Agenda and minutes

Audit and Governance Committee
Thursday, 31st October, 2019 7.00 pm

Venue: Civic Offices - St Nicholas Way, Sutton, SM1 1EA. View directions

Contact: Cassie Fraser-Shanley, Committee Services Officer  Tel.: 020 8770 4990, Email:  committeeservices@sutton.gov.uk

Media

Items
No. Item

15.

Welcome and introductions

Minutes:

The Chair, Councillor Weatherlake, welcomed those present.

16.

Apologies for absence

Minutes:

There were no apologies for absence.

17.

Declarations of interest

Minutes:

There were no declarations of interest.

18.

Minutes of the previous meeting pdf icon PDF 78 KB

To approve as a correct record the minutes of the meeting held on 25 July 2019.

Minutes:

RESOLVED: that the minutes of the meeting held on 25 July 2019 be agreed as an accurate record, subject to minor amendments.

19.

Operation of the Code of Conduct pdf icon PDF 108 KB

A function of the Council’s Audit and Governance Committee is to receive reports on the operation of the member Code of Conduct at Sutton. The purpose of this report is to update the committee on complaints which have been received and dealt with since the last meeting of the Audit & Governance Committee on 25 July 2019.

Minutes:

Alexa Coates, Head of Committee and Management Support, presented the report. 

 

Members discussed the recurring theme within complaints around a perception that members are not responding sufficiently quickly to email contacts. Members suggested a range of possibilities to tackle this, including receiving a copy protocol of how the Council deals with enquiries which can be passed onto residents, adding a response time in email signatures or having an auto-reply. 

 

Members also discussed the time taken to receive a case reference number from Members’ Enquiries and the possibility for a system which allows members to review the status of an enquiry. Richard Simpson, Strategic Director of Resources, agreed to look into this. He also confirmed that there were no statistics held regarding the average response time from Members’ Enquiries to each member. 

 

RESOLVED: that

  1. The action taken by the Monitoring Officer in dealing with complaints be noted.
  2. It be agreed to receive this report biannually rather than quarterly.

 

20.

Member Development Update pdf icon PDF 257 KB

The purpose of this report is to update the Committee on the Council's member development programme, setting out how the Council is ensuring that all members are fully aware of their obligation to follow the Nolan Principles and to help them meet the standards of behaviour and conduct that the public have a right to expect from their elected members.

Minutes:

Alexa Coates, Head of Committee and Management Support, presented the report. 

 

Members discussed the possibility of a central, online casework system, which they agreed would be helpful in their roles. 

 

In response to questions, officers advised that training was delivered by a mixture of both internal and external facilitators and that dates are set with the Council calendar to ensure that enough notice is given. They also confirmed that different models of delivery, such as webinars, were being looked at to increase uptake further. 

 

There was further discussion amongst members as to whether the Members Information Bulletin should be sent on a Friday or Monday. 

 

RESOLVED: that 

  1. The member development update be noted.
  2. It be agreed to receive this report biannually rather than quarterly. 
  3. It be agreed that the Members’ Information Bulletin (MIB) is sent on a Friday, rather than Monday. 
  4. It be agreed that a cross party, representative focus group of Members be invited to give their views on what information would be useful for Members to receive through the MIB.

21.

HR Update pdf icon PDF 410 KB

This report provides an overview of key HR workforce and health and safety related data, including analysis of that data and an overall direction of travel. It provides an update on a range of activities within HR and across the London Borough of Sutton (LBS) to address some of the challenges the data raises.  It also provides an update on some of the projects that are coming out of our OD Strategy.

Minutes:

Alison Hackett, Assistant Director - People and Organisation Development, presented the report.

 

Members were positive about the rise in apprenticeships and asked officers how the Council are advertising the scheme. Officers advised that the HR department are currently going through a restructure, however once completed, they hope to dedicate more time and resources into advertising apprenticeships. 

 

Members also discussed the lack of data within the report for contracted staff. Concerns were raised around ensuring that contractors’ health and safety regulations comply with the regulations of the council and officers advised that health and safety is included in the commissioning and contract management.

 

RESOLVED: that 

  1. the report be noted
  2. It be agreed to receive this report biannually

 

22.

