Agenda and draft minutes

Please note this meeting may be filmed or recorded by the Council for live or subsequent broadcast via the Council’s internet site or by anyone attending the meeting using any communication method.  Members of the public participating in the meeting (e.g. making deputations, asking questions, making oral protests) should be aware that they are likely to be filmed, recorded or reported on.  By entering the ‘meeting room’, you are consenting to being filmed and to the possible use of those images and sound recordings.

The Chair of the meeting has the discretion to terminate or suspend filming or recording, if in his or her opinion continuation of the filming, recording or reporting would disrupt or prejudice the proceedings, infringe the rights of any individual, or may lead to the breach of a legal obligation by the Council.

The Chair referred to the notice of filming at meetings and this information was noted.

To receive any apologies for absence

Apologies had been received from Independent Member, Reene Deba and Councillor Mary Mason.

The Chair will consider the admission of any late items of Urgent Business. (Late items will be considered under the agenda item where they appear. New items will be dealt with under item 7 below).

There was no urgent business. 

A member with a disclosable pecuniary interest or a prejudicial interest in a matter who attends a meeting of the authority at which the matter is considered:

(i) must disclose the interest at the start of the meeting or when the interest becomes apparent, and

(ii) may not participate in any discussion or vote on the matter and must withdraw from the meeting room.

A member who discloses at a meeting a disclosable pecuniary interest which is not registered in the Register of Members’ Interests or the subject of a pending notification must notify the Monitoring Officer of the interest within 28 days of the disclosure.

Disclosable pecuniary interests, personal interests and prejudicial interests are defined at Paragraphs 5-7 and Appendix A of the Members’ Code of Conduct

There were none.

To consider any requests received in accordance with Part 4, section B, Paragraph 29 of the Council’s Constitution.

There were none.

To confirm and sign the minutes of the Audit Committee meeting held 11 March 2025 as a correct record.

To review the action tracker.

RESOLVED: That the minutes of the meeting held on 11 March 2025 be signed as a correct record.

In relation to the Action Tracker, details regarding the commercial Procurement system implementation was in progress. The service was pulling the information together, but had not sent it to the Committee yet. A reminder would be sent to Procurement.

There were some actions on the tracker which had been duplicated and would be removed. The Head of Audit would meet with the Chair to check for any completed actions and take them off accordingly. There were some long outstanding actions from previous meetings. These actions would be updated with the appropriate people sought for updates.

The Committee had assurances from the Procurement service that the Committee would receive a report. Attempts would be made to circulate the report before the next Audit Committee.

In relation to the cyber matter, on the audit plan for this year, there was a specific review of the Audit Needs Assessment. In terms of process, the new Audit Needs Assessment should inform the IT plan from next year onwards. This would highlight all of the key risk areas and where audit input was most needed. For the next meeting, the Audit Needs Assessment would be submitted so the Committee could see the overarching framework for where the auditors believed the risk areas to be and where that particular audit then sat in amongst all the audit areas in IT. This would provide more assurance that the Council was capturing all the key areas of risk. The background to that particular audit was that it had been initially cancelled.

In relation to Procurement, an update had been provided to the Committee containing detail around what was happening with the procurement cycle and the new system implementation which had not gone to plan. The reference to an activity being completed within a week did actually happen. There was an appraisal of the new Procurement system, but other matters had superseded it. That appraisal had not been shared with the Audit Committee. It was more for the officers to consider what they would intend to do with the new Procurement system. Another update could be provided to the Committee.

In relation to the actions relating to property, these fell under Ms Taryn Eves, Corporate Director of Finance Resources. A fuller update would be provided on these actions at the next Committee. The action was referring to the assessment that was carried out last year. This action had been completed but an update on Procurement with a full written report would be submitted at the next Committee.

This report updates the Committee on the Council’s plan for the audit of the Statement of Accounts for 2024/25, which includes the Collection Fund, Housing Revenue Account and Haringey Pensions Fund.

