Agenda item

This report details the work undertaken by Internal Audit for the period 1 November 2024 to 31 January 2025 and focuses on progress on internal audit coverage relative to the approved internal audit plan, including the number of audit reports issued and finalised – work undertaken by the external provider (Forvis Mazars).

Minesh Jani to present.

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

The meeting heard:

·      The service was responsible for making sure that they produced regular information and a request for updating a list of housing boards could be passed onto the service. Internal audit would not have that information on an ongoing basis but the service could be asked to create this and this could be reported back to the Committee.

·      The contract that the Council had for the delivery of audit was with a company called Mazars. The contract ran until to the end of the next financial year and was through the Croydon framework. Croydon Council went out a few years ago to allow all London boroughs potentially to buy off their framework for the delivery of audit. Haringey had accessed it to employ Mazars.

·      In relation to management of contract spend, a nil assurance tended to indicate a completely broken system, whereas a limited assurance indicated a system which was not working as well as it should do. In this specific area, the arrangements that should be in place was if there was any off-contract spend, that this was identified it and fix it so that it was minimised. There was a specific team that looked out for contract spends and reported back. The actions that should follow were not happening. Having identified the anomalies, actions needed to be taken. In relation to culture of compliance, it was often the case that people were found to not be following the rules. This was followed up to understand what it was that drove people to do what they did. Upon investigation, staff appeared to be trying to follow the rules, but the length of time it took for them to complete a task took too long and looked for a quicker way of doing something. A better process needed to be established.

·      In all of the internal audit reports, there had been quite a few of limited assurance where compliance was an issue. The data on compliance was being monitored and reported to services. For the last four or five months, this data was being reported to the corporate leadership team as part of the monthly reporting. This was not just on off-contract spend, it was also around Purchase Card compliance. For about four weeks, all new contracts now had to be signed off by an assistant director. The Council was about to put in place a regulation that no purchase orders would be approved without setting up a small spending panel. This had not necessarily been part of an outcome of the internal audit review. The new Procurement Board that had been established was about having a tight grip over buying and purchasing behaviour.

·      The manner in which the Council arranged its processes for billing clients led to the adult social care debt. One of the one of the key issues is that the Council did not have a variable direct debit so the Council had a fixed amount that it billed each client, each month, irrespective of the service they received. This was then retrospectively calculated what the charge should be and bill the client afterwards. The clients themselves were never quite sure how much their debt actually was It was possible to invite the appropriate service to give an update at a future meeting on general management of financial assessments as a whole, because the auditors raised a number of different areas of concern impacting many aspects of how financial assessments were carried out. It was worth considering if a person did not engage in providing the information for financial assessments, if the Council should maintain the policy to continue providing the service or if there should there be an alternative. An update would be provided at the next meeting.

·      The issue of voids had been raised in the past. The Committee wished to have an audit of voids carried out. The number of issues that were not working as well as they should be. No update at present time could be provided. However, the Director could be asked to provide an n update to the Committee.

·      It was difficult to say if the whole organisation of the Council really appreciated where it was financially. The Council had been open, honest and transparent about the issues that it faced. The financial challenges had been discussed since last September or October 2024. The Council talked about the challenges. It was not clear if everybody making a spending decision or an income collection decision had finance at the forefront of their minds. The Council had developed a financial recovery plan. Everybody at the Council had to play a role.

·      The demonstration of limited assurances was to target internal audit at the right places where there were suspected concerns and risks. A report with an entirely adequate or substantial feedback would be concerning in its own way. 

·      The role of the Corporate Director of Finance Resources was to make sure that the organisation was following up on the recommendations that came out of the internal audit review Internal audit colleagues would do follow-ups, but lead officers needed to make sure that they were addressing recommendations.

The meeting felt that the limited assurance on Broadwater Farm and the general update was extremely worrying because of the amount of money involved and the number of flats that frozen compared to how many people on the waiting list accommodations. It was noted that a formal business case was not in place for the program and that the project initiation document had not been updated since March 2019. This had been a subject of previous audits and had to go further than simply being noted.

The project had been initiated approximately eight years ago. The estimate at the time was £30 million. This was an underestimated sum. Not providing a regular update was something that needed to be urgently considered. The reports also stated that recommendations were due for implementation by March 2025. 

An update could be given on these issues at a future meeting.

RESOLVED: To note the audit coverage and follow up work completed.

At this point in the proceedings, the Chair decided to suspend standing order 18 so that the meeting could be concluded.