Agenda and minutes

David Ewart (Chair) welcomed everyone in remote attendance to the virtual meeting of the Audit & Standards Advisory Committee.  Before asking all those attending to introduce themselves, he reminded the Committee that he had been advised of both Robert Cawley’s and Karen McArthur’s intention to step down as independent co-opted members on the Committee, with effect from 27 May 2020.

Although both had given their apologies for the meeting, they had asked for their thanks to be passed on to everyone for the support received whilst undertaking this role.  On behalf of the Committee, the Chair again took the opportunity to thank Robert and Karen for their support and interest whilst serving as co-opted members and to wish them well for the future.

The following apologies for absence were received:

·         Councillor Choudry with Councillor Kabir attending as a substitute member.

·         Councillor Donnelly-Jackson with Councillor Choudhary attending as a substitute member.

·         Dr Rob Cawley & Karen McArthur (Independent co-opted Members).

·         Nigel Shock, Independent representative.

Members are invited to declare at this stage of the meeting, the nature and existence of any relevant disclosable pecuniary or personal interests in the items on this agenda and to specify the item(s) to which they relate.

The following declarations were noted:

·                David Ewart (Chair) and Vineeta Manchanda (Independent Advisor) declared a personal interest as they knew Martin Smith (Chair of the First Wave Housing and i4B Boards) having previously worked with him at the London Borough of Ealing and NHS, respectively.

·                Councillors Hassan and Kansagra advised they were still to undertake the mandatory audit training, with Councillor Nerva advising he had to undertake the training for scrutiny members.

To hear any deputations received from members of the public in accordance with Standing Order 67.

None.

To approve the minutes of the following meetings as a correct record:

(a)      Wednesday 11 March 2020

(b)      Tuesday 5 May 2020

The minutes of the meetings held on 11^th March 2020 and 5^th May 2020 were approved as accurate records.

To consider any matters arising from the minutes of the previous meeting.

The following issues were raised in relation to the minutes from the meeting on 5 May 2020

6.1    Emergency Planning response to Covid-19 (Min 5)

Councillor Nerva raised the following issues:

·                Given the emergency arrangements during this pandemic, whether arrangements had been made to provide regular updates on decisions taken under emergency powers.

The Chair responded that the plan was to receive a further update at the Committee meeting scheduled for July 2020.

·                Whether the North West London NHS Trust had provided the Council with information about the disproportionate number of Black and Minority Ethnic (BAME) deaths within the borough.

Carolyn Downs (Chief Executive) confirmed that arrangements had been made which included coordinating work by the Assistant Chief Executive between the Scrutiny and Audit & Standards Advisory Committees.  In addition, the Chief Executive advised that she had written to both the Chair and the Chief Executive of North West London NHS Trust jointly with the Leader of the Council in order to highlight this issue and was awaiting response.

This is the Monitoring Officer’s Annual Report to the Audit and Standards Advisory Committee for 2019. It provides an update on Member conduct issues, work of the Audit and Standards Advisory Committee, the Audit and Standards Committee and the Monitoring Officer during 2018 as well as the quarterly update on Gifts and Hospitality.

The Committee received the Monitoring Officer’s Annual Report that provided an update on Member conduct issues and the work of the Audit and Standards Advisory Committee, the Audit and Standards Committee and the Monitoring Officer during 2019.  Debra Norman (Director of Legal, HR, Audit and Investigations) in presenting the report gave an overview of the Committee’s work since 2019 and drew Members’ attention to the following points:

·                The plans being developed to undertake a recruitment process during the course of the year in relation to the vacant co-opted member positions on the Committee and also as the Independent Person current terms of offices came to an end.

·                During 2019, two complaints had been received against a councillor for alleged breaches of the Code of Conduct. Neither of these had been upheld for the following reasons; first complaint - there was no evidence of any breach of the Member’s Code of Conduct (Code); second complaint - it did not disclose any conduct which fell within the remit of the Code.

