Transcript

Good evening, everyone. Welcome to this evening's ordinary audit committee meeting. We've had a few extraordinary ones, so this is the first ordinary one that we have had for a couple of months. The meeting is being webcast and I will now ask people to introduce themselves and also say if they have any... Paul Alder, Interim Head of Pensions and Treasury. David Dobbs, Head of Audit. Asan Khan, Corporate Head of Financial and Technical. Evelina Subjan, Programme Director. Steve Reddy, Corporate Director, Children's Services. Julie Lorraine, Corporate Director of Resources. Hi, David. David Chowdhury, Councillor for Bethlehem West and Substitute in Councillor Kabir Ahmed. And no DPI. Evening all. Thank you. Councillor Bodhul Chowdhury, Bromley South. Shapri-Aid, Monitoring Officer. Thank you. And then I'll go online. If I could go to Hayley first, please. Thank you. So Hayley Clark, Audit Partner at EY. And then Hassan. Hassan Raheeman, Audit Partner at EY. Just for information, I think on the minutes, it refers to me as an audit manager. So if they could just be amended, that'd be great. Thank you. We'll make sure that's amended. And then Dan. Thank you. Audit Manager for EY. Thank you and welcome. And then Councillor Cranston. Thank you very much, Chair. So I didn't believe I had any declarations, but just as the meeting was about to start, I was notified that the authority believes that I might have prejudicial interest in item 7.1, which is only minutes, and I don't know whether they're going to be discussed anyway, but because it believes that that might be on the basis of my wife having been a cabinet member in the previous administration. So as I say, I was only just notified of that, even though it appears that that information has been circulating in this authority for around, but I won't participate in any discussion on 7.1 tonight. Thank you, Councillor Francis. And as I understand it, you need time to consider that you haven't had appropriate time to make that consideration. Councillor Islam. Yep. Chair, it would be good if the monitoring officer can send out any of this, because when we have our committees and full council, I've sat in as a councillor with former Councillor Bake, a councillor bake and clarity on this, some guidelines, so we can all follow that going forward. Thank you, Councillor Aziz. Islam, I think we should take that offline, because I don't think it's a matter for audit committee members and the monitoring officer to advise on, but we'll take that offline. Thank you, everyone, for attending. We've got some substitutes here tonight, and we've got some new faces who haven't been to audit committee before. So before I go to apologies, I would just like to remind everybody that this is an apolitical meeting, that we have a principle of good intent, so we know that members and officers are here, and we're all working on our comments focused on that. So thank you. Farhana, could you explain apologies for us, please? Yes, Chair. So we've got Councillor Asma Begum that I'm aware of. Great. Thank you very much. Okay. We have done declarations of interest, so we're now going to go to minutes and the action log. So we have a restricted minutes of extraordinary audit committee meeting held on the 13th of March. I'm going to take those one by one, and if anyone has any comments on them, please could you just raise your hand. So the 13th of March. Yes, Councillor. Thank you. So when we were talking about item three point, the procurement and contract management in relation to that tonight. So when we get on to the statutory recommendations, I think that's when we would discuss that element. Take us to the action log. Farhana, I found this really helpful, so thank you so much for putting it together. Sorry, Chair. Can you just agree those unrestricted minutes? Sorry, I should have said it. I think these minutes are excellent, and I'm definitely happy to agree to them. Thank you. Can I get members' agreement to the minutes, please, for those who were there? Thank you so much. Thank you. So as I was saying, this action log is really helpful, so thank you for taking the time to put it together. I appreciate it's work in progress, and I appreciate that we need to get into those actions as well. So what I'm going to ask members to do is if there's any actions in the action log that they would like an update on. In three, which is auditor's items for consideration, and we have one paper for this, which is the Pension Fund Provisional Audit Report. And Hassan Rahman, are you going to present this report? Yeah, I will. Thank you. So we've got our audit, provisional audit plan for our 24-25 audit on the agenda. I'll take you through the overview, which is section one of the report, and I'm happy to take any questions which you may have. Section one just summarises the following sections of the report. So just in terms of on your page seven, page five of the report, provides an overview of our audit strategy, setting out the context for the audit so members may be aware in terms of the backstop dates that have been established by the systems FRC and MHCLG in terms of putting those in place to clear the backlog of audits. So the opinion for the 23-24 audit was issued in time within the backstop date that was set. Phase two outlines the recovery phase and then going on from phase three, looking to ensure that the challenges that the system have been facing are addressed and there's embedded system of timely financial reporting going forward. Overall for 23, looking back on the 23-24 audit, we obtained assurance for most of the closing balances, but not all assurances in respect of prior year comparatives. We did undertake a significant amount of work for this year. We plan to undertake the similarly undertaker procedures to gain assurances over the closing position. One element where we anticipate there'll still be a, well, we will be, because there's been a disclaimed opinion in previous years, we're issuing a disclaimed opinion for the 24-25 audit and we anticipate issuing a limitation of scope opinion in relation to IS-26 disclosure notes, which are relating to membership data issues. So on your page nine, now page seven, provides the overview of that strategy. So the risks that we've identified and the areas of focus and provides a summary of the considerations which we've made in relation to those areas. First of all, we've got the, which is an assumed risk on all the audits, is the presumptive risk of management overrider controls. So under in-line-web auditing standards, we identify this on, as I said, on all audits and there's a risk that financial statements as a whole are not free from material error and we undertake procedures to respond to that risk. The second one there is the valuation of level three investments. So these level three investments are termed as complex investments, so it's investments where there's no observable market data and there's significant judgments which are made by, significant judgments which potentially are made in relation to the year-end value which is disclosed within the financial statements. So we do undertake additional procedures to respond to that risk and to gain assurance in relation to the balances which are reported in your financial statements are true and fair. The third area there relates to, which I've referred to earlier on, the IS26, and this is to do with membership data quality issues. So the funds predecessor to Deloitte reported that there were issues in relation to the quality of data that was provided for the triennial valuation. So that's the last triennial valuation which was the 31st of March 2022. But because we appreciate that the management have undertaken an exercise to correct, to review and to correct the issues which were identified by Deloitte but because of the timing of the last triennial valuation that issue will arise until the next triennial valuation which is being undertaken this year. So if all of the issues which have been previously raised have been addressed then going forward that point may well come out but for the 24-25 audit as there's known issues with the membership data that has been submitted it will as I've said result in a limitation of scope audit for the 24-24-24-25 audit and then the final one final point there in terms of assurances over opening balances as I've said earlier we've obtained assurance over most of the closing balances but not all of them and in line with the with our reporting requirements will be that we anticipate issuing a disclaimer opinion in relation to 24-25 that said we will when we report to the committee similarly to what we did for the 23-24 audit we'll outline the areas where we did get assurance and provide a summary of that for members of the committee on page 10 we highlight the materiality levels which we'll be using to undertake the audit and so overall planning materiality that's set at 1% of net assets performance materiality so is 10.7 million and that's the materiality level which drives predominantly drives our testing strategy