The Audit Committee of Tower Hamlets Council convened on Thursday, 10 October 2024, to discuss a range of critical financial and risk management matters. Key decisions included the approval of the unrestricted minutes from the previous meeting, the presentation of audit planning reports for both past and upcoming financial years, and an update on internal audit and anti-fraud progress. The committee also reviewed corporate and directorate risk registers, received a treasury management outturn report, and noted the audit committee work plan.

Audit Planning and Past Audits

The committee received an update from Deloitte regarding the outstanding audits for the 2020/21, 2021/22, and 2022/23 financial years. Jonathan Gooding of Deloitte explained that due to the time constraints imposed by the government's backstop provisions, a full audit for these years would not be possible by the 13 December deadline. Consequently, a disclaimer of opinion would be issued for these audits. He assured the committee that this situation was common across local authorities and would not adversely impact Tower Hamlets.

EY, represented by Hayley Clark and Dan Spiller, presented their audit planning report for the year ended 31 March 2024. They highlighted a Close Monitoring risk rating for the audit, the highest possible, due to factors including the council's public profile, prior year qualifications, and the ongoing Best Value Inspection. This rating necessitates more extensive audit procedures and has led to a higher proposed audit fee. EY confirmed that they had not yet seen the Best Value Inspection report. The committee was reassured that additional resources and recruitment were in place to manage the workload, and a joint plan with management was being developed.

Internal Audit and Anti-Fraud Progress

David Dobbs, Head of Internal Audit, Anti-Fraud and Risk, provided an update on the Internal Audit activity for 2024-25. He noted that progress against the audit plan had been slow, with a significant risk to its delivery due to delays and resourcing issues. Despite this, the External Quality Assessment (EQA) of the Internal Audit service, conducted by Validera, concluded that the service Generally Conforms with professional standards, the highest possible grade. The results of a council-wide Fraud Awareness Survey were also presented, indicating a generally positive level of awareness among staff regarding counter-fraud arrangements and training, although there was a noted concern about the circumvention of controls.

Risk Management

The committee reviewed the Corporate Risk Register, which had increased to 15 risks with the addition of Community Cohesion (LPG0036), People First Transformation (LPG0037), and Civil Contingencies (COM0002). Two risks, Building Safety Act (PLC0023) and Protection of Freedoms Act (CS0014), 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 positive trajectory for improvement. Jesper Klesius, a risk consultant with Zurich Resilience Solutions, highlighted the need for clearer leadership in risk management and a review of the risk strategy, which is currently out of date. The committee requested further clarification on the disparity in risk scores for adult and children's services and noted the addition of community cohesion as a risk. Discussions also touched upon the inclusion of risks related to the Best Value Inspection.

Treasury Management Outturn Report

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 remained at 5.25% throughout the year. The council's investment portfolio stood at £219.701 million as of 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 and complied with its treasury management strategy. The report indicated that the council's average credit worthiness of investments was A+, in line with the local authority benchmark average. No new external borrowing was undertaken during the year.

Audit Committee Work Plan

The committee noted the updated 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 to discuss sensitive business matters.

Restricted Items

The restricted minutes from the previous meeting were agreed and approved. A verbal update on Adult Social Care Procurement was also provided, the details of which remain restricted.