·                The requirement on members to register gifts and hospitality received in an official capacity worth an estimated value of at least £50, including a series of gifts and hospitality from the same person that add up to an estimated value of at least £50 in a municipal year.  Any gifts and hospitality registered by Members were published on the Council’s website and open to inspection at the Civic Centre, with the latest update attached at appendix A to the report.

·                Monitoring Officer Advice Notes (MOANs) continued to be issued to members.  During 2019 three MOANs were issued.  Appendix B to the report listed the MOANs issued since 2015, with copies available on the Member’s internal SharePoint portal.

·                The LGA were in the process of finalising the consultation questions for the draft Model Code of Conduct.  These would be more closely aligned to the current version that the Council already had in place. Officers were awaiting the consultation questions and would keep the Committee informed as to how the consultation progressed.

·                Mandatory training sessions for members continued to be provided annually. In addition, all other Members were invited to attend the sessions in accordance with the Members’ Code of Conduct.

In the ensuing discussions, Members asked as to whether there existed a Code of Conduct for senior officers and how the level of confidence in the complaints system had been assessed and evaluated.  Specific questions were asked about the timeline for recruitment of the co-opted members and Independent Persons, member training and whether the Council had a duty to protect members from abuse aimed at them on social media.

·                Debra Norman (Director of Legal, HR, Audit & Investigations) confirmed that the Council had in place an officer code of conduct, underpinned by disciplinary procedures although constrained by legislative procedures.  She continued that the Council promoted the members code of conduct complaints process on the corporate complaints page on its website. In view of the robust systems in place, there had been fewer complaints  ...  view the full minutes text for item 7.

This report presents the Council’s draft 2019/20 Statement of Accounts to members of the Audit & Standards Committee for noting prior to submission to external audit.

Daniel Omisore (Deputy Director of Finance) introduced the report that presented the Council’s draft 2019/20 Statement of Accounts prior to its submission to external audit.  He informed the Committee that ordinarily, the Director of Finance would be required by 31^st May following the year-end, to sign and date the draft Statement of Accounts and confirm that they presented a true and fair view of the financial position as at the year ending 31 March.  The final audited accounts would then be approved by the Council following external audit, by no later than 31 July of the same year.

The Deputy Director continued that in view of the recent coronavirus pandemic and the associated challenges facing Local Authorities and their finance teams, the Ministry for Housing, Communities & Local Government (MHCLG) had recently announced a relaxation of these deadlines. They had confirmed that applicable from 30 April (for Financial Year 2019-20 only) the draft accounts would need to be approved by 31 August 2020 and final, audited, accounts by 30 November 2020.  Members heard that given that the successful remote working arrangements thus far implemented, the Council was aiming to work, as far as possible, to the normal timeframes. This approach would ensure finance staff were free to focus on the COVID-19 recovery, budget setting and the Medium Term Financial Plan (MTFP) later in the year.  It was also felt this would help to alleviate resource pressure for auditors as it was expected that a number of Council audits might converge at the same time later in the year.  He then summarised the draft accounts clarifying the key aspects of the balance sheet and the movement in reserve statement, as set out within the supplementary report.

Prior to member discussion, the Chair reminded members they were not required to adopt the draft accounts at this meeting.  The Committee would consider the final draft set of accounts at their meeting in either July or September 2020.  He then invited Sophia Brown and Paul Dossett representatives from Grant Thornton (external auditor) to provide an update.

Sophia Brown informed the Committee that there was nothing further to report, at this stage, as they anticipated commencing the audit around 15^th June 2020 and would endeavour to complete by July 2020.  She added that Grant Thornton had discussed the key points of the audit with the Director of Finance.  Paul Dossett cautioned that access to the Civic Centre could also influence the progress of the audit.

The Chair then thanked the Deputy Director for his initial presentation and invited comments from members with the following issues raised:

(a)    Members took note of the impact of Covid-19 on incomes including rent payments and sought assurances on how the council intended to address such sensitive issues.  The Deputy Director responded that in addition to a wide range of support made available following the outbreak of the pandemic, a Debt Board had been set up to address issues including but not exclusive to rent collection, council tax  ...  view the full minutes text for item 8.

