Agenda and minutes

Apologies were received from Rachael Tiffen (Independent Co-opted Member).

The Chair welcomed Stephen Ross, as a newly appointed Independent Co-opted Member to his first meeting of the Committee

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.

David Ewart (Chair) declared a personal interest as a member of CIPFA.

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

None.

RESOLVED that the minutes of the previous meeting held on Tuesday 6 June 2023 be approved as a correct record.

Members noted the updates provided in relation to items listed on the Action Log.

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

None.

This report presents the Council’s draft 2022/23 Statement of Accounts to members of the Audit & Standards Committee.

Ahead of the report being presented to the Committee, the Chair clarified that as the accounts were currently in the draft stage and therefore not in a position to receive final approval, there was no requirement for the Audit & Standards Committee to meet following the Audit & Standards Advisory Committee.

Ben Ainsworth, Head of Finance was then invited to introduce a report that provided the Committee with an update on the Council’s draft 2022/23 Statement of Accounts.

In considering the report the Committee noted the following key points:

·                The Accounting Statements (page 45-49 of the Committee report) set out the Council’s income and expenditure for the year as well as its financial position at 31 March 2023 in compliance with the requirements of the CIPFA Code of Practice on Local Authority Accounting.

·                The Accounting Statements detailed a significant uplift in the Council’s total reserve funding (£650m) as detailed within the Comprehensive Income and Expenditure Statement (CIES) and the Movement in Reserves Statement (MiRs). Further details were also provided in distinguishing between usable and unusable reserve funds.

·                The Pensions Fund had seen an increase of £500m, this was reflective of the national picture of increased interest rates. If the trend were to continue the Council’s pension contributions as an employer could reduce.

·                The Committee’s attention was drawn to the Movement in Reserves Statement table (page 46 of the Committee report) that detailed an increase in Capital Grants and a decrease in the Earmarked General Fund Reserves. This decrease resulted from planned projects put in place to support post covid recovery with funds that had been released for these purposes reflected in the reduced General Fund Reserves.

·                The Committee noted that the Pension Fund accounts had been positively received by the Pension Fund Sub Committee.

In response to the update provided the Committee highlighted comments on a number of issues with the following responses provided:

·                In response to a Committee query in relation to the sufficiency of the General Fund Reserves, Minesh Patel, Corporate Director of Finance and Resources advised that that in general terms reserves were on a downward trajectory, however Brent were in a positive position whereby there was no reliance in using reserve funding. It was recognised that a generous reserve fund was favourable, and it was felt that the amount held (5% of the General Fund Balance) for unrestricted reserves was sufficient for the next financial year. However, it was noted that given the financial pressures arising through the cost-of-living crisis, inflation and demand for services, the situation would be closely monitored and if necessary, further consideration would be given to how the Council could increase its reserve funds.

·                The Committee recognised the difficulties in increasing reserve funding as it was likely to only be achieved through accruing an in-year surplus within the Council.

·                Following a Committee query in relation to the accessibility of the funds held in reserves, the Committee were advised of the process available to access funding, however once allocated the challenges in being  ...  view the full minutes text for item 6.

This report updates members on Treasury Management activity and confirms that the Council has complied with its Prudential Indicators for 2022/23.

Amanda Healy, Head of Finance, introduced a report that updated members on Treasury Management activity and provided confirmation that the Council had complied with its Prudential Indicators for 2022/23.

Key issues highlighted were as follows:

·                The Council’s Treasury Management activity was compliant with the CIPFA Code which required authorities to produce annual Prudential Indicators and a Treasury Management Strategy Statement.

·                The economic background in relation to the current outturn position continued to be impacted by global inflation as a result of the war in Ukraine, along with the UK’s current economic outlook and increase in interest rates.

·                In terms of borrowing, at 31^st March 2023, the Council held £781.0m of loans to finance the Council’s capital programme strategy to support new homes and regeneration. Borrowing options continued to be carefully assessed to ensure the Council could achieve the lowest cost funding options to support the commitment to the capital programme.

·                There were concerns that the future of borrowing for the capital programme could become more challenging as borrowing rates had already significantly increased since last year. In respect of the economic environment and rising construction costs, capital programme projects continued to be assessed. If any issues concerning viability were identified, they would be brought to Cabinet.

·                In relation to investment activity, the Council’s investment balances ranged between £72m and £159m due to timing difference between income and expenditure as detailed in Table 4 of the report.