and sample selection we've set that at 50% of planning materiality and that is taking account of the position where disclaimed opinions have been issued in prior years and then moving on to page 11 we provide a summary of our audit scope and we also outline that we plan to undertake a substantive audit approach and make reference to section 6 of the report where we outline the timetable which we're planning on following for our audit of the pension fund section 2 of the report provides further details on the procedures that we'll be undertaking in response to the risks and areas of focus which I've just briefly run through on section 3 it provides further details on our materiality and likewise section 4 on the scope of the audit and then moving on to section 7 we confirm our independence there are no issues that we're aware of that will impact our independence in undertaking the audit and then on section and then within the appendices on appendix A sets out our responsibilities in relation to the PSA framework and then on appendix B it sets out the fees and the fees are determined by the PSA under the framework and any scale fee variations are subject to PSA approval happy to take any questions which members may have on the report thank you so much Hassan we didn't receive your report until quite late this week thanks councillor thanks Hassan for that summary would you be able to advise how the material materiality compares to other councils so the materiality of the overall materiality of 1% of net assets is for our audit of pension funds that's the percentage which we apply for all pension funds the testing threshold or the performance materiality in terms of that being set at 50% so we either set it at 75% or or 50% for a number of other local government pension schemes typically that is set at 75% but for those pension funds disclaimed opinions haven't been issued in the previous years so we have gone to the lower level of 50% for our Woody of Tower Hamlet's pension fund reflecting the fact that disclaimed opinions have previously been issued in relation to this pension fund so councillor as a committee we've had a lot of discussion about material thrilled to have that conversation with you as I'm sure you would be as well any other questions for Hassan or Paul or Julie is there anything that you so much we will look forward to seeing you no doubt at the next meeting thank you chair great I will now move us on to section four which is items for consideration and we have 4.1 external auditors annual report and management responses so this report we're going to take is read so I would ask officers and EY to just point out any key messages that they would like the committee to be aware of please so I believe you'll be presenting the report I think the actual report is EY's report to present and the council has presented in this paper its management responses I think all I would say by way of introduction is it is EY's report to present from my perspective I think we're not the only council but it's compounded in this council audit of a period that ended a year ago and in that intervening year progress will have been made and issues will have come to light because auditors operate to a standard that until the point at which the kind events that happen count for that reporting period we get a strange mix of three things happening at Tower Hamlets all correctly presented by the auditors that strange mix relates to the fact that there haven't been previous years accounts on opinions they could rely on so a lot of issues are repeated secondly the events that took place after the year end but before the date of signing the accounts particularly around the BVI and the action plan that's been produced as a result of that feature but also none of the progress that happens during that passage of time is the job of the auditors to consider they'd consider that when they were auditing this year's accounts so the management responses have been designed to try and give you some assurance that there hasn't been a stopping time where issues have been flagged correctly flagged by EY that are long standing and we haven't been acting on them in that intervening period and I would hope that that's the mess of responses we don't disagree with the auditor's findings we've just tried hard to put some context around that for you and some assurances to progress I haven't got anything else to add I don't know whether Hayley it's appropriate for EY to talk through their report and then ask them can talk you through our responses if required or simply answer questions thank you happy for me chair to please thank you Julie for that intro all I was really going to say on the report is our final reporting document that we're required to issue to the council under the national audit office audit code of practice and it really is just a summary of the financial statement audit and the value for money conclusions that we reached and reported to the committee in February within our audit results report so a lot of the information in here should correlate back to that reporting in February so we don't take into account any new information from the point that we have signed and clearly any of the issues that we identified in that report we will reflect on the progress that's been made since that as part of the 24-25 audit the only I'm going to call it new information just because it wasn't set out in detail in the audit result support but it's not new in the sense that it wasn't information that was already in place at the time of signing this we include in appendix a a high level summary of the arrangements that the council has in place against each of the value for money criteria but that really just reflects information that we've gained from the organisation that's consistent with our understanding so I'm happy to pause there clearly if the committee would like any further information on any aspects of the report then have to provide that thank you thank you Hayley and I think maybe for the benefit of councillor childry and councillor isman the financial reporting so this was one that I was really comfortable with and I was also really happy to see the update in there how the progress can be tracked is there a clear work plan for this thank you councillor isman so we have asked for each statutory recommendation for an action plan to be presented on finance Hassan I wondered if you could we had a conversation earlier about external audit recommendations so one of the things that we and I think it might be helpful to update the committee on that please yeah so in terms of consolidating and bringing a complete set of recommendations from our previous auditors Deloitte and our current auditors EY we are doing that internally so we've got a tracker that picks up the final recommendations that Deloitte made for the three years from 2021 through to 2022 23 at the 4th of December audit committee and we've added EY's control observations recommendations to that so we are internally tracking that and I was able to share that with you chair earlier today what we can absolutely do is ensure that moving forwards that those recommendations come forward and it is part of the statute recommendation one in terms of reporting back regularly to the audit committee in terms of external audit recommendation so certainly from the next audit committee onwards we can bring that tracker back in terms of actions that are still outstanding and rest be assured we are actively monitoring it so we've got timelines action owners I'm more than happy to share that with the committee if that's what the committee so wishes thank you I think that gives us a lot of assurance so thank you I think where the committee will probably want to be made aware as if anything is not on time if you can be informed if things are behind schedule I think that would be really helpful yeah it's quite a comprehensive list that we've got so a lot of the actions we have already implemented so all we can do is the outstanding actions so it's just about when it's coming back to this committee and how it has ownership of that yes I'm coming expecting this will be regular now so we will bring it back to every ordinary meeting by exception in terms of anything slipping or a recommendation that we've previously implemented which is internal audit and Julie I think you're going to present this yes so just for clarity the council were required to do two specific things in response to the statutory recommendations they were required to agree hold a meeting in public and agree those recommendations which they did and then agree the council's response and the council's response has been determined as being audit committee require an action plan for each of the three recommendations and then as I said to monitor progress and council Islam that is going to be at every audit meeting the second recommendation was around risk and assurance and internal orders and at first glance it could be assumed that it was just about outstanding audit recommendations or the volume of limited