Agenda and minutes

Venue: Bromley Civic Centre

Contact: Steve Wood  020 8313 4316

Items
No. Item

138.

APOLOGIES FOR ABSENCE AND NOTIFICATION OF SUBSTITUTE MEMBERS

Minutes:

Apologies were received from Councillor Robert Evans and Councillor Keith Onslow attended as substitute.

139.

DECLARATIONS OF INTEREST

Minutes:

There were no declarations of interest.

140.

CONFIRMATION OF THE MINUTES OF THE MEETING HELD ON 2nd NOVEMBER: EXCLUDING THOSE CONTAINING EXEMPT INFORMATION pdf icon PDF 343 KB

Minutes:

The minutes of the meeting held on the 2nd of November 2022 were agreed and signed as a correct record.

141.

QUESTIONS TO THE AUDIT SUB COMMITTEE

In accordance with the Council’s Constitution, questions that are not specific to reports on the agenda must have been received in writing 10 working days before the date of the meeting. This would have been by 5pm on 22nd February 2023.

 

Questions specifically concerning reports on the agenda should be received within two working days of the publication date of the agenda.  Please ensure that questions specifically regarding reports on the agenda are received by the Democratic Services Team by 5pm on 2nd March 2023

 

Minutes:

Two questions were received from a member of the public concerning the Net Zero report that had been published on the Council website prior to the meeting. The written questions and responses had been published on the Bromley Council website and emailed to the questioner.

142.

MATTERS OUTSTANDING FROM THE LAST MEETING--PART 1 pdf icon PDF 306 KB

Minutes:

CSD 23041

 

Members noted the matters arising from the previous meeting.

 

Resolved that the Matters Arising report be noted.

143.

QUESTIONS REGARDING THE AUDIT REDACTED REPORTS

The published Audit and Risk Management Redacted Reports are:

 

1.  Capital Strategy: Planning and Monitoring

2.  Cash and Bank

3.  Net Zero

4.  Pre-Paid Cards (Children’s)

5.  Public Health Covid 19 Response: Lessons Learnt

6.  Quality Assurance Framework: Children’s

7.  Review of Edgebury Primary School

 

The web link to the reports is

 

Agenda for Information Briefings on Wednesday 8 March 2023, 7.00 pm (bromley.gov.uk)

 

Please ensure that any questions on the reports are received by the Committee Clerk by 5pm on Thursday, 2nd March.

Minutes:

As previously mentioned, two questions had been received concerning the audit redacted reports published on the Council website. These were regarding the Net Zero report; the answers to the questions had been published on the Bromley Council website and emailed to the questioner.

 

The Chairman asked about the redacted published report concerning Edgebury school. This was the only published redacted report where there was an outstanding priority one recommendation. There had been issues with 16 missing computers and loose financial controls. He asked if this priority one recommendation was being followed up. The Head of Audit and Assurance  responded and said that the school had installed more robust processes, but the Audit Team would return in April to see how these processes were being implemented.

 

RESOLVED that the redacted reports published on the Council website be noted.

144.

LBB DRAFT AUDIT RESULTS REPORT-YEAR ENDED 31st MARCH 2020 pdf icon PDF 4 MB

Minutes:

Hannah Lill, Senior Manager with Ernst and Young, attended to present the report and answer questions. She was supported by Mr. David Dobbs (LBB Head of Corporate Finance and Accounting—CEX). The Committee was informed that this report had previously been presented to the General Purposes and Licencing Committee and that modifications and changes to the report had been highlighted in blue. Ms Lill directed Members to the objections to the accounts. It was noted that with respect to the 2018-2019 accounts an acceptance decision letter had been sent to the objector and that matters relating to the closure of these accounts were progressing. Members noted that due to the outstanding objections on the 2017/18 and 2018/2019 audits, Ernst and Young had been unable to conclude on the value for money arrangements for the 2018/19 and 2019/20 accounts.

 

Ms Lill referred the Committee to page 9 of the Ernst and Young report which stated that E&Y had completed the audit of LBB’s financial statements for the year ended the 31st of March 2020 and they had performed the procedures that were outlined in their audit planning report. Ms Lill reminded Members that E&Y had previously reported to the July 2021 committee meeting where they had highlighted a potential qualification on property, plant and equipment which had resulted from errors identified in furniture and equipment valuations. The Council had since suggested an alternative approach which addressed the matter and which would result in a Prior Period Adjustment; so this work was now substantially complete.

