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Audit and Risk Committee - Tuesday, 20th May, 2025 7.00 pm

May 20, 2025 View on council website Watch video of meeting
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Summary

The Audit and Risk Committee met to discuss the council's financial performance, audit plans, recycling strategies, use of investigatory powers, governance, and cybersecurity. The committee approved the draft 2024/25 Annual Governance Statement (AGS) and authorised the Corporate Director of Resources to make final amendments before publication.

Financial Performance and Audit Plans

Matt, the Deputy Acting Corporate Director, reported a positive financial outturn with a £3.5 million positive variance, mainly from corporate items like favourable bad debt provision movements, treasury, and capital items. He noted that forecasting inaccuracies occurred because corporate items aren't typically forecasted monthly.

Badr Abbas, along with Elizabeth and Anna from KPMG, presented the external audit plans for the council and pension fund. The committee noted that KPMG plans to issue the 2024/25 audit opinions by December 2025, well ahead of the government's deadline. Key discussion points included:

  • Materiality: Materiality was set at £27 million, with a misstatement threshold of £1.35 million.
  • Significant Risks: The significant risks identified were the valuation of land and buildings and the valuation of post-retirement benefit obligations.
  • Pension Scheme: Elizabeth presented the pension fund audit plan, noting an increased materiality reflecting the rise in fund assets. The plan included risks around the existence, accuracy, and valuation of investments.

Councillor Janet Burgess MBE, Carers Champion, asked about the pension fund potentially moving into surplus, and was assured that the fund is ring-fenced and cannot be freely transferred to general fund balances.

Recycling Rates and Waste Arisings

Andrew Beverley, Assistant Director of Green and More Active, and Matthew Homer, Head of Waste Strategy, presented a report on the financial risks and opportunities associated with recycling. The report highlighted Islington's current recycling rate of around 30% and the challenges in increasing it due to the borough's density and lack of green waste. Key discussion points included:

  • Recycling Targets: The council has a target of achieving a 36% recycling rate by 2026 and 40% by 2030.
  • Financial Incentives: Increasing recycling rates can lead to significant cost savings, with a 1% increase potentially saving £82,000 per year.
  • Food Waste Collection: Councillor Pamela expressed the view that the council could maximise the potential benefits of improving food waste collection. Matthew Homer admitted that more could be done to improve participation rates in food waste recycling.
  • Estate Recycling Investment: The council has invested £2 million in improving recycling facilities on estates, with initial data showing a 20% increase in recycling rates on one estate with bin weighing equipment.

Councillor Paul Convery, Chair of the Audit and Risk Committee and the Pensions Committee, emphasised the need for a provable return on investment for recycling initiatives.

Regulation of Investigatory Powers Act (RIPA)

Farida Hussain, Deputy Director of Legal Services, presented the annual report on the council's use of covert investigatory powers under the Regulation of Investigatory Powers Act (RIPA) 2000. The report noted that the council had not authorised any directed surveillance during the financial year.

Councillor Caroline Russell, Business Manager, Independent and Green Group, questioned whether the council was missing opportunities to investigate housing benefit fraud, tenancy fraud, and council tax fraud by not using these powers more extensively. Councillor Russell expressed discomfort with covert surveillance and asked how Islington's approach compares to other boroughs. Farida Hussain agreed to benchmark Islington's use of RIPA powers against other boroughs.

Annual Governance Statement

Matt, the Deputy Acting Corporate Director, presented the draft 2024/25 Annual Governance Statement (AGS). New issues highlighted in the AGS included:

  • VAT Partial Exemption Limit: The council almost exceeded the 5% VAT partial exemption limit, requiring increased awareness and management of VAT implications in decision-making.
  • Risk Management: Following a peer review, the council is strengthening its risk management approach, including defining risk appetite and streamlining the principal risk register.
  • Expiring PFI Contracts: The council has five Private Finance Initiative (PFI) contracts expiring in the next ten years, requiring careful planning and resource allocation for the handover process.
  • New Financial System Implementation: The council is implementing a new financial system with TechnologyOne, requiring careful project management to mitigate risks.

Councillor Convery emphasised the importance of ensuring the new financial system is properly implemented and working from day one.

Cyber Security Annual Report

Melanie presented the cybersecurity annual report, but the details were not discussed in the public session due to the sensitive nature of the information.

Other Matters

  • The committee agreed to add remarks of thanks to Nazarene Khan for her service at her last meeting on 24 March.
  • New members Nurla, Sataram, Flora, and Pardeep were welcomed to the committee. Pardeep, a qualified chartered accountant, was introduced as an independent member.
  • Councillor Convery reminded members of Article 8 of the Constitution, noting the audit committee's sweeper function for non-executive matters not delegated elsewhere.
  • The committee reviewed the Audit Committee Response Tracker - May 2025.

Attendees

Profile image for Councillor Paul Convery
Councillor Paul Convery  Chair of the Audit and Risk Committee and the Pensions Committee •  Labour Party •  Caledonian
Profile image for CouncillorDr Sara Hyde
Councillor Dr Sara Hyde  Executive Member for Health and Social Care •  Labour Party •  Caledonian
Profile image for Councillor Janet Burgess MBE
Councillor Janet Burgess MBE  Carers Champion •  Labour Party •  Junction
Profile image for CouncillorCaroline Russell
Councillor Caroline Russell  Business Manager, Independent and Green Group •  Green Party •  Highbury
Profile image for Councillor Nick Wayne
Councillor Nick Wayne  Chair of Corporate Resources and Economy Scrutiny Committee •  Labour Party •  Canonbury
Alan Begg
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