assurance audit recommendations and David has put together a very sound framework for the committee to be able to monitor those outstanding recommendations and progress on them from my perspective and with following discussion with fellow corporate directors actually we recognised that it was great fixing what had gone wrong how do we ensure that it doesn't happen again and in order to ensure it doesn't happen again we need to think about internal audit and its role in our commitments should management make and you can see that this protocol is draft it was a beginning it's out for consultation we've had comments back from David I think as recently as yesterday but it is designed to be very clear to elevate internal audit and the importance of assurance and the importance of responsiveness it sets out the ability for the internal audit team to escalate problems they encounter in delays in responses at an early stage it ensures corporate directors are cited on their not just audit recommendations but their element of their risk based audit plan which forms part of their DLT meetings so this is another step in my view closer to being able to present to you the next meeting an integrated action plan that relates to statutory recommendation to combining the work really excellent work David's already done on a framework for monitoring audits together with the work we're doing wider inside the organisation with management to ensure that the issue doesn't happen again so it's presented to you just by way of assurance of progress and management taking very seriously the importance of internal audit as a strategic management partner and that's what it sets out thank you Julie any questions for proving the internal audit process I think what we were expecting at this meeting was an action plan so our next ordinary meetings thank you so the implementation of a lot of the key elements of this protocol are already happening and David had already taken steps to engage proactively with DLTs it was something internal audit already did and I think what this does is we're starting a new year you're going to see an audit plan today corporate directors have been cited on that audit plan it's risk-based they're very aware of how that cuts across their own directorate so from this moment not wait until July until you approve a plan from from this time those monthly DLT meetings will be cited on progress against their audit plan their recommendations and what should happen in July when this comes back in an action plan you shouldn't see we are going to monitor these you should be able to have assurance that the meetings that have taken place that have been monitoring them and that will form part of the action plan that you rightly ask for this is their responsibility are they then auditing their own work is that already clarified for you guys previously because that was a weakness in the past so it's this is about internal audit so internal audit is independent so if I pick up the first and just to give you some additional assurance on the second one of the things I think we should thank David and the team for and all be proud of is that our standards of internal audit have been subject to an external assessment very recently and the council's approach was awarded the higher standard that it could have been under that external assessment so that independence are we marking our own homework is the our approach to internal audit in keeping with the higher standards the answers yes and we had an external review to demonstrate that in relation really good question why doesn't it look like the others partly and I need to be clear when this recommendation came a lot of focus was on the historical and sorry the outstanding audits from prior periods had accumulated there hadn't been responses and the recommendations hadn't been actioned and that was the initial focus of a framework that David bought to resolve that problem how do we action those I looked at the recommendation and my perspective of it and certainly in conversations also with EY was that actually internally across the council our approach to internal audit our approach to things from the way in which we currently investigate matters like fraud we look at through a lens of success is the prosecution not the lens of internal audit where success is identifying a failure in control and fixing it so I see this recommendation as being wider than how do we close off those old recommendations and in setting that out I think there's a lot more to this in order for us to be able to put together a comprehensive action plan like the others where you will see here's progress by July I would imagine those outstanding audits have been cleared here's how we're going to implement a framework that prevents that happening again and that protocol is part of that but also we'll be looking at a third element which is the resourcing of internal audit and I've certainly had conversations with David talking about whether we need to allocate some specialist forensic audit capacity into David's team the more we expect of internal audit the more we need to consider have they got the resources to be able to deliver so because not all of that is done I don't think we're in a position yet to set that all out in an action plan and I want it to be an action plan that you think yes that covers all of the issues not just the outstanding limited assurance recommendations I hope that makes it clear thank you any other questions and just one observation from myself on the paper was that there was very difference to the audit committee and I wondered whether management management might want to consider the role of the committee in helping to I will absolutely say that on board let's move on to statutory recommendation number three which is to do with Julie I'm going to look to you first but thank you so this is one and you'll gather that our three recommendations are all at three different stages recommendation one quite advanced in both the plan and progress recommendation two not quite there yet in that comprehensive plan recommendations three and we're presenting to you in the form of an action plan this evening I think and I know from discussion that the items on the action plan are there to address the specific issues that led to the statutory recommendation and I just want to address Councillor Francis's comments earlier because very valid Councillor you have asked about assurance on the way in which we procure consultants that wasn't one of the elements that fed into the statutory recommendation it's very much the procurement issues around this were around where the council had been at risk of or had breached any areas of legal issues so there were two specific issues that triggered the procurement recommendations and fed into some of the risk and that was two specific issues and actually it was three one was under the domain of the standards committee and one related to a fraud around the RFQ system and quotes and you can see very clearly actions around that and another related to in inadequate processes around contract management in home care procurement they were the stimuli and I'll let the order to speak for themselves and this action plan plays very closely to align with the specific issues that external audit are asking us to address it doesn't mean there aren't wider improvements for procurement underway there are and it doesn't mean that there aren't other areas that audit may be interested in in procurement like consultants it just means that for this statutory recommendation that's the focus and the only other thing I would add leave and and I never leaner to give you further assurances some of the issues we have to address some of the things we need to do to fix it fix the controls actually won't be done overnight so if I give you an example one of the issues we had was related to a previous member of staff who was able to abuse the system that allows managers to request a purchase order based on a single quote under a threshold of a 25,000 pounds and repeated use of that to the same supplier ultimately does trigger a legal breach because it will trigger how much you've spent with a single supplier breaching the procurement thresholds in order to completely resolve it as you will see the team are looking at I've identified a new system for us to put in place what I don't want you to fear is that until such time as we've put that system in place we haven't done anything at all because some of these actions are quite big because actually we've put some interim immediate controls in place that change the thresholds that increase segregation and change levels of authority on a temporary basis for RFQs so I know that Evelina and Andy can talk to you about the plan and particularly perhaps give you assurance well that's great we're going to get a new system but what have we done today to make progress against some of these and we have engaged very carefully but a lot of help actually from EY and their forensic specialist where we're looking at the approach we're taking to