This meeting was scheduled for discussion of a wide range of topics relating to the Council's finances and the financial governance of the Council. In particular, the committee was scheduled to consider the adoption of Annual Governance Statements for 2021/22 and 2022/23 and audited statements of accounts for the same two periods.

Annual Governance Statements

The Annual Governance Statement (AGS) is a statutory report that explains how a council meets the seven principles of good governance laid out by CIPFA and SOLACE. The AGS also explains how the council has complied with its own local code of governance, what it is doing to improve, and how it knows it is doing these things. The 2021/22 AGS contained for discussion included an action plan for strengthening governance. This action plan included a range of updates on a number of key areas, including:

• Programme and project management delivery assurance
• Governance over Council-owned companies
• Health and safety
• Key business-as-usual corporate governance processes that support the planning, delivery and monitoring of service delivery.

The 2021/22 AGS stated that the Council was in the process of refreshing its governance arrangements.

In 2021/22 there has been a clear focus on activity to start to refresh and reinvigorate governance arrangements to meet future challenges in 2022/23 to be articulated in the new Corporate Plan.

The report pack also included an AGS for 2022/23. This AGS included an update on the implementation of the action plan from the 2021/22 AGS. This showed that the Council had made progress against each of the key areas, but all actions were still ‘in progress’. The 2022/23 AGS also identified for discussion further actions to be taken, including:

• Embedding a new service planning approach and developing and embedding a new commissioning approach
• Re-establishing public performance reporting
• Continuing to develop and embed robust programme and project management arrangements, including oversight and assessment of the benefits that are realised
• Ensuring that the Corporate Health and Safety Audit and Assurance Framework operates sufficiently and addresses key health and safety issues where there was insufficient assurance.
• Ensuring that there is clear measurement and analysis of the progress made in addressing the equalities, diversity, and inclusion issues that were reported to the council by staff in 2021.
• Ensuring that high-priority recommendations were implemented in a timelier way.

Audited Statements of Accounts

In the report pack for discussion, the Corporate Director of Resources, Duncan Whitfield, included a report that set out audited statements of accounts for 2021/22 and 2022/23. These accounts had been audited by EY. It is one of the “Big Four” accounting firms. Mr Whitfield explained that the audits were late and included a disclaimer from the auditor. This is because of a national backlog in the completion of audits, known as the “Audit Reset”.

As previously reported to this Committee, due to a number of factors in the local authority audit arena there was a significant backlog in the publication of audited accounts of local bodies in England. The Government and organisations involved in the regulation and oversight of local authority financial reporting and audit, worked collectively to agree a solution to clear the outstanding historical audit backlog and ensure that delays do not return. This is known as the “audit reset”.

In 2021/22 the Council reported an overall underspend of £1.589m. This resulted from overspending in service areas like Children and Families, Adult Social Care, Regeneration & Property, Civic Pride, Customer Help Digital Complaints, and Education and Inclusion, offset by significant underspends in other areas.

Overall, the General Fund outturn position is an underspend of £1.589m … The outturn position for the year showed an overspend of £10.286m from Service Directorate revenue budgets.

In 2022/23 the Council reported an overall underspend of £0.25m. This resulted from overspending in service areas like Housing General Fund, Highways, Parking & Transportation, Adult Social Care, and Children & Families, offset by significant underspends in Corporate Budgets.

Overall, the General Fund outturn position is an underspend of £0.250m … The outturn position for the year showed an overspend of £20.461m from Service Directorate revenue budgets.

The report pack also included the Pension Fund Accounts for both 2021/22 and 2022/23. The 2021/22 accounts reported net assets of £1,009.952m.

Net Assets of the scheme at 31 March 2022 – £1,009,952

The 2022/23 accounts reported net assets of £936.044m.

Net Assets of the scheme at 31 March 2023 – £936,044

These Pension Fund accounts had not been affected by the Audit Reset. In both years, it was expected that they would receive an unqualified audit opinion from EY.

Internal Audit

There were two internal audit reports scheduled to be discussed at this meeting.

The first was the [Update on Internal Audit red rated recommendations 12 months past original target date](https://moderngov.redbridge.gov.uk/documents/s167846/Update+on+Internal+Audit+red+rated+recommendations+12+months+past+original+target+date.pdf) report. This report explained that the proportion of red-rated recommendations that were overdue had fallen to 66% in Quarter 2 of 2024/25. It had previously been reported as 85% in Quarter 2 of 2023/24.

Whilst 66% of actions remain overdue this quarter, this has reduced from 85% reported in quarter 2 2023/24.