 

Ms Lill said that due to the significant amendments required to the draft audited accounts, Ernst and Young had envisaged that they would work through the revised statements with officers during February and March 2023; they would then report to the 8th of March committee with a view to signing the financial statements later in March 2023. This would include the signing of the separate opinion on the London Borough of Bromley’s Pension Fund and the 2019/20 statement of accounts.

 

Page 10 of the report provided a further summary of risk areas. These were summarised as follows:

 

·  Management Override--misstatements due to fraud or error

·  Incorrect capitalization of revenue expenditure

·  Valuation of land and buildings

·  IAS 19 valuations

 

Ms Lill said that Ernst and Young had concluded their work on management override and had found no indication of any mis-management involving the override of controls.

 

Ernst and Young had concluded their work on incorrect capitalization of revenue expenditure and a separate report had been drafted concerning this.

 

Ms Lill stated that as a result of material issues identified with ‘furniture and equipment’ and also with the depreciation of revalued assets, the Council had corrected these using Prior Period Adjustments.

 

Ernst and Young had agreed the LBB’s pension liability disclosures to the actuarial report. They had noted an unadjusted misstatement on IAS 19 in respect of the Goodwin case. They had reviewed the roll forward of liabilities under ISA 540 estimates and the E&Y pension specialist had  ...  view the full minutes text for item 144.

145.

LBB EXTERNAL AUDIT PLANNING REPORT: YEAR ENDED 31 MARCH 2021 pdf icon PDF 4 MB

Minutes:

Ms Lill highlighted the principal areas of focus and risk :

 

·  Risk of fraud in revenue and expenditure recognition

·  Misstatements due to fraud or error

·  Potential misstatements in property, plant and equipment and investment properties valued at fair value due to significant judgments involved

·  Incorrect valuation for pension liability due to significant judgement involved

·  Going concern disclosures

·  Incorrect accounting treatment of Covid grants

·  Inappropriate infrastructure asset recognition and derecognition

 

Ms Lill stated there were two new risk areas:

 

·  Incorrect Accounting Treatment of Covid Grants

·  Inappropriate infrastructure asset recognition and derecognition.

 

The latter was a national issue affecting all authorities that held infrastructure assets. Ms Lill said that EY were collaborating with officers to implement the current CIPFA work around until the Council were ready to move forward in line with the new code.

 

Members noted that Planning Materiality had been set at £10.52m. Performance Materiality had been set at £5.1m and Audit Differences had been set at £0.52m.

 

The report set out EY’s planned work on the Council’s VFM arrangements. EY were now auditing under the Code of Audit Practice 2020.  This meant that they would no longer be providing a VFM conclusion. At the end of the audit a commentary would be issued on the VFM arrangements. This would be a public document and so would be discussed with officers prior to publication.

 

Ms Lill referred Members to Appendix A on page 39 of the EY report. This noted the various proposed fees for the 2020/21 and 2019/20 audits. Additional fees were mentioned in the commentary and Ms Lill stated that these would be discussed with officers, presented to the PSAA and then brought back to the attention of the Committee. 

 

A discussion took place concerning the administration of Covid Grants and the assessment of pension liability risk. Ms Lill said that pensions liability was a significant estimate within the finance statement and EY were obligated to ensure that these statements were reasonable and supportable. This was the same for all local authorities. The Chairman of the LBC Pension Committee was present and he stated that the Council’s pension scheme was 120% funded.

 

RESOLVED that the LBB External Audit Planning Report for Year Ended 31st March 2021 be noted. 

 

 

 

146.

UPDATE REGARDING INDEPENDENT MEMBERS

Minutes:

The Chairman stated that two candidates had been interviewed for the position of Independent Member. It was intended that a further three candidates would be interviewed in early April. It was hoped that they would be appointed and ready to sit on the committee for the July meeting.

 

RESOLVED that the Independent Member update be noted.

147.

INTERNAL AUDIT AND FRAUD PROGRESS REPORT pdf icon PDF 871 KB

Additional documents:

Minutes:

FSD23018

 

The Head of Audit and Assurance updated the committee regarding the External Quality Assessment and said that the assessment was now going ahead. The External Assessor would be meeting the Head of Audit and Assurance,  the Director of Finance, Chief Executive and the Chairman of the Audit and Risk Management Committee. A follow up report regarding the External Quality Assessment would be provided to the next meeting of the Audit and Risk Management Committee.

