Agenda and minutes

The Chair apologised for the change of date of the meeting and thanked Members and officers for their cooperation in securing a suitable alternative.  Councillor Macleod-Cullinane wished to put on record his dissatisfaction with the Council’s formally approved programme of committee meetings being altered at relatively short notice for the convenience of a political group. 

It was noted that no apologies had been received and no Reserve Members had been appointed.

No declarations of interest were made.

That the minutes of the meeting held on 31 January 2017 be taken as read and signed as a correct record.

RESOLVED:  That the minutes of the meeting of the Committee held on 31 January 2017 be taken as read and signed as a correct record, subject to the following amendments:

·                     Minute 162 (Declarations of Interest) – the end of the sentence to be amended to read “… Councillor Amadi declared a non-pecuniary and non-disclosable pecuniary interest in that she worked in Wealdstone town centre.”

·                     Minute 168 (Page 70), penultimate paragraph – replace “programme” with “programmes”.

Minute 168 (Internal Audit and Fraud Teams: Mid-Year Report and Plan Update 2016-17) (Page 69): the minute records that “the outstanding items in Table 2 (in the report) would be reported to the next meeting”, but the information had not been included on the agenda.  It would be circulated separately to members of the Committee.

To receive any public questions received in accordance with Committee Procedure Rule 17 (Part 4B of the Constitution).

Questions will be asked in the order notice of them was received and there be a time limit of 15 minutes.

[The deadline for receipt of public questions is 3.00 pm on Friday, 31 March 2017.  Questions should be sent to publicquestions@harrow.gov.uk  

No person may submit more than one question].

RESOLVED:  To note that no public questions, petitions or deputations were received at this meeting.

RESOLVED:  To note that no references had been received.

Report of the Corporate Director, Resources & Commercial

The Committee received a report outlining the draft plans for Internal Audit and the Corporate Anti-Fraud Team (CAFT) for 2017-18 and proposing approval of an Internal Audit Charter established in accordance with the Public Sector Internal Audit Standards.  The report was introduced by the Head of Internal Audit and the Corporate Anti-Fraud Service Manager. 

The Chair asked for clarification of the support provided by PwC in relation to IT, particularly in the context of previous discussions at the Committee about the cost and value for money of this support.  The Head of Internal Audit explained that, while there had been a budget for specialist audit work on It services for some years, this had now reduced to £18,000 per annum; where necessary, she would on occasion be able to supplement this from underspends elsewhere.  This specialist work was expensive and very few authorities could afford to maintain an in-house service.  The Council had therefore joined with five other authorities and PwC to form the Cross Council Assurance Service, a framework which allowed the councils to share expertise and knowledge and make more effective and efficient use of PwC’s support.  As a result, it would be possible to carry out the IT-related work in the draft plan within the available budget. 

A Member was interested in whether audit and anti-fraud staff were involved in networks involving other boroughs.  The Head of Audit advised that there were meetings every other month for the officers in her role in London authorities as well as other networks for relevant staff. 

A Member asked about how the absence of full independent assurance in relation to some areas which were the responsibility of the Head of Internal Audit, were mitigated (Section 2.12 of the report refers).  The Committee was informed that, in a strict sense, the Public Sector Internal Audit Standards required heads of internal audit to declare where this independent assurance was not in place; in practice, the heads of internal audit in local authorities often had job responsibilities in relation to fraud and risk management which impact on their independence. The Standards were generally useful, but in some instances, they reflected “ideal world” solutions which were unrealistic in modern local authorities under significant budget pressures; as explained in the report, there were arrangements in place which mitigated the risk associated with variation from the Standards in this respect.

In response to a Member’s question about the Peer Review of the Council carried out in 2016, the Head of Internal Audit confirmed that she had taken its findings and recommendations into account in preparation of the draft plan and proposed responses would be addressed in later annual governance assessments.  The Corporate Director, Resources and Commercial, confirmed that the Council was still working on its response with a draft action shortly to be considered by Members. 

A Member queried the implications of the fact that the Head of Internal Audit reported to a Corporate Director who had both responsibility for some of the areas subject to  ...  view the full minutes text for item 178.

To resolve that the press and public be excluded from the meeting for the following item of business, on the grounds that it involves the likely disclosure of confidential information in breach of an obligation of confidence, or of exempt information as defined in Part 3 of Schedule 12A to the Local Government Act 1972:

RESOLVED:  That in accordance with Part I of Schedule 12A to the Local Government Act 1972, the press and public be excluded from the meeting for the following item(s) for the reasons set out below:

Report of the Corporate Director, Resources & Commercial

The Committee received a report on the Corporate Risk Register: Quarter 3, 2016-17, which was introduced by the Head of Internal Audit. 

A Member asked about the role of the Head of Internal Audit in advising managers about the treatment of identified risks.  The Head of Internal Audit underlined that responsibility for the management of the risk lay with the relevant service manager, though she would assist in identifying appropriate controls and challenge them if she considered them inadequate. 

Another Member raised the following concerns:

·                     there was a need to be clear about the possible impact on costs of the risk associated with the Smoking Cessation programme item in the register, and the means of mitigating this risk;

·                     the issue relating to Cultura should have been placed in the risk register given the governance concerns which had arisen;

·                     school place planning had become more significant in view of the requirement to close the Pinner Wood School site due to subsidence;

·                     the risks related to the Medium-Term Financial Strategy could have very significant implications and the “B2” classification might not be high enough; there was a need to understand the overspends and risks more specifically rather than as an aggregated item;

·                     information should be provided which assessed the potential costs of identified risks.

The Head of Internal Audit advised that some of the points raised would be addressed in the content of the Quarter 4 report.  The Director of Finance explained that it was difficult quantify the potential costs of risks with any degree of reliability; there was a lot of subjective judgement involved and doubtful that the time and effort involved was justified by the usefulness of the figures.  She considered that it was a better use of limited staff resources to focus on budget monitoring and adjustment.  With respect to the Medium-Term Financial Strategy, the Director of Finance considered the B2 classification to be appropriate given overall progress with achieving savings targets, but the position would be kept under constant review.  She accepted that it would be helpful to provide more specific information about the individual areas of budget pressure so that the risks could be scrutinised more closely; she would reflect this in Item 2 of the Corporate Risk Register as part of the Quarter 4 report. 

In reply to a Member’s question on the number of risks which had materialised over the previous 12 months, the Head of Internal Audit undertook to obtain this information and advise the members of the Committee.

A Member considered that since the B2 rating for the risk associated to the Medium Term Financial Strategy implied a likelihood of as much as 80% that it would not be met, the Council ought to be taking more action to mitigate the risk than was set out in the risk register schedule (p.45, DRR Ref.2).  Officers advised that the risk rating estimated the likelihood as between 51% and 80% and this range was considered appropriate given the context of significant budget challenges.  The action  ...  view the full minutes text for item 180.