Agenda and minutes

Audit Committee
Tuesday 24 March 2015 7.00 pm

Venue: Board Room 3 - Brent Civic Centre, Engineers Way, Wembley HA9 0FJ. View directions

Contact: Joe Kwateng, Democratic Services Officer  020 8937 1354, Email: joe.kwateng@brent.gov.uk

Items
No. Item

1.

Declarations of personal and prejudicial interests

Members are invited to declare, at this stage of the meeting, any relevant financial or other interest in the items on this agenda.

Minutes:

10        Recruitment of Independent Chair of the Audit Committee

 

Mr David Ewart declared a disclosable pecuniary interest as he was the current Chair of the Audit Committee. He stated that he would vacate the meeting room during consideration of this item.

2.

Deputations

Minutes:

None.

3.

Minutes of the previous meeting pdf icon PDF 130 KB

Minutes:

RESOLVED:-

 

that the minutes of the previous meeting held on 7 January 2015 be approved as an accurate record of the meeting.

4.

Matters arising

Minutes:

Housing benefit subsidy

 

In response to a member’s enquiry, Simon Lane (Head of Audit and Investigations) reported that following a presentation to the Committee responding to the findings of the audit Andy Monkley, Subsidy and Policy Manager, had developed an action plan and provided a brief written update on progress.  Simon Lane noted that the original action plan was behind schedule although the service had been making progress to bring this up to date. The written update which had been circulated to all members of the Committee had been reproduced in paragraph 3.6 of the Chief Finance Officer’s report entitled Internal Audit Progress Report.  He added that as decided by the Committee, representatives of the department would be back to provide a further update to the Committee at its next meeting in June.

5.

KPMG External Audit Plan pdf icon PDF 489 KB

This document describes how KPMG will deliver the audit work for London Borough of Brent and the Brent Pension Fund.

Minutes:

Members received a report from the external auditor (KPMG) which described how KPMG would deliver the audit work for London Borough of Brent and the Brent Pension Fund.  The report was presented by Steve Lucas (Audit Manager). He informed members that KPMG’s overall audit approach remained similar to last year’s with no fundamental changes.  The work would be carried out in four stages with the timings and onsite work agreed with the Chief Finance Officer.  He continued that the audit strategy and plan would remain flexible as risks and issues changed throughout the year and that the initial assessments would be reviewed and new risks that emerged would be evaluated and responded to accordingly.

 

Steve Lucas informed members that KPMG had completed their initial risk assessment for the financial statements audit and along with the two risks required by international auditing standards; two specific risks relating to accounting for school assets used by the Authority’s maintained Schools and the Authority’s new general ledger were identified.   He added that the initial risk assessment for the Pension Fund’s financial statements audit had identified one significant risk this year which related to changes made to the Local Government Pension Scheme from 1 April 2014 and how the Authority calculated pension entitlement.  Members noted that KPMG’s initial risk assessment for the VFM conclusion had not identified any specific risks at this stage.  In his view, the Authority had robust systems and processes in place to manage effectively, financial risks and opportunities in a secure and stable financial position.  He added that the Authority was prioritising resources within tighter budgets by cost reductions, improved efficiency and productivity.

 

Steve Lucas continued that KPMG’s main year end audit was currently planned to commence in early July 2015 and that the findings would be presented to the Committee in a report entitled “Report to Those Charged with Governance (ISA 260 Report).  He added that the planned fee for the 2014/15 audit would be £266,120, an increase of £2,600 due to the Audit Commission increasing the fee scale to take account of the additional work required on National Non Domestic Rates (NNDR).

 

In response to the Chair’s question, Steve Lucas clarified the level of materiality used by KPMG and that they would only bring unadjusted errors in excess of £1m to the attention of the Audit Committee.

 

RESOLVED:

 

that the findings of the external auditor’s report be noted.

 

6.

KPMG Terms of reference for audit committee training pdf icon PDF 49 KB

This report sets out the objectives and the timetable for Audit Committee effective training.  The training aims to assess the committee’s effectiveness and look at the characteristics of an effective audit committee and ensure all members of the audit committee have a clear and shared understanding of their role.  Training will be provided on some of the softer skills that will help the members to become more effective in their role.

 

 

 

Minutes:

The Committee considered a report that set out the objectives and the timetable for Audit Committee members’ effective training. Conrad Hall (Chief Finance Officer) in setting the background stated that the training, to be delivered by KPMG specialist team, would aim to assess the committee’s effectiveness and look at the characteristics of an effective audit committee and ensure all members of the audit committee have a clear and shared understanding of their role in holding the Council to account.