Mr Kaycee Ikegwu, Head of Finance (Housing & Chief Accountant), Mr Josh Parkinson and Mr Tim Cutler, KPMG, introduced the report.

The Committee heard:

·         In relation to materiality, the plan this time last year had used a similar percentage outlined in the report. A forecast expenditure was used at that point. KPMG used 2% last year and then when the actual expenditure came in at the end of the year, it was noted as being slightly higher than anticipated. The materiality had not been revised. It was kept at what it was initially, which then meant that the percentage came down. The other reason for the increase was that it was linked to expenditure which increased year on year, partly driving the change.

·         The principle of materiality was that the figure was a percentage of the overall expenditure in the account. It would change year on year pegging to that percentage. Although it looked unusual, it was based on forecast expenditure which was why it was a slightly different percentage of prior year final expenditure. However, the principle of how the materiality had been designed was the same. KPMG had aimed for 2% of the actual expenditure.

·         In relation to materiality, KPMG tended to take a very generic approach to the sector on the percentage of gross expenditure. Materiality was meant to look at the profile of the financial statements and the importance placed on the financial statements by external stakeholders. KPMG viewed the financial statements to have lower priority to the budgetary reporting of an authority. Unless there was listed debt highly leveraged loan covenants, auditing standards left KPMG with a range between 0.5% and 3%. At 2%, KPMG recognised some risk in the sector, but 0.5% to 1% was where one would expect FTSE 100 companies to be, where shareholders relied on the accuracy of the financial statements to a precise degree. There was nothing to be read into the figure other than the fact that the expenditure was growing.

·         KPMG would need to set a detailed plan to rebuild assurance and it was important to complete the risk assessment. It was not KPMG’s intention to go back and audit the three disclaimed periods from 2021 through to 2023 due to time constraints and resource capacity. A methodology had been agreed with the NAO and the FRC to attempt to restore assurance based on a series of more efficient procedures, largely to take a risk assessment and then to design specific procedures based on it. KPMG would have further conversations with officers on this and ask for relevant information from those disclaimer periods to allow KPMG to form an assessment of the risk of material misstatement from them. Upon completion, there may be a question around document retention or corporate knowledge, but until that level of inquiry had been completed, it was not possible to guarantee a rebuild of assurance. This was meant to be done over a series of years and it was not expected that a particularly  ...  view the full minutes text for item 7.

This report updates the Committee on the Council’s Draft Statement of Accounts 2024/25.

Mr Kaycee Ikegwu Head of Finance (Housing & Chief Accountant) introduced the report.

The Committee heard:

·         In relation to the exceptional financial support, in the year 2024/25, the Council had approached Government for about £28 million, but ended up needing only £10 million. By the end of 2025/26, the Council would find out exactly how much of the £37 million it would require.

·         The £10 million from the previous year was what was needed to utilise the £28 million that had been agreed in principle from Government for 2024/25. The £37 million related to 2025/26 and that was what the Council estimated its pressures to be. This would include the pressures that were coming through for 2024/25. It was not necessarily £10 million plus £37 million, because when the Council set the balance budget in March 2025, it had anticipated some of the pressures that were coming through from 2024/25. The Council was keeping a close eye on it with monthly monitoring. The first quarter report would be presented to Cabinet and then to the Overview and Scrutiny Committee in September 2025. This would provide a better indication.

·         In relation to housing benefit overspend, although this was quite unusual, it tended to be money received in grant that then got redistributed as part of housing benefit. The Council had some historic overpayments that it was trying to recover. The Council had overpaid some benefit claimants and these remained outstanding. The Council was looking to take a realistic and prudent assumption about how much of that was achievable. There were also issues around supported exempt accommodation. The amount of housing benefit that people were entitled to if they were in supported accommodation was different if they lived in normal private rented accommodation, for example. There had been some errors in some of those calculations. Overspending was largely driven by an increase in bad debt provision relating to housing benefit. The management reporting on the outturn position was set out in the report that had been submitted to the Overview and Scrutiny Committee.

