Agenda and minutes

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Contact: Daksha Ghelani, Senior Democratic Services Officer  E-mail:  daksha.ghelani@harrow.gov.uk

Media

Items
No. Item

188.

Attendance by Reserve Members

To note the attendance at this meeting of any duly appointed Reserve Members.

 

Reserve Members may attend meetings:-

 

(i)            to take the place of an ordinary Member for whom they are a reserve;

(ii)          where the ordinary Member will be absent for the whole of the meeting; and

(iii)         the meeting notes at the start of the meeting at the item ‘Reserves’ that the Reserve Member is or will be attending as a reserve;

(iv)         if a Reserve Member whose intention to attend has been noted arrives after the commencement of the meeting, then that Reserve Member can only act as a Member from the start of the next item of business on the agenda after his/her arrival.

Additional documents:

Minutes:

RESOLVED:  To note that there were no Reserve Members in attendance.

189.

Declarations of Interest pdf icon PDF 96 KB

To receive declarations of disclosable pecuniary or non pecuniary interests, arising from business to be transacted at this meeting, from:

 

(a)          all Members of the Committee;

(b)          all other Members present.

Additional documents:

Minutes:

RESOLVED: To note the declarations as published on the Council’s website prior to the meeting and the following additional declaration made by Councillor Kairul Kareema Marikar during consideration of:

 

Agenda Item 11 – Statement of Account

Councillor Marikar declared an interest in that she had a care business.  She would leave the Chamber if the interest became pecuniary.

190.

Minutes pdf icon PDF 178 KB

That the minutes of the meeting held on 12 October 2021 be taken as read and signed as a correct record.

Additional documents:

Minutes:

RESOLVED:  That the minutes of the meeting held on 12 October 2021, be taken as read and signed as a correct record.

191.

Public Questions

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 in which they were received.  There will be a time limit of 15 minutes for the asking and answering of public questions.

 

[The deadline for receipt of public questions is 3.00 pm, 25 November 2021.  Questions should be sent to publicquestions@harrow.gov.uk  

No person may submit more than one question].

Additional documents:

Minutes:

RESOLVED:  To note that no public questions were received.

192.

Petitions

To receive petitions (if any) submitted by members of the public/Councillors under the provisions of Committee Procedure Rule 15 (Part 4B of the Constitution).

Additional documents:

Minutes:

RESOLVED:  To note that no petitions had been received.

193.

Deputations

To receive deputations (if any) under the provisions of Committee Procedure Rule 16 (Part 4B) of the Constitution.

Additional documents:

Minutes:

RESOLVED:  To note that no deputations were received at the meeting under the provisions of Committee Procedure Rule 16.

194.

References from Council and other Committees/Panels

To receive references from Council and any other Committees or Panels (if any).

Additional documents:

Minutes:

None received.

195.

Late Reports

Additional documents:

Minutes:

Members agreed to accept the late reports for the special circumstances and grounds of urgency set out in the supplemental agenda.  However, the Chair and the Vice-Chair stressed the importance of such technical reports being submitted to the Committee on time and with the main agenda.

Resolved Items

Additional documents:

196.

Information Report - Audit Completion of Statement of Accounts 2019-20 - Annual Audit Letters

Report of the Director of Finance and Assurance.

Additional documents:

Minutes:

The Committee received a report of the Director of Finance and Assurance, which set the Annual Audit Letters for the Council and Pension Fund issued by the Council’s external auditor, Mazars LLP, for the financial year ended 31 March 2020 for consideration.  The report also referred to the completion of the external audit for the financial year 2019-20.

 

An officer introduced the report and highlighted the key positive conclusions arising from the external auditor’s work, which were as follows:

 

·                  an unqualified audit opinion and value for money conclusion;

 

·                  no audit recommendations issued.

 

The officer added that the Audit Letters would be replaced with Annual Audit Reports in the future.

 

The Chair welcomed Lucy Nutley (Director) from Mazars LLP, the Council’s external auditor, to add to the introduction and respond to questions from Members.  Lucy Nutley drew attention to the executive summaries set out in the enclosures to the report.  Members noted the reports from Mazars and agreed that any questions relating to the Council’s performance and delivery on issues such as Regeneration ought to be considered under the Statement of Accounts, Minute 199 refers.

 

RESOLVED:  That the report be noted.

197.

Annual Governance Statement 2020/21 pdf icon PDF 504 KB

Report of the Director of Finance and Assurance.

Additional documents:

Minutes:

The Committee received a report of the Director of Finance and Assurance, which set out the Head of Internal Audit’s Final Audit Opinion and the Annual Governance Statement (AGS) for 2020/21.

 

The Head of Internal Audit and Corporate Anti-Fraud introduced the report reminded Members that they had received a draft ASG in July 2021.  The Head drew Members’ attention to the governance issues that she considered to be of particular significance:

 

·                  the Depot Redevelopment Project, which was no longer considered to be a significant governance gap; details of which were set out on page 35 of the main agenda;

 

·                  an emerging issue, allegations of fraud and corruption, which was currently the subject of a criminal investigation and which had been covered in Part II (confidential) verbal briefing at the last meeting. Members were informed that the outcome of the investigation would be reported to the Committee in due course.

 

The Chair welcomed the transparency and the challenges faced by the Council but highlighted the need to recognise and applaud the positive elements within the report.