 

Members noted that the report provided an update on progress against the 2022/2023 Internal Audit Plan. A Member referenced the two audits which had been classified as having a ‘limited assurance’, these were the Housing Allocations audit and the Parks and Green Space audit. The former had not been published recently with the redacted reports as it contained part 2 information.

 

A discussion took place regarding payments made outside of the financial system. The Head of Audit and Assurance said these payments were rare and limited in number but she would endeavour to find out more about these payments and report back to the committee. The committee was pleased to note that Bromley was the 4th highest prosecutor of blue badge fraud in England. The Chairman mentioned that previously enforcement officers used to seize blue badges where appropriate and in his view it was time to encourage them to do so once again A Member commented that enforcement officers should be encouraged to confiscate blue badges where necessary.  A Member queried how misuse of the blue badge would be determined. Another Member expressed concern lest victims of blue badge fraud be punished unfairly due to the actions of others. 

 

A Member referred to the appendix and the reference to possible changes to the delivery of SEN Transport. She asked if in future the dates that work was undertaken could be added to the summary.

 

A Member referenced Covid Business Support Grants and said that he had forwarded some information to officers regarding a potential fraud. He had not received an update regarding this. The Head of Audit and Assurance  responded that if he provided the details to her outside of the meeting she would investigate this further.

 

RESOLVED that a recommendation be made to the ECS PDS Committee to consider re-instating the previous practice of confiscating Blue Badges. 

148.

INTERNAL AUDIT PLAN AND CHARTER 2023-2024 pdf icon PDF 469 KB

Additional documents:

Minutes:

FSD 23019

 

Members noted the Audit Charter and the fact that it was best practice to review this every year. A Member asked what was being planned in terms of property valuations and property maintenance so that problems that had occurred previously would not re-occur. It was suggested that insurance could be managed elsewhere to avoid audits of this area being sourced externally. Claims handling was currently outsourced to LB Sutton. It was noted that there was extensive reporting regarding the insurance service to ER&C PDS.

 

A discussion took place regarding Risk Appetite and Risk Tolerance and what levels the Council was prepared to accept. A Member suggested that a statement regarding this would be useful. It was noted that PDS committees had a responsibility to scrutinise risk.

 

RESOLVED:

 

1) That the April to October 2023 Audit Plan be approved.

 

2)  That the Internal Audit Charter be approved

 

3) That the proposed suite of Key Performance Indicators for 2023-2024 be approved. 

 

 

 

149.

LOCAL GOVERNMENT ACT 1972 AS AMENDED BY THE LOCAL GOVERNMENT (ACCESS TO INFORMATION) (VARIATION) ORDER 2006 AND THE FREEDOM OF INFORMATION ACT 2000

  The Chairman to move that the Press and public be excluded during consideration of the item of business listed below as it is likely in view of the nature of the business to be transacted or the nature of the proceedings that if members of the Press and public were present there would be disclosure to them of exempt information.

Minutes:

RESOLVED that the press and public be excluded during consideration of the items of business listed below as it was likely in view of the nature of the business to be transacted or the nature of the proceedings, that if members of the press and public were present, there would be disclosure to them of exempt information.

150.

MATTERS OUTSTANDING: EXEMPT INFORMATION

Minutes:

CSD23042 

 

Members noted the matters outstanding that were recorded in the exempt information matters arising report.

 

RESOLVED that the Part 2 Matters Outstanding report be noted.

151.

INTERNAL AUDIT AND FRAUD PROGRESS REPORT--PART 2

Minutes:

Members noted the Part 2 Internal Audit and Fraud Progress Report. As this report contained exempt information, the minutes are noted in the Part 2 minutes.

 

RESOLVED that the Internal Audit and Fraud Progress report (Part 2) be noted.    

152.

EXEMPT MINUTES OF THE MEETING HELD ON 2nd NOVEMBER 2022

Minutes:

Members noted the exempt minutes of the meeting that was held on 2nd November 2022.

 

RESOLVED that the exempt minutes of the meeting that was held on 2nd November 2022 be noted.