identifying what controls failed what intermediate actions do we need to take have we contained this are we satisfied that it won't happen again so I just wanted to paint that context and I hope it was you do you want to come in now Andy so I suppose just to reiterate what Julie was saying this is not a short-term fix overnight RFQ who is authorizing it a cost center against it so that with the advent of the new power BI systems where we then draw all that information from there into there gives us greater clarity over what who's doing what and we put a control in whereby if and we start to have conversations with those people about well why are you doing this now there may be very good reasons it may be that it is a different piece of work with the same supplier it may be a different department is using the same supplier for a similar piece of work but ultimately there will come a point when we are disaggregating that spend and we need to come up with a more strategic way of procuring those goods and that role is now sitting very squarely within procurement and the category managers to have that ongoing dialogue and on a daily basis with with their directors thank you very much any questions for see why no action would follow from that that's quite interesting isn't it because at the last meeting we saw quite a broad action plan we've now got something perhaps a little wonder whether there's a middle ground Julie that we need to get to and I think that's absolutely right and in some ways although frustrating you should take some assurance time I think I was very open and I said this addresses a broad range of improvements that we need to make to procurement and some of that was identified counseling the BVI and has become part of the transformation plan that was approved I think just last week by the transformation advisory board that has its own governance it has a very clear program for identifying what needs to be approved and monitoring it monitoring it the BVI comments in EY's report and they can speak for themselves did not result in a statutory recommendation this is totally focused on the statutory recommendations so this and the domain of the audit committee so you don't get duplication is EY clearly saying to us there were these examples of failures in controls contract management issues and the council needs to address them and that's what this is designed to do so in some ways the big action plan that came last time and I think I did say to you quite openly this is about the broader improvements the council is making to procurement and does not address the specific concerns that EY have raised and that was correct this one focuses on the specific concerns around the statutory recommendations and what I would say is those statutory recommendations aren't the only things we need to respond to from comments from EY it's because they are statutory recommendations that we need to respond to those in a slightly different way it's not that everything else is ignored it's that the formal mechanism for statutory recommendations is quite different so I hope that answers the question the comments made by BVI about BVI by the external auditors did not result in a statutory recommendation from the external auditors they have their own governance arrangements to progress and their own ways of reporting back to members and the public public thank you Julie um councillor Francis did you want to come in again you know be interested upon it as well that's okay and then I might have a reflection of mine thank you so Hayley or Dan would you like to come in there please thank you thank you um so um maybe if I cover the the BVI element of our reporting first so um Julie's right in that it didn't result in statutory recommendations um however we did identify it as a significant weakness in relation to the value for money criteria now the reason that we didn't think it was appropriate to raise uh the BVI um uh reporting and the resulting ministerial directions at that point in time is because that was relatively new so we need to give the organisation time to respond to those directions and work with the envoys before we then consider what the next steps might be in our reporting and clearly that that's a journey that the organisation are on at the moment in relation to contract management and procurement um how we've ended up with the significant weakness and then the resulting statutory recommendations I guess is probably more of an amalgamation of factors that we've become aware of throughout the course of the audit now um as Julie's pointed out there were a couple of examples that um that we've referred to as non-compliance of laws and regulation matters that management identified and brought to our attention um and that we are working alongside the council on in terms of um uh evaluating how they are resolving those matters and the controls and both of those matters uh did relate to procurement there's also um the extent of procurement related matters that were coming out of internal audits reporting across the period that we were we were reviewing um and you're right there was reporting in the BVI report in relation to procurement so when we we pulled all of that information and knowledge together that's how we ended up at the statutory recommendations that are included in our report I don't know if does that answer your question thank you Hayley so just say the references that you make in your report in the EY report under the value for money section around procurement you're saying that those are the some that those led to the statutory recommendation as well yeah we we have to look at it in in the round so when we took all of that together we felt that it was of a severity that we needed to put in place the statutory recommendations okay so in that sense then so I think that's really helpful information so in that sense do we need to be looking at a slightly broader action plan in response to the statutory recommendation but julia yeah it might be helpful to hear can i just make one point so there is a point at which all three of those statutory recommendations interlink so so the the to avoid repetition but but some of the issues around the failures that we flagged in procurement featuring improvement in controls featuring improvement in the audit environment i think specifically for me where there was an element that there was already a process in place and a governance arrangement to oversee improvements then i don't feel that it has a place on a statutory recommendation plan what would we write implement bvi recommendations how would we do it through the transformation advisory board what else would i say do it through the transformation advisory board as a board member we have member representation across all groups and i think there's a lot of things that we discuss at that board including how we respond to the directions and it would be good for colleagues to speak to some of the board members and we are looking at ways on how that's communicated to relevant groups and wider stakeholders including the public i think um being someone who's an internal lawyer outside of my council role i'm also uh someone who's had experience in procurement i think looking at um the recommendations that they are quite big i hate to regurgitate what um colleagues have said andy and julie but there are a lot of big stuff um i think when when i was looking at it looking at basic things like contract registers uh although it's mentioned here i i just assumed we'd have that but i think some of the work plan that you see and some of the activities that's gone on since march 24 i think has it been even more um and stuff around category management sorry sorry really sorry to interrupt you because this is really helpful and really useful i think where we are with audit committee is we're meant to be i think objective and we're really meant to be there as a critical friend and i appreciate you're wearing two hats here um but i don't think it's for you to provide the committee with assurance i think we should be looking to have your perspective as a transformational advisory board member and also your audit experience as well is invaluable but providing the committee with assurance does that make sense no teacher i think i think my my point was i feel assured as opposed to providing assurance to the board or the committee thank you and i think where we need to get to is for the committee to get the same level of assurance that you are thank you councillor islam i want to come back on a point that judy's made about um if we would what would we do um how would we because then it will say no as in what as this council would do because the ownership of the bbi and the improvement plans sits with tab but is there a i haven't seen the actual plan we have a lot of us haven't and so we don't know what's in there but would be when it comes to controls and risk management or is there nothing in there that talks about because then is that my question really is is there an overlap is there room to build on this or because