The Audit, Governance and Standards Committee of Southwark Council was scheduled to review several key reports concerning the council's financial management, internal audit functions, and governance structures. The meeting's agenda included discussions on the progress of internal audits, the annual report of the Corporate Anti-Fraud Team, the external audit plan, and the council's compliance with the CIPFA Financial Management Code. Additionally, the committee was set to consider the draft Annual Governance Statement for 2023-24 and the membership of its sub-committees.

Governance Conversation: Assistant Chief Executive, Governance and Assurance

A significant item on the agenda was a report detailing the progress of the Members' Code of Conduct working group. This group is reviewing the current code, which has been in place since 2011, with consideration given to adopting the Local Government Association's (LGA) model code of conduct. The report outlined the timeline for final recommendations to be made to Council Assembly in 2025. The working group, chaired by the Monitoring Officer, has met several times and engaged an external governance trainer, Bethan Evans, to facilitate workshops for members. Feedback has also been sought from Independent Persons, and a benchmarking exercise comparing other London boroughs' adoption of the LGA model code has been undertaken. The report noted that options for consideration include keeping the current code unchanged, adopting the LGA code in full or in part, or amending the current code to include elements of the LGA code.

Internal Audit Annual Report and Annual Statement of Assurance – Interim

The committee was scheduled to receive an interim report on the work undertaken by internal audit for Southwark Council during the 2023-24 financial year. This report provides an overview of the effectiveness of the controls in place for the full year. The internal audit plan for 2023-24 covered a range of directorates, including Children and Adult Services, Environment, Neighbourhoods and Growth, Finance, Governance and Assurance, Housing, IT and Shared Service, and Strategy and Communities. The report detailed the assurance opinions and number of recommendations from audits completed, with a summary of findings and a recommendation implementation rate. The Head of Internal Audit's opinion for 2023-24 provided Moderate Assurance, indicating a sound system of internal controls designed to meet the Council's objectives, with controls being applied consistently across various services.

Internal Audit Progress Report

This report informed the committee of the progress made against the completion of the 2023-24 internal audit plans. It summarised the work undertaken, including an assessment of the systems reviewed and the recommendations raised. The report indicated that work was substantially completed, with draft or final reports issued for the majority of audits. A final annual report for 2023-24 was scheduled to be presented to the committee on 15 July 2024. The report also detailed the status of audits commenced to date for 2023-24 and outlined the internal audit programme for schools.

2023-24 Annual Report of the Corporate Anti-Fraud Team, Finance and the Special Investigations Team

The committee was to review the annual report summarising the work of the Corporate Anti-Fraud Team (CAFT) and the Special Investigations Team (SIT) for the period 1 April 2023 to 31 March 2024. The report detailed the anti-fraud caseload, including corporate investigations, housing waiting list reviews, Right to Buy (RTB) checks, and Blue Badge fraud. It highlighted the introduction of a new case reporting system and provided statistics on investigations opened and closed, properties recovered, and tenancies and RTB applications prevented. The report also covered the National Fraud Initiative (NFI) data matching exercise, detailing the number of matches, frauds identified, and sums recoverable. The work of the Special Investigations Team (SIT) in investigating housing tenancy fraud, including unlawful subletting and non-occupation, was also presented, with a significant value of housing tenancy fraud prevented.

External Audit Plan & Strategy for Southwark Council 2023/24

This report provided an overview of the risk assessment and planned audit approach for the statutory audit of Southwark Council for the year ending 31 March 2024. Prepared by KPMG LLP, the external auditors, the report outlined significant risks such as the valuation of land and buildings, management override of controls, valuation of post-retirement benefit obligations, and fraud risk over Housing Revenue Account (HRA) expenditure recognition. It also detailed other audit risks, including the valuation of investment properties and PFI liabilities, and the presentation of IFRS 16 pre-transition disclosures. The report also discussed the Value for Money (VfM) risk assessment, identifying potential significant weaknesses in financial sustainability, contract management, and TMO management.

Draft Annual Governance Statement 2023-24

The committee was asked to note the draft Annual Governance Statement (AGS) for 2023-24. This mandatory statement, required by law, reports on the review of the effectiveness of the council's system of internal control and its governance arrangements, aligning with the CIPFA/SOLACE framework for good governance. The draft AGS included consideration of the impact of the coronavirus pandemic on council services and highlighted key governance issues, including actions taken on previously identified issues and emerging governance areas. It also discussed areas of significant change looking forward to 2024-25 and the medium term, such as the HRA's financial sustainability, elections, medium-term local government funding, statutory changes to procurement, and the replacement of the Enterprise Resource Planning (ERP) system.

Compliance with CIPFA Financial Management Code

This report reviewed Southwark Council's compliance with the CIPFA Financial Management (FM) Code for the 2023-24 financial year. The FM Code aims to support and improve councils' financial resilience. The report detailed compliance against each of the 17 FM standards, grouped into seven sections, and highlighted areas of risk, particularly concerning the Housing Revenue Account (HRA) and its long-term sustainability, as well as the level of external debt. The assessment indicated that Southwark Council is at 'low risk' for general fund reserves and reserve sustainability, and rated 'good' for children's social care, but identified external debt as a high-risk area.

Annual Report on the Work and Performance of the Audit, Governance and Standards Committee in 2023-24

The committee was presented with an annual report summarising its work and performance during the 2023-24 municipal year. The report included the outcome of a CIPFA self-evaluation questionnaire, which indicated a good overall performance with areas for further development. Suggested approaches for committee development included private meetings with auditors, evaluation of members' skills and training needs, and leveraging available training from the LGA and CIPFA. The report also noted that the council's external auditors had changed to KPMG, with BDO continuing as internal auditors.

Membership of Audit, Governance and Standards Sub-committees for 2024-25

The committee was asked to appoint members to two sub-committees: the Audit, Governance and Standards (Standards) sub-committee, which considers complaints of misconduct against elected councillors, and the Audit, Governance and Standards (Civic Awards) sub-committee, which considers civic awards. The report outlined the responsibilities of these sub-committees as set out in the council's constitution and provided details on proportionate membership allocations based on political groups. It also noted the history of the civic awards scheme and the requirement for co-opted members on the civic awards sub-committee.