·                In noting the prudential requirements within the CIPFA Code, the Council’s objective in terms of investment had remained to strike an appropriate balance between risk and return in order to minimise the risk of incurring losses from defaults and the risk of receiving unsuitably low investment income.

·                The Council’s non-Treasury Investments were to the Council’s subsidiary companies i4B Holdings Limited, whose primary purpose was to deliver the housing options as defined in the Temporary Accommodation reform plan and First Wave Housing that was set up to manage properties previously owned by Brent Housing Partnership. The collective investments had generated £5.9m of income that covered the borrowing costs of investing in housing through wholly owned subsidiaries.

·                The Committee’s attention was drawn to Appendix 2 of the report that set out the Council’s full prudential indicators for 2022/23.

The Chair then invited the Committee to raise questions on the report, with the responses summarised as follows:

·                The Committee queried if the Council undertaken any borrowing for capital projects that had subsequently not proceeded.  Officers confirmed that the Council did not borrow for specific projects as borrowing was obtained for the overall borrowing needs of the Council, as such there was no funding that had not been utilised effectively.

·                Officer confirmed that the borrowing reported was for the contracts in 2022/23, there had been no new borrowing for 2023/24 as yet.

·                In response to further details sought on the Council’s borrowing, the Committee’s attention was drawn to the Liability Benchmark chart in Appendix 2 that demonstrated the Council’s borrowing need against the Council’s existing cash  ...  view the full minutes text for item 7.

To receive an update on progress in delivering Grant Thornton’s responsibilities and consider the following papers from Grant Thornton as the Council’s external auditors:

8.1 London Borough of Brent Draft Audit Plan 22-23

8.2 London Borough of Brent Draft Pension Fund Audit Plan 22-23

(Agenda republished to include the above reports on 12 July 2023)

The Chair welcomed Ciaran McLaughlin, Key Audit Partner, Grant Thornton, who attended online to update the Committee on the External Audit Progress Report and Audit Plan that set out the scope of work being undertaken until the end of March 2023.

The following key points were highlighted as follows:

·                Recognition was given to the fact that despite the challenging economic environment the Council continued to perform well in delivering effective services and maintaining finances.

·                The 2022/23 audit was expected to be completed by October 2023; it was noted that Brent had fared well against other boroughs in the timely completion of their audits.

·                Key risks reviewed in the current audit were identified as standard in nature and not representing anything more significant.

·                The valuation of land and building, council dwellings and the final valuation of pension fund liability were identified as significant risk areas due to their complex nature, not as a result of anything specific to the Council’s management of these areas.

·                The Committee’s attention was drawn to page 15 of the report that addressed risk in relation to the Council’s subsidiary companies, this included setting out the progress made following previous recommendations, these would be commented on in further detail in the next Audit Findings report.

·                The Committee were informed that materiality was determined by using 1.5% of the Council’s gross expenditure as detailed on page 23 of the Committee report. There were no major changes in materiality to report.

·                The Value for Money aspect was assessed over three standard areas, Governance, Financial Sustainability and Improving Economy, Efficiency and Effectiveness as outlined in the report. There were no significant weaknesses identified at this point in the review.

The Chair thanked Ciaran McLaughlin for the update provided and for clearly highlighting the changes in the report. Given the timeframe of the estimated Audit completion and the Committee’s next meeting, the Chair recommended that the Committee may wish to seek an additional meeting date in October 2023 to allow the Audit & Standards Advisory Committee to consider and Audit & Standards Committee to formally approve the final Statement of Accounts, this was to be taken as a forward action.

The Chair then invited Sheena Phillips, Senior Manager, Grant Thornton to update the Committee on the Pension Fund Audit Plan.

The following key points were highlighted:

·                The Pension Fund had seen a small decrease of £13.5m in the net assets available for benefits during the 22/23 financial year, investment income had remined the same at £1.1m and the total contributions had increased to £67.5m.

·                The significant risks identified in the report were identified as standard to be included in local authority audits and included management override of controls, Valuation of Level 3 investment and the implementation of the new Pensions Administration System.

·                Level 3 investments invited particularly enhanced auditing due to the high values and estimations involved.

·                The Local Government Pension Scheme triennial valuation as required by Regulation 62 of the Local Government Pensions Scheme (LGPS) was identified as a lesser risk and  ...  view the full minutes text for item 8.

To note the Committee’s Forward Plan and agree a draft agenda for the next meeting, which would be reviewed and finalised by the Chief Finance Officer, the Head of Audit and the Chair of the Committee one month after the date of the current meeting.

It was RESOLVED to note the Committee’s Forward Plan.

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.