The second was a [Internal Audit and Counter Fraud 2024 25 Q2 update](https://moderngov.redbridge.gov.uk/documents/s167862/Internal+Audit+and+Counter+Fraud+2024+25+Q2+update+-+Report.pdf) report. This report provided an update on the status of the Council's Internal Audit and Counter Fraud arrangements.

This report provides an update on Internal Audit and Counter Fraud activity since the last meeting.

A significant part of this report was dedicated to providing an update on actions that had been agreed in response to Internal Audit reviews. At the end of September, 37 out of 47 actions were rated ‘in progress’, and 10 were rated ‘implemented’.

The status of implementing those actions at the time of producing this report (30th September 2024) is:

• 37 ‘in progress’
• 10 ‘implemented’

This report also explained that internal audit was working on a “provisional audit plan” for 2024/25. This was included in Appendix 1 of the report.

Appendix 1 details the reviews in the current provisional plan for the remainder of the 2024/25 municipal year.

A significant part of the work planned by internal audit related to the achievement of the aims set out in the Council’s Corporate Plan 2022-26:

• Safe and Healthy
• Clean and Green
• Homes and Neighbourhoods
• Jobs and Skills

Internal audit work in the plan also included the following corporate activities, which are likely to support or enable the delivery of all corporate priorities in the Corporate Plan:

• Decision making
• Asset valuations
• IT infrastructure
• Programme management
• Contract management
• Customer services
• Complaints handling
• Recruitment
• Staff and Organisational Development
• Business Continuity and Emergency Planning
• Financial Governance and Management
• Major Programme Delivery Assurance

Internal audit was also scheduled to continue its review of the following grants:

• Disabled Facilities Grants
• Bus Subsidy Grant

Risk Management

The [Strategic Risk Register Quarter 2 2024 25](https://moderngov.redbridge.gov.uk/documents/s167783/Strategic+Risk+Register+Quarter+2+2024+25+-+Report.pdf) report provided an update on the Council’s arrangements for managing risk.

A key part of this was an updated risk register that identified 10 significant risks that the Council faces, including:

• The failure to maintain a sustainable Medium-Term Financial Strategy in an increasingly uncertain economic outlook
• A reduction in the available temporary and permanent affordable housing provision
• A cyber-attack against Redbridge Council’s IT systems, or a partner organisation’s IT systems
• The failure to safeguard vulnerable children
• Non-compliance with relevant Health and Safety legislation
• The failure to safeguard vulnerable adults
• Emerging or existing infectious diseases, including measles and respiratory illnesses that become endemic or pandemic nationally and in Redbridge.
• The failure of critical services as a result of business disruption and inadequate service continuity arrangements
• The failure of the Council to appropriately and competently respond to a major incident
• The failure to mitigate extremism through Redbridge Council’s Prevent programmes.

Information Governance

The [Information Governance Mid- Year Update 2024-25](https://moderngov.redbridge.gov.uk/documents/s167772/Information+Governance+Mid-+Year+Update+2024-25.pdf) report explained that the Council had a statutory duty to ensure that data was managed well.

The Council has a statutory duty to ensure that it protects the information it holds.

The report included three key performance indicators that monitor how well the Council is managing data, including:

• Vendor risk assessments
• Subject Access Requests
• Freedom of Information requests.

Work Programme

The report pack included for discussion a [Work Programme](https://moderngov.redbridge.gov.uk/documents/s167793/Work+Programme+-+5+Dec+-+Report.pdf) for the Governance and Assurance Committee. This included plans to consider updates on the following subjects:

• Regulation of Investigatory Powers Act
• Anti-Fraud & Corruption Strategy & Policy
• Cyber Security Strategy
• Information Governance Strategy
• Internal Audit & Counter Fraud
• Risk Management Strategy & Policy
• Treasury Management Strategy

The Work Programme also included plans for discussion of the Internal Audit Plan 2024/25 and the External Audit Report 2021/22 and 2022/23.

The draft work programme is attached at Appendix 1 for the Committee to note.

CIPFA Code of Practice for the Governance of Internal Audit in Local Government

The final document scheduled for discussion was the [Code of Practice for the Governance of Internal Audit in Local Government](https://moderngov.redbridge.gov.uk/documents/s167780/APPENDIX+3+-+Code+of+Practice+for+the+Governance+of+Internal+Audit+in+Local+Government+for+consultat.pdf). This document set out CIPFA's view on the role of internal audit in local government. It explained that internal audit should report to the audit committee. It also set out how internal audit should be positioned to ensure its independence and its effectiveness.

To be effective and to meet the requirements of professional standards, internal audit’s authority needs to be established.

…

The Code provides the route to satisfying the essential conditions in GIAS (UK public sector), tailored for UK local government.

It is likely that the Governance and Assurance Committee's consideration of this document formed part of a consultation on the Code.