i i i took your suggestions but i'm just asking does it cause any problems for the organizations on how we do this in both the the meeting the requirements of the statutory recommendations and following that through and the improvement plan do we clash or is the room to be able to put that sorry thank you thanks chair i think um we've produced a continuous improvement plan i think that will be shared at the right forums at the right time i think um there will be uh engagement with the relevant boards because it's not just the audit committee that um we'd have to work with to to respond to the challenges um or the findings sorry so um i don't think there'll be a clash per se i'm talking in particular to what we're talking about here which is procurement covered does it give us room to build on this or there is no overlap taking into account what the improvement plan has please julie thank you perhaps perhaps i can clarify the roles are different the transformation advisory board has a different role to the audit committee so there may be some issues that the transformation advice delivering there will be elements of that when we change any controls that are the domain of the audit committee that's not because the bvi is the domain of the audit committee it's because so what what i would suggest is there is nothing to stop the audit committee through its audit lens in asking officers to bring to them information around the procurement of consultants to satisfy yourselves that the controls are in place appropriately to ensure that that happens properly nothing to stop you doing that at all it's not part of the statutory recommendation and it doesn't mean that committee are overseeing an element of the bvi and i hope that makes it clear what we should be seeking to do is i'm in a 360 view but of duplication otherwise you'd never make any decisions thank you and this is something that we've talked about a little bit with uh in committee before around the bvi report and the recommendations and the action plans and what's audit committee's role in that now my feeling is that there is an action plan in place which is going to tab i think within that there are recommendations around improving governance um and no audit committee does have oversight of governance where i think the audit committee needs to be informed about is where that action plan isn't being actioned and that the audit committee should be informed about in relation to procurement i think we've got a statutory recommendation and an action plan presented to us a broader action plan come to this committee i don't think we're going to get that resolved in this meeting so i'm going to suggest that we have an action for hana perhaps for myself as chair to work with julie and perhaps with ey this meeting councillor you've got your hand up uh just very quickly on the two things that you've said i think um i respectfully think that um managing sort of the issues coming from the bvi is squarely the responsibility of the tab um and in terms of whether they overlap with procurement i think by the next committee uh i think we would have known what the plan looks like so then maybe you can take a view on whether i don't know we addresses some of your concerns here but going back to julie's point i think you can probably request stuff um in the remit of this committee and hopefully take some of your work forward our work councillor yeah i'm sure you'll be back again to some especially with your audit background councillor francis thank you um i agree with what you um with what you're proposing um but i do want to come back to the point because i do think that ey have confirmed that um this statutory recommendation by the concerns that are referenced in the best value inspection and in relation to procurement the one that very clearly stands out um in that report and isn't in this report and i think that that in itself is a bit of an issue the fact that something is highlighted is acknowledged publicly as being a problem and the action as a appropriate way of doing business so i guess like what i would add to what you've already asked is in relation to that paragraph 4.38 which specifically talks about to what the best value inspection report says on that because i think i can't have confidence in the rest of the process unless i've got confidence in in the way that we're seeking to address that particular concern as well so it'd be really helpful to have that sort of and i think the next committee meeting is july so just bearing that in mind to have it elizabeth's thank you councillor that's really helpful i will take that on board i'm really conscious that we've got like the agm coming up as well so i may not i may not be chair of the audit committee come july so i'm keen that in my responsibilities as chair for now that we uh have those just to push that and get that through as much as i can thank you um should we move on thank you i was just going to add because i do think things need to be resolved number one the information that was presented to the last meeting has not disappeared counter it's public information it's it's there for the record it hasn't gone away anywhere it's still there number two i'm more than happy to add a row to that action plan that specifies the issue you've mentioned but the action will be to ask the transformation advisory board to oversee that as part of their uh oversight of the bvi continuous improvement and and that would be the action that i would recommend because that is their role yeah no thank you julie let's let's discuss it i think like what we need to get as a committee is clarity over what's in tab what's the role of overview and scrutiny and where and when does audit come in and bearing in mind what's being reported to audit through our external auditors obviously we are going to be questioning and challenging that information and where the responses to that information is given to a different place we need also have sight of that information so i think it's it's clearly complex um and something that we need a little bit of time to get our forward as much as i can in the next couple of weeks thank you so corporate code of governance update so we have robin beatty to introduce thank you and yeah thank you evanine oh oh i'm so sorry for hana thank gosh you're here yes um so recommendations the audit committee is recommended to note the various reports and approve the action plan and elena for coming along thanks okay so corporate government corporate code of governance update item 4.2 robin welcome to our meeting we're going to take your paper as read if that's okay um but it would be really helpful in your presentation so audit committee hasn't seen this report for a couple of years and we've also got some new members who have weren't on the committee last time so it might just be helpful for you to just explain what the purpose of that report is and what you want from flowing from the the the government directions um the purpose of the code really is to set out that's really helpful thank you any questions from members for robin um are we just invited to comment on it i think comments and questions yes i think would be helpful so i i um i i mean i i've worked in some big organization um portray a glass that's half full rather than half empty but as with the um concerns that we raised about um the i think currently under the mayor's leadership and that the word failing doesn't um feature as far as i know but more along the way in our in our wonderful journey towards the sunny uplands and you know that's just not where this authority is at there is a statutory intervention um been issued by by the over the last three years before that as well may i just may i just get some clarity on this because i don't think this is an opinion piece this report i think it's a statement of what controls are in place robin is that is that correct and if there's like if there's any control weaknesses or gaps how do they get addressed and that's as far as it goes okay thank you so i'm so when a document is published and it's in the name of views around it i just don't think it kind of um it meets the need so i think when when we get to see the annual governance statement which you'll be familiar with so i think this is like that's the next in tower hamlet but again it's not for audit committee to do that apologies councillor you've been very patient um it was just i think the opening of the councillor's speech i just felt um it was along the political lines and just going back to your point around being objective that's why i put my hand up i think what would have been helpful is to hear from the council if there's anything particular within the code rather than just a forward or if the councillor was to reference things within the actual document that would be helpful for committee to understand what's not meeting so our standard i think that would be helpful thank you and is well it's okay for councillors to talk to other councillors in this meeting you don't have to go through me yeah you don't have to go