 

Sally Anne Eldridge of KPMG stated that KPMG had been asked by the Chief Finance Officer to develop and deliver training to audit committee members to help them understand their role more fully and to improve the audit committee’s effectiveness. She added that the training programme would include Brent Housing Partnership Audit Committee’s members. She outlined the approach to the training as follows; a review of documentation including audit committee papers and forward plan; observation of the Council and Brent Housing Partnership audit committee meetings; survey of audit committee members; face to face meetings with audit committee members in advance of the training; and initial training session.  Sally Anne Eldridge drew members’ attention to the list of documentation that would be requested from members including their curriculum vitae (CVs) to include basic information such as the amount of time as a councillor, any business or financial training, any audit or scrutiny experience and any other council committee experience. Members learnt that the training would cost £9,600 which would be charged separately and thus additional to KPMG’s audit fees. 

 

Members welcomed the report but in the discussion that followed, they expressed a view that as the membership of the Committee was both small and transient, the estimated cost of the training would not represent value for money. Conrad Hall, Chief Finance Officer, responded that members were sighted on the proposal at the last meeting and that Sally Anne Eldridge had attended that meeting as part of developing the proposal. In response to a query from members as to whether the training had already been commissioned, Conrad Hall advised that he would only progress if members were content that the proposal represented value for money and was needed.   It was suggested that the report be referred to the General Purposes (GP) Committee for their consideration.  Councillor Pavey (Deputy Leader) advised that the appropriate body to re-consider the report would be Member Development Reference Group.  Members then agreed that the Chief Finance Officer should work closely with the Member Development team and the Reference Group with a view to identifying a training programme that would be cost effective including a cross council training programme. 

 

RESOLVED:

 

that the report proposing member training for audit committee members be referred to the Member Development team and the Reference Group for their consideration with a view to identifying a training programme that would be cost effective including a cross council training programme

 

7.

Internal Audit Progress Report pdf icon PDF 268 KB

This report provides an update on progress against the internal audit plan for the period 1st April 2014 to 28th February 2015. The report also provides a summary of counter fraud work for 2014/15.

 

I have attached an appendix to the report.

Additional documents:

Minutes:

Members considered a report that provided an update on progress against the internal audit plan for the period 1 April 2014 to 28 February 2015 and a summary of counter fraud work for 2014/15.  In agreeing to receive first Chief Officers who were in attendance to explain the results of their service area’s audit, members welcomed Chris Whyte (Head of Recycling and Waste), Phil Porter (Strategic Director, Adult Social Care) and Rakshan Pindoria (Head of Client Team, Adult Social Care).

 

Simon Lane (Head of Audit and Investigations) reported on the weaknesses he had identified on the ECHO application audit. He explained that ECHO was a business information system designed and managed by Veolia under the Public Realm Contract with the Council.  Simon Lane brought to members' attention the following key areas of weakness as part of the audit: 

Failure to review and update the training matrix to confirm that all staff have been adequately trained; lack of a clear indication of the current license arrangements in place; use of weak passwords to authenticate access to the ECHO system; storing of user passwords in unencrypted format; weak user access management processes; absence of a process to report and review critical changes on the system; absence of adequate up to date restore and recovery arrangements; and absence of service level key performance targets.  He made the point that the current issues around password security do not conform to minimum PSN standards. As a result of the audit, one priority 1, four priority 2 and one priority 3 recommendations were raised.

 

Chris Whyte (Head of Recycling and Waste) explained that the main areas of concern involved security and use of the system which had been live for less than a year.  He added that the recommendations of the audit as set out in the report would be carried out and that the system controls would be subject to a review by the technical team of Veolia, the owners of the system.  He was confident that Veolia would comply with the Council’s request as they were keen to partner the Council in the management of waste. In respect of timescale, Chris Whyte stated that it would take about 3 months to carry out the recommendations effectively.

 

Members instructed the Head of Audit and Investigations to oversee the implementation of the recommendations and if dissatisfied the Chief Finance Officer should report back to the Committee.  Chris Whyte was thanked for his contribution.

 

The Head of Audit and Investigations then reported on the audit findings of

Appointee and deputyship audit within Adult Social Care as follows;

        Documentation for Appointeeship & Deputyship clients not always retained on Framework I to support applications, income received and expenditures paid;

·                Exceptions identified by Softbox were not resolved within a timely manner;            

·                Softbox Exceptions reports were not flagging all exceptions;

·                Reconciliations were not being carried out on a monthly basis.

As a result of the audit, four priority 1, eleven priority 2 and one priority 3 recommendations were raised.

 

By way  ...  view the full minutes text for item 7.

8.

Risk Register pdf icon PDF 65 KB

This report presents the council’s current Corporate Risk Register.

 

I have attached appendices (2) to the report.