·         In relation to the increase of approximately £300 million on the pensions fund, the audit report was based on what had been observed. It discussed the 2022 or 2023 position because those reports would have been written later. In examining the 2023 position, there was a net asset position. It was a net asset position of £87 million. These were done every year and assisted by actuaries. The current assessment found a liability of £300 million. Prior years had movements of about £100 million. Although £300 million seemed large, the reference really being made was about future liabilities. It was not referring to an actual spend in a year. In actual fact, assets outweighed liabilities, but under accounting rules, the Council could not benefit from it. There was something which took effect called the ‘asset ceiling’. The way local government pension schemes worked was it was only possible to recognise a surplus if the Council was able to extract it  ...  view the full minutes text for item 8.

To inform the Audit Committee of the statutory requirements to produce an Annual Governance Statement for 2024/25 (AGS) and to provide a draft statement relating to the 2024/25 financial year for review and approval.

Mr Minesh Jani, Head of Audit and Risk Management, introduced the report.

The Committee heard:

·         The way the governance framework was set out was prescribed in the CIPFA Solace Code. This set out what good governance ought to look like in local authorities. The table in the report showed all the key principles of what the code required the Council to demonstrate. The Council had benchmarked itself against those principles. Where there was compliance to 100%, there was a link attached to evidence it. Whether there were issues, however significant, the Council had identified what they looked like. From that the report then crystallised the remaining significant matters and reported this in the paper. For those areas where the governance was in place, that would not be much detail, just a link to a document that set out where the Council was meeting those standards.

·         The section on ‘behaving with integrity’ was one that had been assessed as fully compliant.

·         In relation to handling complaints, when the Council did the appraisals, there were different levels of gaps in compliance with the CIPFA Solace Code. The six areas that had been identified were the most significant matters. There were other areas where the Council not as good as it could be. These were not regarded as the most significant and for these, there were other processes that applied. In general terms, there was reference to the fact that the Council was not very good at managing information and information governance. However, that was through the prism of responding to members inquiry and freedom of information requests. It was possible to attach complaints as part of that that appraisal. Part of the Council’s responsibility was to engage and respond to people who wanted information from the Council in a in a timely way and the Council could improve on this.

·         In response to a question around compliance with the statutory housing compliance standards, it was noted the Council had a significant governance issue. How the Council managed its housing portfolio was not where it should be at. The appropriate director for the service  had updated the Committee on where they had managed to improve some elements of the governance around the housing portfolio. This did not mean that further improvements could not be made.

·         There was a key control around how the Council let property. There was a process for this - choice based lettings - where applicants made an application for housing and they would be assessed in terms of priority. When their turn comes up (as they would be identified as the highest priority person), they would be allocated a house or a home of some type. The factors that went into selecting who was applicable may not extend to their antisocial behaviour, because this may not be known at the time the property was allocated. A person was allocated a property based on their priority. 

·         In response to a specific query, members were advised once an individual had been  ...  view the full minutes text for item 9.

To inform Members of the overall adequacy and effectiveness of the system of internal control and risk management operating throughout 2024/25 and present a summary of the audit work undertaken to formulate the opinion, including reliance placed on work by other bodies.

This report also fulfils the relevant statutory requirements of the 2017 UK Public Sector Internal audit Standards (PSIAS); the 2017 Local Government Transparency Code; and the Audit Committee’s terms of reference.

Mr Minesh Jani, Head of Audit and Risk Management, introduced the report.