through me at all it's meant to be a open debate so please respectfully please do that councillor islam um i just have a view that because this is coming to this might be a reason why i come back to this community oh i hope you do councillor um i wonder whether we could get a briefing on this i'm kind of conscious as part of our work plan we should include some training and development and i wonder whether this is something specifically that we can get a bit more information on particularly thinking about a head maybe ahead of the annual governance statement so we're clear as to what the guidance is what the council is presenting what the role of audit committee is and where we could and where we could challenge and where we could ask for comments to be included as well uh it's not it's not going this is no this is it always goes to the audit committee for review but i don't i'm not sure if our i don't think we own this commit this document and i'm i'm wary of approving and agreeing things as a committee that don't necessarily would you check the terms of reference or yeah that would be helpful um similarly with the annual governance statement that's not an audit committee um ownership yeah yeah and we feed into that and i know we've we've we're doing some work on um a protocol for that as well and how that comes through to committee at what point sorry councillor did you want to ask that formally as part of the meeting in order for me to save myself from reading the entire report um and the fact that cabinet members are sitting in this committee i'm going to interrupt you no i'm just in the interest of time you know we've got a very tight agenda we know councillor is kindly sitting here as a substitute it's his first audit committee meeting and i'm sure he will i'm sure we want to have him back and i'm sure like after this meeting maybe i could have a conversation with him and take this offline and you can very well do that i can't support this if he insists on putting this to the vote or attempting to put this to the vote in any way i have some advice support this thank you councillor i have some advice on that very kindly from uh shupria who has asked us to stick to the recommendation in the papers which is moving along it's lovely to meet you thank you right gosh we're eight o'clock already i feel like i'm behind schedule and we've got so much to go through um i will move on to 4.3 internal audit annual plan and audit charter and this is like this is this is the stuff of audit committee this is this is what we this is what we're here to do right this is what we we actually own this document i believe and we own the audit plan so i'm really keen to hear contributions on this but before we go to that david can i hand over to you to introduce the report as i mentioned this we're going to take it as read but it'd be really helpful if you could highlight anything key that you'd like to draw our attention to please uh thank you chair thanks jay and i do welcome your suggestions um david i just wanted to understand in terms of scheduling how do the internal audits uh or sorry how are external audits or statutory sort of um audits from people like of stair and cqc and others how are they considered when you're scheduling these internal audits thanks david that's really helpful and um do we sort of track audit fatigue so i know it's risk based in terms of the audit program but are some departments audited like so many times and are they over audited and maybe rightfully so but do we sort of track that kind of stuff about the length of two scientific councillor i'm surprised as someone from internal audit background that you think any area could be over audited i'm very surprised at that any other questions for david or comments um one thing from me i suppose on the or two things so one thing on the audit plan given that we have talked a lot about procurement in this committee and given that we have talked um we know we've got the procurement act coming in and members have had training on that as well i wonder whether we should add a procurement audit to the plan for this year given the work that is going on i i'll look to you david to suggest a sensible scheduling of that and councillor francis i wonder whether your point around the procurement of consultants is something specifically that could be looked at as well absolutely thank you my other point was on the audit charter and at the risk of opening up a can of worms again i am going to highlight which is to do with internal audits involvement in the production of the annual governance statement um where is it gone sorry david i might have to ask you to help find that for me in the so it's paragraph 5.2 conflicts of interest and it says here the head of internal audit has responsibility for collating and compiling the annual governance statement this is not best practice and whilst the work of audit forms part of the assurance framework that this is reported in the ags it should not lead the reporting process so i just wanted to highlight that because that's something that we've discussed as a committee there was something that was raised in either the last committee meeting or a previous one i i cannot remember um but david i wondered whether um anything is happening on that in order to move us towards best practice um something it needs to be looked best practice thank you i'm just conscious that now it's been raised in audit committee and i'm conscious as well that we don't own this document or this process whether we can ask management to consider how they as part of the governance improvement way how that a move towards better practice in compiling the annual governance statement could be conducted could we know that as an action please for hana um to follow up on councillor francis i mean i think it's better to say that i've been um one of the um i'm i'm kind of i'm relatively happy with the uh with the author of this document and um would deliver a better outcome thank you for your observations any other comments for david in which case david thank you so much for your work on this um the audit committee is recommended to agree the internal audit and anti-fraud plan and agree the updated internal audit charter can i get thank you um brilliant we will now move on to internal audit and anti-fraud progress update um which david will be introducing and presenting and we also have um steve and david who have been very patient um through the meeting and i believe that you will be talking about here for the housing and regenerative risk register rather than limited reports even better thank you okay um caller version looks a little bit like this um and in the bar on the far right you'll see the the the figure 41 percent so that's 41 percent of i'm happy to take any questions on the content of this chair thank you david i will can i suggest that we um ask questions of david first and then we will ask steve and julie i think to david i had one on the deferred audit of public health grants where it says that the that was deferred due to a lack of readiness um could you just expand on that a little bit please um yeah this was a sensible in the circumstances and that's on the plan for this year um it will be carried out yeah of course absolutely thank you um i also thank you for your table there were a couple of reports that were issued last year that are still in draft by the looks of it one of them is oh one of them is client side management of schools capital program for children's services steve i wonder as we we have you here whether you could explain to us maybe why it's the apologies for the delay thank you do you have a time scale in place where you think you might be able to get this resolved by progressed it's good to hear thank you and in terms of some of the other reports that were issued last year and is still in draft um so we have corporate compliance culture a delay in finalization it's as simple as that is the pensions admin date correct then or is that a typo it is correct so that's over a year i think this is an area that we need to um improve upon and i think uh julie the protocol that was presented in the first part of the meeting is absolutely vital and critical in helping to see improvement in this area as sponsors and explanations on some of these so maybe one of the actions we could ask for the next meeting is to get um an additional column on here to our cmt um should help address that thank you councillor francis did you thank you um yeah well a couple of questions first of all um so david did helpfully um tell us uh we set established the sharepoint link to the draft report so i just wanted to um to check is that uh should be entitled to have access to it so i just so just a small point but i just wanted to um ask about two others that were deferred in the course of this year so the first of them show you see that from some of the queries that we raise on behalf of constituents however that that's not um the only thing that's happened in relation to the housing options service business continuity as well is that