Review of the Investment Property Portfolio and Risk Management pdf icon PDF 197 KB

This report sets out how the Council monitors performance and deals with risk in relation to existing and new properties in the investment portfolio.  This contributes to the quality and security of the Council’s investment holdings and its ability through protected/improved revenue to deliver the corporate plan priorities.

Minutes:

Chris Rhodes, Head of Asset Management, presented the report.

 

Members discussed the occupancy rate of St Nicholas Centre, which had been rated amber in the report. In response to questions, officers advised that the council continues to work collaboratively with the management company so that the centre remains relevant and continues to contribute to the High Street. The level of rent was a matter between the tenant and the company holding the long lease and the use of turnover-based rental agreements in some cases should not be directly impacting the retention of tenants as it was a commercial tenancy condition. Additionally, when questioned about the increase in industrial units within the portfolio and whether it was council policy to create more industrial properties, officers advised that it was not policy specifically, however the council are keen to expand their industrial and logistics holdings where possible to ensure the IPP remains a balanced portfolio. Opportunities in Sutton are however limited.

 

RESOLVED: that the report be noted.

 

23.

Internal Audit Progress Report pdf icon PDF 202 KB

In May 2019, the Audit and Governance Committee agreed an Annual Audit Plan comprising a total of 750 chargeable days. This report summarises Internal Audit’s progress in delivering the Annual Audit Plan up to September 2019.

Additional documents:

Minutes:

Margaret Culleton, Head of Audit, presented the report. 

 

Members discussed the school audits and asked officers what action the council takes to make schools more compliant and if there were any mechanisms in place to foresee any future issues which may occur. Officers advised that regular meetings are set-up to assist on improvements and it is the responsibility of Governors to take the audit seriously. There were checks in place such as quarterly returns and reconciliation of accounts, which act as an early warning system and it is not uncommon for some smaller schools to have some compliance issues, due to not having the scale of financial infrastructure in place. 


RESOLVED: that the progress report be considered and commented on.

 

24.

Hackbridge School - Capital expansion project Internal audit pdf icon PDF 124 KB

Internal Audit were asked to review the processes and procedures followed for the Hackbridge Primary School Expansion project, including the tender and monitoring arrangements and to consider any lessons learnt. The report is attached as Appendix A.

Additional documents:

Minutes:

Margaret Culleton, Head of Audit, presented the report. Paul Algeo, Head of Programme and Project Management, provided more information on the project, including a timeline of events. 

 

Members raised concerns about allegations in relation to Lakehouse that had appeared in the media prior to Lakehouse’s appointment on this contract. Officers advised that the Council used the Haringey LCP Major Works Framework (managed by the London Borough of Haringey) and that Lakehouse passed all relevant checks to be part of that framework which is used by a large number of London Boroughs. A discussion took place on various press stories which involved Lakehouse.  The team working on the project were only made aware of these allegations in July 2017, after we were in contract with Lakehouse, however officers emphasised that this was against employees of Hackney Homes and Lakehouse, and not the organisations. 

 

Members discussed the significant findings in the report and in response to questions around the use of a JCT contract and the role of the Haringey LCP Major Works Framework, officers clarified that the terms of the contract were standard in the industry and that the Framework agreement was not at fault, as Lakehouse had entered into a formal contract with the London Borough of Sutton. 

 

Members also questioned the cost implication of the project, and whether there would be any way to recover costs from Lakehouse, especially as it had now gone into administration. It was confirmed that there was an overspend in the region of £2-3 million and that the London Borough of Sutton was taking legal action to attempt to recover costs as much as possible. 

 

Members requested that they are kept informed of the final position in relation to costs on this project. A request was also made that officers consider the most effective way to procure major construction projects and a report is brought back to a future meeting. A further discussion took place regarding member roles in evaluation on larger projects. 


RESOLVED: that the findings of the Internal Audit report be noted.

 

25.

Anti Fraud and Anti Corruption Strategy and Whistleblowing Policy update pdf icon PDF 126 KB

The Anti-Fraud and Corruption Strategy sets the Council’s approach to preventing, detecting, investigation of and action against fraud and corruption, both internally and externally.

Additional documents:

Minutes:

Margaret Culleton, Head of Audit, presented the report. 

 

During discussion, members urged officers that there should be a focus on turning the strategy into a culture change within the organisation and for a system to be created which gives greater protection to protect potential whistleblowers. Officers advised work was ongoing with HR to ensure the policy was communicated effectively to all.  