 

RESOLVED:  That

 

(1)             the Head of Internal Audit’s final audit opinion 2020/21 be noted;

 

(2)             having reviewed  the Annual Governance Statement 2020/21 in line with the Committee’s terms of reference, and confirmed that the Annual Governance Statement (AGS) properly reflected the risk environment and supporting assurances and legal and financial advice, taking into account internal audit’s opinion on the overall adequacy and effectiveness of the Council’s framework of governance, risk management and control; the Committee was satisfied and recommended it for approval by the Leader and Chief Executive.

198.

Information Report - Audit Progress Report

Report of the Director of Finance and Assurance.

Additional documents:

Minutes:

The Committee received a report of the Director of Finance and Assurance, which included an appendix that provided an update on progress from Mazars LLP, Council’s external auditor, on the delivery of their responsibilities and highlighted the potential risk of there being a significant weakness in Value for Money (VFM) arrangements relating to an alleged identified fraud.

 

Lucy Nutley (Director) from Mazars LLP informed Members that the new Code of Audit Practice issued by the National Audit Office had changed the work that auditors were previously required to do on the Council’s arrangements to deliver VFM, details of which were set out on page 43 of the supplemental agenda.  She added that the related reporting arrangements had also changed in that any weaknesses in VFM arrangements had to be reported to those charged with governance, which was the GARMS Committee.

 

Lucy Nutley reported on a potential significant weakness in arrangements in an area in relation to the operation of internal controls and the achievement of value for money.  A further report, the Auditor’s Annual Report, was intended to be submitted to the April 2022 meeting of the Committee, which would contain this risk and set out the need for any further recommendations to be issued or confirm that appropriate mitigating actions had been taken by the Council.

 

Lucy Nutley responded to questions from Members as follows:

 

·                  the work carried out by Mazars LLP would include a review of the findings and recommendations of the internal audit, including the progress made by management in their implementation.  Additionally, consideration would be given to the findings and recommendations of the Independent Review, commissioned by the Council’s Chief Executive, including the progress made by management in their implementation of any recommendations;

 

·                  the report in April 2022 would detail the outcome in relation to this risk but she pointed out that the risk may continue until 2022/23;

 

The Chair stated that the Council’s Internal Audit team were involved in the review of the risk and that Councillors would also be involved.  The Head of Internal Audit and Corporate Anti-Fraud reported that information could not be made public until the Police had concluded their investigations into the allegations but that the work being carried out by her team and the Independent Review would continue to be reported to the Committee when possible. 

 

RESOLVED:  That the report be noted.

199.

Statement of Accounts 2020-21

Report of the Director of Finance and Assurance.

Additional documents:

Minutes:

The Committee received a report of the Director of Finance and Assurance, setting out the audited Statement of Accounts for 2020-21 which were subject to the issue of the audit opinion.

 

Lucy Nutley (Director) from Mazars LLP, the Council’s external auditor who had prepared detailed reports on matters arising from the audit of the Statement of Accounts and the Pension Fund Annual Report, drew Members’ attention to the Executive Summary on page 241 of the supplemental agenda and outlined the key messages therein, including that their opinion on the financial statements was subject to further work being carried out,  but it was anticipated to be an unqualified opinion on the financial statements.  She hoped that the financial statements would be signed off in December 2021.

 

Members’ attention was also drawn to the significant audit risks identified, which were, in the following areas:

 

·                  management override of controls;

 

·                  revenue recognition;

 

·                  property plant and equipment valuation, including investment property (noting that a material valuation uncertainty had been recorded on the valuation of investment property of a specialised nature);

 

·                  defined benefit pension liability valuation (noting that a material valuation uncertainty had been recorded on the valuation of the Council’s share in the Pension Fund assets);

 

·                  grants accounting.

 

Lucy Nutley referred to supplemental agenda pages 261 onwards, including appendices A and C, and identified areas including those where Mazars had been satisfied  with the Council’s management responses to the internal control recommendations  and the summary of misstatements.  Together with Stuart Frith (Manager – Mazars LLP), she responded to Members’ questions as follows:

 

·                  the valuation of investment property assets and holdings held in the Council’s Pension Fund in areas such as retail and leisure and where the impact of Covid-19 was ongoing would  show the  “emphasis of matter” within the  audit opinion, due to the fact a material valuation uncertainty had been recognised in the formal valuation;

 

·                  the Pension Fund accounts were set out separately. Approximately 80% of the Pension Fund related to current and former Harrow employees.

 

·                  the changes in financial assumptions of approximately £260m, used in calculating the defined benefit pension liability, as set out on page 121 of the supplemental agenda, was due to a change in assumptions applied compared to in the previous year.  All assumptions applied had been reviewed and compared to the national report issued by Pricewaterhouse Coopers LLP.  The change arose from  a number of factors, all of which would increase the liability of the Council: increases in overall life expectancy, salaries and pensions.  The figure of £260m was calculated by the Pension Fund’s actuary in accordance with the relevant code of practice.  Mazars had assessed the independence of both the actuary (appointed by the National Audit Office) and Pricewaterhouse Coopers LLP and the assumptions made were appropriate;

 

·                  in respect of IT Security, there had been no indication of any untoward access of IT by former employees but that the ability to do so had been present.  All Internal Audit Plans would cover any issues with the IT and  ...  view the full minutes text for item 199.