Additional documents:

Minutes:

Members considered a report that presented the council’s current Corporate Risk Register.  Simon Lane (Head of Audit and Investigations) drew members’ attention to appendix 1 of the report from the Chief Finance Officer that set out the councils corporate and key operational risks. In addition, there were further risks contained within the departmental registers which can be viewed via the infostore system.  Strategic Directors were required to maintain an operational risk register and review this periodically with their Departmental Management Teams and were kept up to date.

 

Members were advised that corporate risks had remained relatively static with financial challenge across the authority and specifically within Adult Social Care as a result of demographic pressures, being identified as corporate risks.  The Head of Audit and Investigations added that further work would have to be done to align risks with the new senior management structure, particularly relating to those which were now within the sphere of Chief Operating Officer’s responsibility.

 

RESOLVED:

 

that the contents of the Council’s updated Corporate Risk Register be noted.

9.

Internal Audit Plan 2015/16 pdf icon PDF 187 KB

This report sets out the Draft Internal Audit Plan (“the Plan) for 2015/16 and the basis on which the plan has been formulated.

Minutes:

The Committee considered a report which set out the Draft Internal Audit Plan (“the Plan) for 2015/16 and the basis on which the plan had been formulated taking into account the council’s strategic and operational risks and in close liaison with KPMG (external auditors). Simon Lane (Head of Audit and Investigations) informed members that the internal audit service in partnership with Mazars Public Sector Audit Limited, would deliver 996 days (Mazars 590, in-house 406).  Members heard that the plan was to reduce the number of bought in days from 900 to 600, the reduction being offset by the use of a CIPFA trainee for the full year.

 

In reference to table 1 that set out the planned days by department, the Head of A&I stated that whilst the number of days within the Chief Operating Officer’s department appeared high, it was broadly comparable with the number of days in the constituent departments in 14/15. He added that the BHP Audit Committee had already confirmed that it required the same level of audit coverage as the previous year.  He then drew members’ attention to the indicative timetable showing the schedule of audit in Q1 to Q4.

 

In the ensuing discussions, it was suggested that recruitment be added to the audit plan and to include principally, the advertisement, interview and assessment for the Chief Operating Officer’s post and the Chief Executive’s post.  The Chief Finance Officer responded that the audit plan was to focus on the system and the selection of the sample rather than on an individual. In endorsing the advice by the Chief Finance Officer, Members expressed a view for additional columns indicating results of previous year’s audit so as to allow for comparison.  In welcoming the report, officers were instructed to send to members the revised days and the 2009/10 audit recommendation on recruitment.

 

Members were concerned about the lack of audit coverage on recruitment and selection and Simon Lane undertook to provide details of the follow up work undertaken in this area.

 

RESOLVED:

 

(i)        that the approach taken to formulate the draft plan for the 2015/16 financial year be noted and that the content of the plan be approved;

 

(ii)       that copies of the revised days for the audit plan and the 2009/10 audit recommendation on recruitment be sent to all members of the Committee.

10.

Recruitment of Independent Chair of the Audit Committee pdf icon PDF 66 KB

This report sets out the arrangements for the appointment of the independent chair of the audit committee as the term of office for the current independent chair comes to an end on 24th June 2015.

Additional documents:

Minutes:

Having declared an interest in the item, David Ewart (Independent Chair) left the meeting room and took no part in the discussion and voting.  Councillor Choudry chaired the meeting for this item only.

 

Members considered a report that set out the arrangements for the appointment of the Independent Chair of Audit Committee, as the term of office for the current Chair would end on 24 June 2015.  Members heard that the current Chair was eligible to apply. Conrad Hall (Chief Finance Officer) informed members that the post would be advertised in conjunction with the position of Chair of the Pensions Board and that candidates would be able to apply for one or both positions, drawing attention to the person specification attached at appendix 1.  The Chief Finance Officer added that the constitution of the Pensions Board had been agreed at a meeting of the General Purposes Committee at its meeting on 25 February 2015.

 

RESOLVED:

 

that the arrangements set out within the report from the Chief Finance Officer for the recruitment of Independent Chair of the Committee be noted and that the person specification attached at appendix 1 be approved.

11.

Any other urgent business

Notice of items to be raised under this heading must be given in writing to the Democratic Services Manager or his representative before the meeting in accordance with Standing Order 64.

Minutes:

Vote of thanks.

 

The Chair announced the end of his term of office and thanked members and officers for their invaluable contribution and advice over the years.

12.

Date of next meeting

The date of next meeting of the Audit Committee will be confirmed at the Council’s Annual General Meeting (AGM) on 20 May 2015.

Minutes:

The date of next meeting will be confirmed at the Council’s Annual General Meeting (AGM) on 20 April 2015.