This report provides the Committee with an update on i4B Holdings Ltd’s (i4B) recent performance, audit arrangements, and risk register.

This report provided the Audit and Standards Advisory Committee with an update on i4B Holdings Ltd’s (i4B) recent performance, audit arrangements, and risk register.  Martin Smith (Chair of i4B) introduced the report and drew the Committee’s attention to the following aspects of i4B performance:

·             As of April 2020, 254 Brent families, including 623 children had been housed in i4B properties, the breakdown for which had been set out within Table 1 of the report.  The benefits envisaged in the business model were now flowing through in a regular way.

·             In view of the prevailing housing market conditions, i4B had adapted its purchasing priorities to fit in with its business model.

·             The purchase of the Quitain block for key workers, completed on 20^th February 2020 that would provide 153 units of 1 and 2 bedroom apartments for key workers and would be let at 65% of market rate plus service charge. He considered that this would be a significant asset, enhancing the Council’s ability to recruit and retain key workers within the Borough.

·             Because of Covid-19, the building contractor, Wates, had served a notice on Quintain stating that practical completion of the Quintain block project (due in October 2020) had been delayed. The construction project was progressing, albeit at a slower rate and i4B was awaiting further information from Quitain about the length of the delay. He added that the delay was not likely to be critical to the company’s business model and drew Members’ attention to the risk register as set out within the report.

The Chair thanked Martin Smith for his presentation and invited comments from Members with the following issues raised:

(a)    Members sought further detail about the company’s performance figures for 2019/20 (budget against actual). Martin Smith clarified that the spend on maintenance resulted mainly because i4B were buying properties which required refurbishment to a higher standard.  The company (i4B) achieved a reduction in insurance fees through partnership arrangement with the Council in purchasing insurance cover, resulting in economies of scale.  The increased loss for the year to budget resulted from interest cost and finance charges for the Quintain block for key workers, which totalled over £800k and had not been included in the original budget.

(b)    In response to questions about the company’s operating losses and future prospects, Martin Smith stated that the financial modelling covered a 30-year period.  The operating losses at early years were in line with expectation but over time and with fixed interest rates and stable flow of rental income, i4B would move into surplus and if property prices should rise, the company’s balance sheet would improve accordingly.

(c)    Members heard that i4B was not as susceptible to interest rate movements as the interest on loans from the Council was fixed.  Martin Smith added, however, that in the current circumstances it was difficult to predict the path of interest rates.

(d)    In response to questions about the choice of business name and rationale for the councillor representation on the i4B Board,  ...  view the full minutes text for item 9.

This report provides the Committee with an update on First Wave Housing Limited’s (FWH) business plan, recent performance, risk register, and audit arrangements.

This report provided the Audit and Standards Advisory Committee with an update on First Wave Housing Limited’s (FWH) business plan, recent performance, risk register, and audit arrangements.  Martin Smith (Chair of FWH) provided the key highlights of the FWH report as follows:

·             FWH’s primary purpose was to manage, maintain, and improve its stock of 329 properties and to contribute to Brent’s Housing Strategy by providing good quality, affordable, secure, and well managed homes to Brent residents. It currently had 329 tenanted properties: 89 at social rent, 25 at intermediate rent, and 45 at PRS/market rent and had 170 Settled Homes, which were a form of temporary accommodation, let on assured short hold tenancies, with rent levels slightly below LHA rates.

·             The performance of FWH, measured against the Company’s Key Performance Indicators was reported to the Board monthly. The annual rent roll was £4.2m.

·             As of March 2020, the year to date (YTD) cumulative performance outturn for rent collection was 98.96% against an annual target of 98.5%. YTD rent income collection for August 2019 was 97.29%. Total loss for the year had come in as £120k. Previous in-year projections were in line with this loss for the year.

·             On performance, there was a variance of circa £750k to the original budget driven mainly by repair costs but the main reason for the scale of the variance related to the original budget set and calculation of costs.  Costs for 2019/20 costs were in line with those for 2018/19.