right yeah and then we had asked for some of the hr related audit reports helpfully chair you last night i sent an email around uh and kindly copied me in about the agenda and the approach and that's where i noted expectations around four areas that you wanted uh assurance on in relation to three reports in hr limited assurance when i reached out to hr today i knew steve uh was coming this evening i also knew david was coming this evening both of whom have been actively engaging with david around that when i spoke to hr for some reason that had just skipped any effective communication channel what they have done is provided me with a briefing note for all of you this evening that i'm happy to circulate by email it talks to all three of the um audits where limited assurance was there and it does answer all four bullet points that you've asked what they would like to do is have the opportunity to come back and um answer any questions this this is their brief note that they've prepared so if you're happy chair i will circulate that via farhana so you'll all receive it and they would like the opportunity to do further appearance come back to your next meeting and answer any questions and be in a position to update you further on progress thank you julie i'm comfortable with that and we look forward to seeing them in july steve i will hand over you to you thank you very much for your patience um it would be great for you maybe to kind of you've had the bullet points that we would like to uh uh the the the questions that audit committee are interested in um and i would like to remind members that this is an opportunity to be a critical friend to the directors and to not get too into the detail of individual issues or individual casework items thank you um thank you chair so of a deal with the send improvement plan audit so uh colleagues may be aware there was a an area send inspection back in 2021 so this was the improvement plan that was generated as a result and this piece of audit work that was carried out um in the initial report was provided in july last year and then um a revised final report was completed for november um quite disappointing in terms of some of the findings because the the team were not able to provide sufficient evidence to demonstrate uh what was being reported in some areas of the improvement plan um what has happened since then which is more positive is that as a result of changes in operations and practice and how we monitor delivery of the improvement plan what evidence uh we use for the improvement plan and the governance arrangements in place uh some follow-up audit work uh was kindly carried out uh by david's team um the reports of that is not available but fortunately earlier this week um the update in terms of the um high risk and medium recommendations has been provided and i've got in front of me the table where our audit colleagues have gone through each of those recommendations and with the latest evidence that was available up to march have been able to say that there's one which is partially dealt with which will be completed in may um so this document will come to you and you'll be able to see that was the limit and you can see how those recommendations have been addressed um part of that is i um personally took over chairing the send improvement board and changed the agenda and membership and the documentation that was presented to that board and that is all part of our improvement work we also as a council have external advisors from the dfe and nhs england and we've been meeting with them quarterly and in we have to share information and provide them with assurance that we're actually delivering uh the improvement in send um i won't you know obviously members of this committee and those who sit on scrutiny committee uh overview and scrutiny committee and others will know send is still a big demand and it's you know we're really um working hard to address the level of demand and support our children and families so i would never want to give you the impression that oh that's really great and we're all we're all sorted in terms of our response to send uh you know far from as as we are nationally but in terms of this audit have we got the evidence to show where we're saying something has improved then the latest audit which we got the findings uh in march shows that actually made so that that's the send one i can go on to business continuity if that would be helpful i think yeah if you could present on that and then we'll take questions on on both thank you so um not naturally my area in terms of children's services but as a consequence of discussions with cmt um i agreed to take on the chair of the civil contingencies board and also this has been flagged as a consequence of the audit um that's something that civil contingencies board will be overseeing the improvement work in so um i we we have had regular updates now to civil contingencies board on this i have filled my colleague corporate directors inboxes weekly with an update on where we are on business continuity plan compliance and we have seen a marked improvement in terms of the compliance what happened with the audit was so we're more compliant but what is the quality of the business continuity plans and the work found some significant concerns that was back in october again our our colleagues in audit kindly did a more recent sam i would say it's positive to report that that latest more recent sampling has shown that there is improvement um there is a lot of work to do um but there is definitely improvements and again on that will come to yourselves from that more more recent auditing i would also say having taken on chair the civil contingencies board and with um we're really driving compliance uh with business continuity plans but also linked to that training there's a lot of training going on at the moment and a lot more engagement with a wider group of staff around this agenda and we've had some case studies from other councils recently and the take-up of that trains for the minutes i'd say we've had some quite a lot of incidents recently both in and out of hours uh fires and other incidents and just um as someone there just over a year i'd say i've been really impressed with the response of both emergency planning of offices of elected members of our partner agencies responding to out of hours incidents particularly thanks thank you so much um any questions for steve please so i have a question for you which is on the business continuity report so it seems to me that business continuity doesn't just sit with one person it sits with more with everybody to a certain extent are there any areas of the council that um are a little bit slower to action their business continuity plans just you in addressing that um i would say uh when uh we started uh three or four months ago and we were circulating two or three plans where we're waiting for a formal sign-off um and again we had coincidentally we had the civil contingencies board this morning and again the emergency that's the council whereas before um they weren't so the um the raised profile of business continuity planning and the training and supporting people to respond to incidents and i guess also the work following grenfell as well as has raised the profile significantly so i at this stage i wouldn't um i wouldn't say there's one part of the council i'm concerned about in terms of compliance around business constitution planning and the quality of the the plans um at the moment anyway thank you thank you and i think it's helpful to talk about those sort of um real incidents because that's the real test of the effectiveness of the business continuity plan um as part of that process when incidents do occur do does who would who would take responsibility for reviewing the actions that occurred and then taking the lessons learned from that and reflecting those back into the business continuity plans received an update on listing all the incidents that happened since the last meeting in january and then we went into detail on a couple of them and how the response played out and uh some of the learning um and for instance one thing we said that the response is really good but when it goes over a long period of time over 24 hours we need to recruit more staff volunteers to support rest centers and things like that um i mean what again what i've found here is that you reach out to to officers and and again elected members and people just really willing to help but it's important that we have the send improvement plan because obviously this was a plan that was put in place before you arrived at the council we've talked in this committee a little bit about handover and how the handover of responsibilities and audit reports has resulted in some audit actions not actually being implemented on time um with the improvement plan given on in order to get to this improvement place um what have you learned through this audit process that you think would be useful to be reflected to other directorates where there are issues around handover and taking