The Audit Committee of Tower Hamlets Council met on Thursday, 10 October 2024, to discuss audit planning, internal audit progress, risk management, and treasury management. Key decisions included noting the audit planning reports for the 2020/21 to 2023/24 financial years, approving the internal audit progress report and its associated assessments, and noting the council's treasury management activities and performance for the 2023-24 financial year.

Audit Planning and Progress

The committee received updates from the council's external auditors, Deloitte and EY, regarding the audit planning for the 2020/21 to 2023/24 financial years. Deloitte confirmed that due to the backstop provisions introduced by the government, a disclaimer of opinion would be issued for the 2020/21, 2021/22, and 2022/23 audits by the 13 December deadline. This was deemed to have minimal impact on the council, as many local authorities are in a similar situation. EY presented their audit planning report for the 2023/24 financial year, highlighting a high-risk rating for the audit due to various factors, including previous qualifications and changes in personnel. They outlined their audit strategy, which will be a fully substantive approach, and detailed the significant risks identified, including management override of controls, inappropriate capitalisation of revenue expenditure, and the valuation of land and property.

Internal Audit and Anti-Fraud Update

David Dobbs, Head of Internal Audit, Anti-Fraud and Risk, presented an update on internal audit activity for 2024-25. He reported that progress against the audit plan had been slow, with a significant risk to its delivery due to delays and resourcing issues. However, the External Quality Assessment (EQA) of the Internal Audit service, conducted by Validera, concluded that the service generally conforms with professional standards, the highest grade achievable. The Fraud Awareness Survey indicated a generally positive level of awareness regarding the council's counter-fraud arrangements, although there was a notable percentage of respondents who were unsure about the council's zero-tolerance stance on fraud. The survey also highlighted that over half of respondents had received fraud awareness training.

Risk Management

The committee reviewed the Corporate Risk Register, which had increased to 15 risks, with the addition of Community Cohesion, People First Transformation, and Civil Contingencies. Risks related to the Building Safety Act and the Protection of Freedoms Act were relegated to directorate level. A health check report from Zurich Municipal, the council's liability insurer, indicated that while the council is in the early stages of restoring its risk management processes, it has a strong framework and the potential for rapid maturation with adequate resources and attention. Recommendations included officially assigning a corporate risk champion, ensuring risk management is a standing item on leadership team meetings, and developing a communications plan. The Risk Management team was also shortlisted for a Public Sector award.

Treasury Management

Paul Audu, Interim Head of Pensions and Treasury, presented the Treasury Management Outturn Report for 2023-24. He noted that investment returns fluctuated with the Bank of England base rate, which increased to 5.25% in August 2023 and remained at that level. The council's investment portfolio was £219.701 million at 31 March 2024, earning an income return of 4.98% and a total return of 5.74%. The council maintained a low-risk approach to borrowing, with no new external borrowing undertaken during the year. All treasury management activities complied with the Treasury Management Code and the council's approved strategy.

Audit Committee Work Plan

The committee noted the proposed work plan for 2024-25.

Exclusion of Press and Public

The committee resolved to exclude the press and public from the remainder of the meeting for the consideration of exempt information related to adult social care procurement.