·             A benchmarking exercise undertaken in February 2020 demonstrated that FWH’s operating costs were in line with other providers of similar size and found that FWH had a strong performance in operating margin, placing it within the upper quartile in all peer groups.

·             For minor voids, FWH’s target was 21 days. For major voids, FWH’s target was 76 days. The YTD performance as of March 2020 for voids was as follows:

·             General Market Rent (Minor Void) – 35.9 days.

·             Settled Homes (Minor Void) – 33.65 days.

·             Settled Homes (Major Void) – 94.2 days.

The YTD performance for major voids had increased notably as a result of works being delayed on one Settled Home property, which had been caused by a roof leak within a block managed by a registered provider. Once remedied, the void works commenced and the property was let in 34 days.

·             While not a priority, FWH retained the ability to purchase new build accommodation, through working with the Council and on the open market, using a proportion of the loan facilities of up to £110.5m agreed by the Cabinet to be made available to i4B Holdings and FWH. As opportunities developed, FWH would continuously review its financial model and potential grant funding opportunities to ensure schemes secured optimum value for Brent.

The Chair thanked Martin Smith for the in-depth update of FWH performance and invited comments and questions from Members.  The following issues were raised and responses submitted were noted:

(a)    In response to specific questions about the rising Service Level  ...  view the full minutes text for item 10.

This report provides the Committee with an update on progress against the Internal Audit Plan.

This report provided an update on progress against the Internal Audit Plan for the period 1 January 2020 to 30 April 2020.  Michael Bradley (Head of Audit and Investigations) introduced the report during which the Committee noted the following points:

·             During this period, Internal Audit completed 10 audit reviews and advisory pieces of work, issued a further seven draft reports which were awaiting management responses, completed 14 follow up reviews, completed two school audits and completed grant claim certifications for the Troubled Families Programme.  Details of the key findings were set out in Appendix A of the report and details of the audits currently in progress were set out in Appendix B of the report. To ensure that agreed management actions in respect of significant risks were implemented, officers had also carried out follow-up reviews.

·             A further seven audits were nearing completion or in progress.  Due to the ongoing Coronavirus situation, a number of this year’s audits had had to be postponed and would be rescheduled in 2020/21.  Planning work had also now commenced on a number of audits from the 2020/21 Audit Plan.

·             For each audit where controls had been analysed and a report agreed with management, an assurance opinion was given. This grading mechanism provided an indication of the level of confidence in the controls in operation and the extent to which they were being applied.  For 2019/20 this grading system would be no longer used and an indication of the level of confidence was now gained by examining the number of issues raised and their associated risk level.

·             During the period, 14 follow up reviews were completed (as detailed within Appendix C of the report).  A further 11 were currently in progress. Of the 14 completed, four had high-risk actions that had not been implemented or only partially implemented.  These would be followed up to ensure they have been satisfactorily implemented.  119 management actions had been reviewed in total.

·             Management had provided positive feedback on individual audits completed on areas including usefulness of the audit, quality of the report and usefulness of any recommendations made.  Of the five questionnaires that had been returned during this period. 97.5% of scores were either very satisfied or satisfied.

The Chair thanked Michael Bradley for the update and invited comments from the Members during which the following were noted;

(a)        Members raised specific questions about the impact of Covid-19 on the finances of the Council when there was no income flow from for example, parking facilities. Furthermore, the ability of the audit team to complete its work whilst service areas such as highways, older persons pathway and Spot Purchasing, Residential and Nursing Care were all marked “fieldwork in progress”.  Michael Bradley responded that the Audit and Investigation unit had, since the report was written, completed some of the audits that were in progress.  In addition, the remote working protocol including some face-to-face activity, where appropriate, had enabled the unit to function with minimal impact.  In 2020/21, the unit would scrutinise any  ...  view the full minutes text for item 11.

This report provides the Committee with an update with the counter fraud activity for this year.