on responsibility for um work previously done does that make sense thank you um i think some of the concerns uh are being picked up now in the new process so for instance you know one of the concrete and ascend one um and it is a bit linked to your conversation around deferral um it's that just because the service is really really busy being perfectly honest in terms of our service responding to the audit and providing evidence to try and challenge some of the findings where we haven't well thank you for your honesty there much appreciated um one final question from me if i may just as you talked about staffing so in terms of the send team probably we're all aware as members that there has been sort of some turnover and stuff there what is the sort of current status and situation and how much more it is that we keep an eye on case loads so as part of the send improvement board and i've now established the send inspection preparation group that's one of the things that data back is that we've got comparatively positive caseloads for our staff we have recruited more staff into our sen team in the council and to be more responsive um so i think we're still using some agency capacity in the sen team which i'd like to reduce as much as possible um but hopefully not too many thank you so for this action so for this item the audit committee is recommended to consider and note the internal audit program thank you very much uh we will then move on to 4.5 which is the risk management report what we've tried to do this time around just say this is the risk register we've tried to reflect um some context in terms of david's directorate the recent upheaval the creation progress there and it does reflect well on on that directorate um the underlying work has been considerable um there were a number of risks with respect to their own areas of expertise and with their teams um i think where we've ended up um with the support actually of david and his team is is a much better place um when i look at housing regeneration the thing the risks that really kind of um keep me awake at night and keep us all awake at night are you know a combination of kind of health and safety regulatory particularly when i think about the time we've seen that with some of the the fires over the last uh week or so um but also economic actually and it's a very dynamic picture is what i'd say so we're not doing this as a one-off exercise once a year we need we are um reviewing this risk register and the mitigations regularly so when i think about economic risks that we have they have considerably increased even in the last couple of months um if i speak to developers so the risk around a failure to build out development with all the kind of income implications that has for this authority i think it has massively increased because of some of the global factors around tariffs investor sentiment um people have seen a large amount of their investments uh reduced in values of contractor insolvency so i think when we look even just at this next time around we will probably be increasing some of the risks around economic um factors but i think um this set of risks that we've got will allow us to do that in a really strategic way and then feed feed down into some of the more detailed um areas some of them as well i think we will see a positive movement so for instance with our regulatory improvement journey and the recent inspection from the regulator of social housing we've done a lot of work to really improve our governance um around housing management in particular with things like the new housing management subcommittee and quite a lot of internal governance but plus also the resident voice feeding into that um through things like a resident voice panel so all of that i think will mean that actually over time governance and oversight is going to improve and we will be able to see some some positive movement in respect of councillor francis thank you thank you um so i guess not questions um more more comments so um this authority transferred a lot of stock to organization all about it coming in house i think there are other factors that underpin it but an external check and balance um around it and scrutiny i think is really important and the actions that have been taken or the actions that are listed here are the actions that have been taken i think and the management committee just deals with it the other area that i wanted to comment on though but i i i'm sorry i'm putting that i'm saying that that's negative i'm putting in the context of that is taken i just i just don't think that um that they're quite enough at this point um the other one though is around um housing option service which is an issue that i sort of alluded to earlier um being sent emails and given phone calls and things nevertheless i think that the service is is really really struggling the plan previously was so i think that those risks are really are really there and and i don't know how you would quantify that but um but i think by a level of the risk register can i sorry uh so those points are to david um but i have a point about cohesion as well which i want to kind of come to him respond yeah to those would you like to respond to those update to specifically uh reflect what i think you've described correctly as a london white housing crisis and a real kind of increase in pressure which every that's come on to the risk register last year that i thought it was really valuable that it was included there like um um i think colleagues will have seen uh terrible moments in tower hamlet's history of the community being very fractured and for other people from outside seeking to exploit that for their their own purposes and i think that um we are sort of um globally can i say kind of beginning to kind of to to see that there's a there's a move afoot that could lead to something more on this so i was so some something you know some more some more um yeah a higher level of risk to within our own community as well as others um in other parts of the country that experienced riots last summer and i think that um i guess like i would be interested to know whether that very specific question on the housing risk register which was to do with the dis personally i really like the heat map i feel i i'm in favor of heat maps oh you're not seeing it in its full glory then um but the the highest sort of risk if you like is house building is severely delayed across the borough due to a lack of available electricity supply which is very specific around the electrical electricity supply and what am i missing there is there something that i need to be concerned about can they impact our ability to deliver um housing and it is partly the heat map reflects the reality of whether the risk is going to be realized or not and if there's anything i can do to help in my other role as a local councillor and resident of the island i will be happy to do that um any other questions for david joyce or david jobs um david thank you so much for your report and please pass on your thanks to victoria um who does a lot of the work here um i think it's really been helpful to see the development of the risk register at this forum um and it's certainly improved uh quarter on quarter i do have an issue with like a 200 like a hundred page report i've got to be honest with you i find that quite different and think about how we could improve the presentation um and david thank you so much for attending and hopefully we will see you at another audit committee but again not too many thank you um the audit committee is recommended to do something and i just need to find them happy thank you amazing thank you so much so now we are moving on to the audit committee work plan and when i met with matthew earlier and the um agm is the start of the new year and that's usually when work thank you thank you thank you um so before we move on to the second section i'd just like to discuss where i have been chairing this committee um who knows what will happen in may but i just want to thank you all for your participation and um being well behaved throughout most of the committee thank you we're not done just yet but thank you so we are noting the work plan so i think we're noted that i don't think there's any other business that i can sue exclusion of press and public so i need to read this out in view of the contents of the remaining items on the agenda the committee is recommended to adopt the following motion that under the provisions of section 100a of the local government act 1972 as amended by the local government access to information act 1985 the press and public be excluded from the remainder of the meeting for the consideration of the section 2 business on the grounds that it contains information defined as exempt in part one of schedule 12a to the local government act 1972 and do i have a do i have a seconder for that right will you turn the webcast off now thank you so chair as i um said at the start i'm i'm not going to participate in this part but can i ask that um the that the even if it's not work