The Audit Committee of Tower Hamlets Council met on Thursday, 23 May 2024, to review the Council's Annual Governance Statement for 2023/24 and to agree the committee's terms of reference, membership, and meeting dates for the upcoming municipal year. The committee also discussed the appointment of a Vice-Chair and the ongoing external audit process.

Annual Governance Statement 2023/24

The committee reviewed the Council's Annual Governance Statement (AGS) for 2023/24, a document that outlines how the Council has complied with its governance arrangements over the past year and identifies areas for improvement. David Dobbs, Head of Internal Audit, Anti-Fraud & Risk, presented the report, highlighting that the AGS is a statutory requirement and forms part of the annual accounts.

During the discussion, Councillor Mufeedah Bustin raised concerns about the report's balance, suggesting that some positive commentary from the LGA Corporate Peer Challenge had been included while criticisms were omitted. She also felt the section on the Best Value Inspection lacked background information. David Dobbs acknowledged that the statement aimed to present the Council in the best light but assured members that comments would be taken on board.

Councillor Mark Francis echoed these sentiments, stating he was uncomfortable signing off on a document that he felt was not honest and frank enough about the Council's weaknesses and challenges. He specifically referenced the LGA Peer Challenge report, arguing that the AGS entirely cherry-picks elements and should incorporate the tough criticisms of the authority. He also highlighted the significance of the Best Value Inspection, noting that such inspections are unusual and warrant frankness.

Councillor Abdul Malik, however, defended the report, suggesting that it was unfair to criticise the officers who compiled it, as they were new to the organisation and had worked to galvanise the collateral damage from previous issues. He also raised a question about the robustness of financial management systems and accountability for departmental fluctuations.

Julie Lorraine, Corporate Director of Resources, emphasised the Audit Committee's role in ensuring effective systems of control and noted the progress made in addressing previous issues such as unpublished and late accounts. She also highlighted the ongoing work to review financial regulations and procurement, and to ensure the Council's control framework reflects best practice.

Ultimately, the committee agreed to note the comments made on the Annual Governance Statement, with officers committing to consider these comments when the statement is presented again. The Chair, Councillor Harun Miah, proposed that the minutes reflect that the committee had noted the statement and its comments, and that officers would incorporate feedback.

Audit Committee Terms of Reference, Membership, Quorum and Dates of Meetings 2024/2025

Farhana Zia, Democratic Services Officer, presented the report outlining the Audit Committee's terms of reference, membership, quorum, and meeting dates for the 2024/2025 municipal year. The committee was asked to note these arrangements and determine a preferred start time for its meetings.

Councillor Mufeedah Bustin expressed satisfaction with changes to the committee's membership, noting that it aligned with previous discussions. However, she requested a change to the meeting dates due to clashes with the Development Committee, which she wished to attend. While acknowledging the difficulty in avoiding all clashes, the officer agreed to investigate potential adjustments.

Councillor Mark Francis followed up on the membership changes, referencing the LGA peer review's recommendation regarding cabinet members sitting on the audit committee. He questioned whether the current composition was final or if further changes were anticipated. Councillor Harun Miah, Chair of the committee, stated that the current membership was the agreed position, and Jill Bayley from Legal Safeguarding confirmed that the committee's structure had been discussed and agreed by a majority. Councillor Kabir Ahmed, a Cabinet Member, clarified that when sitting on the Audit Committee, he did so as a committee member, not as a Cabinet Member.

The committee agreed to note the terms of reference, quorum, membership, and dates of future meetings, and to set the preferred start time for scheduled meetings at 6:30 p.m.

EY Items for Consideration

Steven Reed, the Council's newly appointed external auditor from EY, introduced himself and his colleague Hayley Clark. He confirmed that EY had commenced initial planning discussions with officers for the 2023/24 external audit, with the intention of presenting a provisional audit plan to the committee on 18 July.

Councillor Kabir Ahmed inquired about the handover process from the previous auditors, Deloitte, and whether there were any gaps in the accounting process. Steven Reed confirmed that preliminary discussions with Deloitte had taken place and that more detailed discussions would follow. He assured the committee that there were no immediate concerns regarding cooperation.

Councillor Asma Begum raised a point about assumptions made by auditors, asking for clarity on how any discrepancies would be handled. Steven Reed explained that under auditing standards, EY would review the work of the predecessor auditor and consider assumptions made by officers. He stated that findings would be reported in the audit results report and that the audit plan would highlight areas of potential risk.

Appointment of Vice-Chair

Councillor Amin Rahman was nominated and subsequently appointed as the Vice-Chair of the Audit Committee for the municipal year.

Other Matters

The committee also confirmed the minutes of the previous meeting held on 23 April 2024. A portion of the meeting was held in private to discuss a serious issue related to an ongoing investigation, as per legal advice. The committee resolved to exclude the press and public from this part of the meeting.