Michael Bradley (Head of Audit and Investigations) introduced this report that set out the activities of the counter fraud function in Q4.  The Committee noted the following overview provided:

·             Internal fraud typically had the fewest but more complex referrals from a variety of sources in any period. In reference to the table in the report, he gave a summary of the case types as set out within the report but added that due to confidentiality, it was inappropriate to provide additional details within the report.  Members heard that the cases involved misuse of IT, conflict of interest, recruitment irregularities, breach of financial / other regulations and bribery or corruption.

·             The recovery of social housing properties by the Counter Fraud team remained a high priority fraud risk for the Council with the average value of each recovered tenancy being around £93,000.  Five housing cases, with a notional value of £465,000, were recorded as a result of fraud / irregularity in Q4. The total number of fraudulent housing cases concluded in 2019/20 was 19, (27 in 2018/19).

·             The following statistical information was also noted;

Ø   An average of 40 recoveries had been made over the last three years.

Ø   Referrals had declined over the last two years.

Ø   Of the 34 referrals logged during Q4, nine were from Housing Management teams.

Ø   Total referrals logged this year were 176, compared to last year’s total of 151, and a further 24 referrals were received in Q4 that needed to be processed.

Ø   There were currently 92 live housing investigations.

Ø   The successful on-street Blue Badge operation with the Parking Enforcement in the Willesden area.

·                 Arising from the Council’s response to the Covid-19 pandemic, some interim amendments to processes and controls in services had been put in place that were being delivered in a controlled manner with appropriate advice to managers regarding the risk of error and fraud. Officers were analysing the reasons for an increase in fraud referrals and dealing with individual caseloads.

The Chair having thanked the Head of Audit and Investigation invited comments and questions from Members with the following issues raised:

(a)    Members observed that because of the Covid-19 pandemic there could be frequent use of ID scans with all of the attendant problems, some of which were detailed in the report.  Referencing the report, the Head of Audit and Investigations highlighted the importance of adequate identity scanners, particularly for recruitment, and he anticipated the introduction of new scanners as soon as circumstances allowed.  He was looking into the risk of email scans verification. Work currently in progress, would be reported to Committee when it was completed.

(b)    In response to questions about whether the team had an arrangement in place to authenticate documents with the Home Office and the DVLA, the Head of Audit and Investigations confirmed that the ID scanner would be able to check and authenticate documents with statutory bodies.

In the absence of further issues, the Chair once again expressed thanks to the Head of Audit  ...  view the full minutes text for item 12.

This document provides an update to the planned scope and timing of the statutory audit of the London Borough of Brent (‘the Authority’)  and London Borough of Brent Pension Fund (‘the Fund’) as reported in our Audit Plan dated February 2020, for those charged with governance.

The Committee welcomed Sophia Brown and Paul Dossett (Grant Thornton external auditors) to the meeting to provide an update to the planned scope and timing of the statutory audit of the London Borough of Brent (‘the Authority’) and London Borough of Brent Pension Fund (‘the Fund’).  The Committee noted the following updates:

·             In addition to the audit risks communicated to those charged with governance in the Audit Plan on 11 March 2020, recent events had led the external auditors to update the planning risk assessment and reconsider the audit and value for money (VfM) approach to reflect the unprecedented global response to the Covid-19 pandemic. Aware that the uncertainties and the significance of the situation would present additional burden on staff, Grant Thornton aimed to work with the Council to ensure up to date communication and flexibility where possible, in the audit procedures.

·             Although the financial deadline had been extended to 31 August 2020 for the preparation of the financial statements and 30 November 2020 for audited financial statements, Grant Thornton would liaise with management to agree appropriate timescales.

·             In order to fulfil their responsibilities under International Auditing Standards (ISAs UK) Grant Thornton had revisited the planning risk assessment. Furthermore, Grant Thornton advised they may need to consider implementing changes to the procedures planned and reported in the Audit Plan to reflect current restrictions to working practices, such as the application of technology to allow remote working.

