Agenda item

The Committee received a report which sought to inform Members of the overall adequacy and effectiveness of the system of internal control and risk management operating throughout 2020/21 and present a summary of the audit work undertaken to formulate the opinion, including reliance placed on work by other bodies. The report fulfilled the relevant statutory requirements of the 2017 UK Public Sector Internal Audit Standards; the 2017 Local Government Transparency Code; and the Committee’s own Terms of Reference. The report was introduced by Minesh Jani, Head of Audit and Risk Management, as set out in the agenda pack at pages 65-101. The following arose as part of the discussion of the report:

1. The Committee noted that an adequate assurance rating was given overall, which was the second highest level of assurance. 13 audits received limited assurance and there were no instances of audits being assigned a nil assurance rating.
2. The Committee sought clarification as to whether there was any link between the key issues highlighted with the audits carried out within the Council and those carried out in relation to schools. Officers advised that, although there may be similar issues involved, these should be treated as separate and that the report at Agenda Item 12 on the Annual Schools Audit would set out the key issues in relation to schools in more detail.
3. The Committee sought clarification on why the IT change management follow-up audit on page 85 did not receive an assurance rating. In response, officers advised that this part of the report summarised the audits carried out by Mazars and that some of these audits were not assurance related works. Not all of the audits undertaken required an assurance rating, such as if the audit related to the implementation of  a new system or if management requested an audit as they knew there was a specific problem. The Committee were advised that the IT change management follow up audit was not assigned a separate audit score to the initial audit score as it was reviewing the extent to which the recommendations from the earlier audit had been implemented. The other two audits in this section of the report without assurance scores were, the Early Years audit and a CCTV audit. In both of these instances, the audits were requested by management following a series of issues raised by complainants and were not assurance related pieces of work.
4. The Committee sought clarification on the statement in the report at paragraph 3.11 that ‘the action in relation to school audits in the Annual Governance Statement had been closed’. In response, officers advised that because so many schools received low levels of assurances last year, that this was significant enough to warrant inclusion in the AGS as an area of concern. Because there had been an improvement in this area, it was no longer felt necessary to include it in the AGS. Officers assured the Committee that school audits work would continue throughout the year and that a robust process of monitoring would be maintained. In response to a follow-up question, officers confirmed that if performance in this area were to drop again, it would be added to a future annual governance statement.
5. In response to a question, officers confirmed that inclusion within the audit plan did not mean that something untoward had taken place, just that the risks were not being managed to a level that provided surety that adequate checks and balances were in place, or that the Council been exposed to a risk that had raised a control issue.
6. The Committee sought assurances around what could be done to improve performance, where schools were not meeting the standards required to receive a satisfactory assurance rating. In response, officers advised that they were working with schools to improve audit scores and that at least twice a year training and advice sessions were organised and schools who were due to undergo an audit were invited to come along and take part. Officers confirmed that attendance at these sessions was good. In relation to a follow-up question, officers advised that from an audit and financial control point of view, school governing bodies were also offered training by the Head of Audit and Risk Management’s team, which took place biannually and was generally well attended.
7. In response to a question, the Committee was advised that arrangements for letting contracts related to letting of contracts for goods and services, rather than letting of commercial properties. The Committee was advised that the audit raised one priority 1 and five priority 2 recommendations. Therecommendations sought to address a lack of a robust central record relating tocontracts; better awareness and training for management; more robust vettingof suppliers; better use of technology and more oversight corporately ofcompliance with contract procedures rules and procedures.
8. In relation to concerns around limited assurance scores in procurement areas, and the fact that the direction of travel for the audit of contract waivers had not improved; the Committee sought assurance around how often these were audited. Officers acknowledged that procurement was a high risk area and that there was usually 30-40 days in the audit plan allocated for different areas of the procurement cycle. A review was planned for later in the year around procurement as a whole, to investigate some of the reasons behind the limited assurance scores and what could be done to improve these.
9. In response to a question, officers advised that management had agreed to all priority 1 recommendations and the timescales for implementing these at the point in which the recommendations were agreed, so the Head of Audit was not concerned about the resource implications of this as management should highlight any resource concerns before agreeing the recommendations.
10. The Head of Audit acknowledged the need to improve the process of following up on audit recommendations and advised that he would be exploring ways to improve capturing quality assurance for Priority1 recommendations and their progress in quarterly assurance reports, as well as trying to improve the organisational understanding of Priority 1 recommendations more generally. 
11. In response to a question around the fact that the report outlined that Haringey had fewer audit days than many other London local authorities, the Head of Audit advised that Haringey was in the lower quartile two to three years ago but that some changes had been made to resourcing within the team and the Head of Audit confirmed that he was happy with the level of resource that was currently available in the audit plan. The Head of Audit advised that he would continue to monitor the situation going forwards.
12. The Committee raised concerns around the fact that there were targets in place for tenancy fraud and the idea of incentivising prosecutions for tenancy fraud. In response, officers highlighted that the purpose of the target was to provide structure and some form of performance management for the fraud team. Officers acknowledged the concerns raised by Members around this but also set out that tenancy fraud was one of the largest areas of fraud, as was regularly demonstrated from national intelligence gathering exercises. It was an area of focus for local authorities because of the amount of intelligence available about how widespread an issue this was.
13. The Committee suggested that there was an issue of proportionality, with illegal sub-letting at one end of the scale and people on the housing waiting list failing to notify the Council about a change of circumstances, perhaps as a result of a language barrier, at the other.  In response, officers advised that this was not about pursuing people on the waiting list, but rather those who had obtained housing dishonestly through misleading the authority that they were entitled to housing when they were not, or through using a property in a manner that was not what it was provided for.
14. In relation to gas meter safety visits, officers advised that if there was reason to suspect illegal subletting, then a fraud officer would accompany others during a visit to ensure that the person residing at the property was who it should be.
15. In relation to a question around No Recourse to Public Funds, officers acknowledged that Covid was likely to be a significant factor to why there were higher numbers of referrals for this year over the previous year. The Committee suggested that Brexit would also have had a significant impact.  

RESOLVED

That the Committee noted the contents of the Head of Audit & Risk annual audit report and assurance statement for 2020/21.