Robert Montgomery confirmed the council were part of a West Midlands Group looking at trends in cyber fraud and that there was an IDT lead on cyber security. There was reasonable assurance that controls were in place to protect the Council including focus groups, public sector requirements, a cyber security toolkit and up to date antivirus and patching.

External Audit Plan

The External Auditors, KPMG, presented their audit plan for 2023/24.

The materiality was set at £10.6m, which may be revised based on a 2% general risk, to £6.89m, with a misstatement reporting threshold of £530,000.

KPMG highlighted three risk areas: valuation of land and buildings, management override of controls and valuation of the Local Government Pension Scheme (LGPS).

Further areas for consideration included expenditure fraud risk and revenue recognition.

KPMG gave an overview of their approach to Value for Money (VfM) which was in its early stages and further detail would be given to the next Audit Committee.

The audit timetable was set out in the report, but it was highlighted that there would be an increase in the fee, although this had been part of the tender process.

KPMG confirmed they were anticipating the audit would be completed by September and that the audit of Nuplace would be undertaken separately. Nuplace is a private limited company which is wholly owned by the Council and lets and manages its properties.

Members enquired whether the audit would meet the December 2024 deadline.

The Group Accountant, Emily Rushton, confirmed the accounts would be brought to the November 2024 meeting.

Audit Committee Terms of Reference

The Audit Committee reviewed and adopted their terms of reference for 2024/25. The terms of reference include:

• approving the Audit Charter and Internal Audit Plan,
• reviewing Internal Audit activities,
• reviewing documents from the External Auditors,
• reviewing governance and risk management processes,
• monitoring treasury management activities
• approving the Annual Governance Statement that accompanies the final accounts.

Outline of Business 2024/25

The committee noted the outline of business for the 2024/25 municipal year.