The Committee heard:

·         Implementation of recommendations was a key part of the work of Internal Audit. The final output had recommendations for improving the governance, the internal control and the risk management. When examinations had been made into the percentages of recommendations not implemented, the focus had gone into priority one recommendations, because they were the most important. The recommendations not implemented tended to lie in areas where it was clear that the Council was trying to make improvements, but would take time. There were other recommendations not yet implemented and to aid that process, the Council was planning to introduce a new software system capturing every single recommendation and required management to update the status of those on a regular basis. One of the things that the Council was doing was providing the Committee with assurances only when Audit carried out a follow-up. By increasing the oversight, there should be an improvement in the implementation status. This was not to say that all the key priority one recommendations would be implemented sooner, because the Council knew what they were, but there would be an improvement in priority two and priority three recommendations.

·         The Housing service had shown positive progress. From an audit perspective, there was focus on making sure that the internal controls were robust. It was possible to have a scenario where a service had poor internal controls, but was still delivering good service. However, this would not be sustainable over the long term. The need for a good way of doing things with the right checks and balances was key. There had been reports where the service had demonstrated that it had carried out an external review and those reviews had identified improvements. It was important to make sure the service implemented the right level of internal control so that the improvements were sustained and that they were embedded in the in the service.

·         In relation to recommendations that had not been implemented, what worked generally well was when the Audit Committee had sight of the key recommendations causing the limited or no assurance. The Audit Committee could then hold the officers to account on either the timeline or the lack of action. If it was not clear at each meeting what the key outstanding issues were, it would not be clear how effective the Committee would be in helping officers get to implementing improvements. It would be useful for the Committee to receive, at least, the priority one findings tabled at each meeting to see what the due dates were, what the progresses was and what the challenges were.

·         The performance from an internal audit perspective on the level of assurances assigned to schools had deteriorated. Last year, there was a marked improvement in the assurances with very few schools getting a low level of assurance. Unfortunately, in 2024/25 of the 12 schools audited, seven were assigned limited assurance. Three or four key actions  ...  view the full minutes text for item 10.

The Audit Committee is responsible for providing assurance about the adequacy of the Council’s Risk Management Framework and Policy and monitoring the effectiveness of systems for the management of risk across the Council and compliance with them as part of its Terms of Reference.

Under its terms of reference, the Committee is also required to note the Council’s Corporate Risk Register and be satisfied appropriate mitigating actions are being completed in a timely manner.

Mr Minesh Jani, Head of Audit and Risk Management, introduced the report.

The Committee considered the corporate risk register and asked specific questions over the arrangements put in place to manage the risks noted on the register.

The Committee heard:

·         There was a Digital services emergency response plan. This should respond to any eventuality including power outage so that if the Council was unable to access all the data that the Council had in its building, it would be possible to access it through some other means. Prevention was always better than having to deal with issues having taken place, so the Council had maintained a record of its data in more than one data centre. If the Council could not access its data where it was, it had alternative sources to be able to get to that data.

·         Much like the savings risk and making sure that the Committee was appraised of where the Council was in managing the area of staff turnover. A paper would be brought to the Committee with an update.

·         The Council was trying everything it could to try to find trying to mitigate its financial risk. Some of the key areas of trying to do that involved savings, transformation, efficiency, cost control, revenue generation. These were actively being worked on. These had been included in the year's audit plan. The risk was a very challenging picture for the Council. It was difficult for many councils in the position to be able to meet demand with the resources in hand.

·         In relation to Procurement, savings and the budget envelope, the Council should try to do everything as perfectly as it could to maximise every penny that the Council spent. From an audit perspective, audits would be carried out around the Procurement areas and reports would be brought to the Committee on the progress in terms of the specific recommendations, but more generally around some of the procurement activities as well.

·         Transformation was a long-term process. The service would identify and manage key risks across all the different category A projects. The Committee asked for the transformation risk register to be brought to the next meeting.

·         In relation to the cyber risk, the way the Council scored risks was the worst-case scenario. The impact would always be high on a risk register, but this did not mean that the Council should not be looking to mitigate some of the impact.