RESOLVED: that the Anti-Fraud and Anti-Corruption Strategy be approved and commented on by the committee.

 

26.

Fraud Referrals and Investigations Update pdf icon PDF 215 KB

This report summarises the results of the Council’s Counter-Fraud and investigations work undertaken since 1 April 2019 compared with the indicative resource allocation plan for 2019/20.

Additional documents:

Minutes:

Kevin Holland, Head of South West London Fraud Partnership, presented the report.

 

In response to questions, officers advised that nine properties had been brought back into Housing Association/Council control, following identification of fraud, and that the time taken to recover properties was increasing in length. Additionally, the inconsistency between Council Tax Reduction/Single Person Discount fraud cases this year compared to last year was because a big review of SPD was done through data matching last year. Further work has been delayed because of the delay in the London Fraud Hub. Officers will consider how we can try and increase activity in this area. 


RESOLVED: that the report be noted.

 

27.

Annual Audit Letter 2018/19 pdf icon PDF 108 KB

The Annual Audit Letter for 2018/19 formally reports the outcome of the external audit of the Council’s financial statements for the year and the external auditor’s (Grant Thornton) opinion on the Council’s arrangements to secure value for money. The auditor gave an unqualified opinion on the financial statements, including the pension fund statements, and concluded that the Council had proper arrangements in all significant respects to ensure it delivered value for money in its use of resources.

Additional documents:

Minutes:

 Iain Murray, Engagement Lead for Grant Thornton, presented the report. 

 

Members asked officers about the findings and conclusions of the McCloud legal ruling around age discrimination and if this will have any impact on pension schemes in Sutton. Officers was unsure about the ultimate recourse of the ruling, however, it needed to be acknowledged in the relevant financial statements. 

 

Members also asked officers why the council were unable to fully review the monitoring and reporting of the £8 million of savings required for 2018/19, and a separate monitoring programme was needed. Officers advised that a separate monitoring of the savings programme is now in place and gave the auditors increased confidence that the savings were being made. 

 

RESOLVED: that

  1. the external auditor’s report on progress in respect of delivering their responsibilities be noted. 
  2. the challenge questions in respect of the emerging issues be considered.

 

28.

Audit Progress Report and Sector Update pdf icon PDF 110 KB

The Audit Progress Report and Sector Update provides the progress of our external auditors (Grant Thornton) in delivering their responsibilities. The report also includes:

 

·         A summary of emerging national issues and developments that may be relevant to the London Borough of Sutton; and

·         A number of challenge questions in respect of the emerging issues.

Additional documents:

Minutes:

Iain Murray, Engagement Lead for Grant Thornton, presented the report.

 

Members raised concerns around the survey findings that the majority of local finance officers had lost confidence in their future financial position. Officers advised that the survey was conducted in July when there was a lot of uncertainty as it was the last year of spending review and the spending round in September would have provided more certainty. 

 

RESOLVED: that

  1. the external auditor’s report on progress in respect of delivering their responsibilities be noted. 
  2. the challenge questions in respect of the emerging issues be considered.

 

29.

Corporate Risk Register pdf icon PDF 147 KB

This report provides an overview of the current corporate risk register which has been updated for October 2019.

Additional documents:

Minutes:

Sam Barker, Head of Commissioning, Insight and Improvement, presented the report. 

 

Members asked officers if child asylum seekers was an area where the council was at risk of not meeting its statutory obligations and they were advised that the current budget provision was adequate to meet the costs but there is some risk if the numbers increase. 

 

Members asked additional questions to officers about the implications to the London Borough of Sutton over the fire at the Hamptons. 


RESOLVED: that the updated corporate risk register, as part of the ongoing management of risk across the authority, be noted and commented on.

 

30.

Treasury Management - Mid Year Report to 30 September 2019 pdf icon PDF 158 KB

This report is the treasury management review for the six months ended 30 September 2019. It summarises the Council’s Treasury Management operations during the first six months of 2019/20. It is presented for the purpose of monitoring and review and meets best practice as suggested by the Treasury Management Code of Practice.

Additional documents:

Minutes:

Lyndsey Gamble, Head of Investment, Risk and Commercial Finance presented the report.


RESOLVED: that the treasury management activity undertaken during the first six months of the year be noted.