·             Grant Thornton had identified a new significant financial statement risk relating to Covid-19 in the Council and the Pension Fund and had set out the reason for risk identification and the key aspects of the proposed response, as described within the report and the Audit Scope letter (the addendum).  The materiality levels reviewed did not identify any changes to their materiality assessment.

·             Grant Thornton had updated the Value for Money (VfM) risk assessment to document their understanding of the Council’s arrangements to ensure critical business continuity in the current environment. Grant Thornton had not identified any new VfM risks in relation to Covid-19 but had enhanced the financial sustainability VfM significant risk to reflect the impact of Covid-19 on the Council’s 2020/21 budget and beyond.

The Chair thanked Sophia Brown and Paul Dossett tor the update and invited comments and questions from the Committee with the following being noted:

(a)    Clarification was sought on the method of valuation of the pension fund, aware that the impact of Covid-19 would have affected only one month of the audit and whether there could be a further review of the auditor’s fees. The external auditors explained that the valuation involved the combined work of expert valuers, Council officers and actuaries.  The auditors did not anticipate changes to the fees set out within the audit scope letter attached as an addendum to the report, although the impact of Covid-19 would affect the audit opinion.

With no further issues raised, the Chair once again thanked Sophia and Paul Dossett (Grant Thornton) for their attendance and the updates and  ...  view the full minutes text for item 13.

The report updates the Committee on the Council’s use and conduct of covert surveillance techniques when investigating serious criminal offences relying on the powers made available to local authorities in Part II of the Regulation of Investigatory Powers Act 2000 (RIPA).

The Committee received a report that provided details on the outcome of the inspection undertaken by the Investigatory Powers Commissioner’s Office (IPCO) in March 2020.  The IPCO had responsibility for reviewing the use of investigatory powers by public authorities and other intelligence and law enforcement agencies and monitored how these powers were used, ensuring that investigations are conducted in accordance with the law.  Biancia Robinson (Senior Constitutional and Governance Lawyer) presented the report and drew Members attention to the following:

·             The Regulation of Investigatory Powers Act 2000 (RIPA) gave the Council significant powers in order to investigate serious matters and offences.  The powers enabled the Council to use covert surveillance, covert human intelligence sources (CHIS) and the acquisition of service use or subscriber information in relation to communications data in a manner, which was compatible with Article 8 of the European Convention on Human Rights.

·             Any directed surveillance that the Council may wish to undertake must comply with various strict criteria including approval of the application by a Magistrate.

·             The Council was periodically inspected (approximately every 2-3 years) by the Investigatory Powers Commissioner’s Office (IPCO).  Arising from the last inspection that took place in November 2016, the Inspector made two recommended suggestions.  These were addressed and reported to the Committee meeting in March 2018.

·             The Inspector undertook his phone desk top inspection in March 2020 and was pleased to note that the inspection had found similarly good levels of continued compliance with no recommendations made. The Inspector noted the regular updating of the Council’s RIPA policy document; a robust application process for the use of social media investigations; and clear processes to comply with conditions when external agencies required the use of CCTV.

·             In accordance with the assurances confirmed by The Investigatory Powers Commissioner, officers would continue to ensure that the integrity of the Council’s processes and governance procedures were maintained to ensure that the high standards of compliance with the Act and relevant codes of practice continued.

·             Members noted that the operation of the process, set by legislation, would continue to be tracked, monitored and documented.

As there were no further issues raised, the Chair thanked the Senior Constitutional and Governance Lawyer and in welcoming the report, the Committee RESOLVED to note the positive outcome of the 2020 IPCO inspection into the council’s use of RIPA as set out in the Inspector’s letter, attached as Appendix A to the report.

To consider and note the Committee’s Forward Plan.

The Chair drew Members’ attention to the Committee’s forward plan and work programme for 2020/21as set out in the agenda pack.  In welcoming the work programme, the Committee RESOLVED to note the forward plan and work programme for 2020/.

Notice of items to be raised under this heading must be given in writing to the Head of Executive and Member Services or his representative before the meeting in accordance with Standing Order 60.

None.