·         The way officers were looking at cyber risk was primarily looking at preventative controls and other areas, such as plans in place of how to respond to issues arising, needed to be considered.

·         In relation to safeguarding children and vulnerable adults, if a risk in this area was to materialise then it could be quite detrimental for the Council. It was important for the Council to put in place appropriate controls to try to stop such a risk from happening or to at least minimise its effect as much as possible. This was what the Council  ...  view the full minutes text for item 11.

This report details the work undertaken by the in-house resources in the Audit and Risk team and communicates a fourth quarterly update on completion of the work plan for 2024/25.  This performance data and the other three reports from 2024/25 are summarised and included in the overall Annual Audit Report which includes the Head of Internal Audit Opinion.

Mr Minesh Jani, Head of Audit and Risk introduced the report.

The Committee heard:

·         The £18,000 figure found on page 424 of the agenda papers came from the Audit Commission and it was for the savings attributable for each unit that had been recovered. This figure had now been updated to £42,000 as a more representative value. This was something that a lot of local authorities were using to attribute to a recovery of a unit. The Cabinet Office had quoted an even higher figure of £78,000 which they believed was the true cost to a local authority of not having a unit available to rent properly. This was what the Cabinet Office believed each unit was worth to a local authority. The Council would use the £42,000 figure to report to the Committee in terms of what it believed the savings would be. This was in-line with other councils.

·         A few years ago, the Council investigated and prosecuted someone for sub-letting and in in that particular example, the Council still had a potential loss of at least £50,000 just for sub-letting for a few years.

RESOLVED:

To note the activities of the team during quarter four of 2024/25.

This report provides an update to the Audit Committee on the Council’s treasury management activities and performance quarters ending 31^st March 2024, in accordance with the CIPFA Code.

Mr Sam Masters, Head of Finance (Head of Treasury), introduced the report.

The Committee heard:

·         Even though there might be higher borrowing costs, it was not unreasonable to have a spread of different counterparties. There were different pros and cons to each form of borrowing.

·         On each call-day, the lender had the option to adjust the interest rate. If the Council did not agree with the increase in rates, it had the option to repay it. A lot of the loans structured had very high exit penalties for local authorities. Some of the loans were issued in the 1980s, but the Council was quite fortunate in terms of the rates that it had got on its LOBOs. They were not too high off of market rates in any case. If the Council did have to repay it, the Council would enter into a period of negotiation with the bank and see what it could achieve. In quarter 1, the Council had been able to repay £50 million worth of loans at par. The fair value of the loans was £58 million, but the Council repaid them at £50 million. If the Council needed to replace the financing, there would be arrangement fees and various other fees if the Council would seek to go to the PWLB. As the PWLB rates come down, it was very likely the Council would be able to replace them at a cheaper interest rate than it was currently holding.

·         The credential indicator list at £30 million was the minimum level of cash that the Council wanted to have available. These would be cash deposits or highly liquid investments or instant access investments like the money market funds. The dip below £30 million, which lasted less than 24 hours, was driven by a huge amount of capital invoices in the last week of March being paid through that had not been adequately modelled within the Council’s cash flow projections. The Council paid out £56 million that week and the cash flow projections were projecting around £6 million to £10 million. This was a significant variance to what the Council was expecting. Some corrective measures had been taken so the Council had issued guidance around large payments Any payments over £200,000 now required specific notification from budget holders. The Council had improved its cash flow modelling significantly. The Council was looking at replacing the very outdated logo system with Treasury Live which was part of PSLive.

·         The incident would not occur again. The Council had now taken the corrective measures to prevent it. The Council had improved its cash flow modelling and repeat reminders of the guidance would be issued to budget holders.

RESOLVED:

1. To note the treasury management activity undertaken during the financial year to 31st March 2025 and the performance achieved which is attached as Appendix 1 to this report.

2. To note that all treasury activities were undertaken in line with the approved Treasury Management Strategy.