There were no disclosures of interest.

To approve as correct the minutes of the meeting held on 25 July 2024 and authorise the Chairman to sign them.

The meeting minutes of the Committee held on 25 July 2024 were agreed as a correct record and signed by the Chairman following a rewording of paragraph 3 of the item on Annual Treasury Management report.

The Head of Financial Control introduced the report and then invited the representative of Ernst and Young (EY), the external auditors, to present the report the Audit Completion Report from Ernst and Young LLP on the 2021/22 and 2022/23 Statement of Accounts, together with the 2021/22 and 2022/23 Financial Statements for approval.

The Council was required to prepare annual financial accounts covering the period from 1 April to 31 March. These accounts were required to comply with the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom (the Code). The Accounts and Audit Regulations 2015 required that the authority prepared and published its unaudited accounts by 31 May, however; the Accounts and Audit (Coronavirus) (Amendment) Regulations 2020 revised the statutory publication date for 2021/22 to 31 July 2022. This reverted back to 31 May for 2022/23. Regulation 9(2) required Members to approve the Statement of Accounts that was to be published, either by meeting as a whole or through a committee.

Once Members had approved the Statement of Accounts, regulation 10 set out the requirements for publication of an authority’s accountability statements. These comprise of the Statement of Accounts together with the opinion and any certificate, the Annual Governance Statement approved by Members and the Narrative Statement.  Over recent years Havering, like many local authorities, had experienced significant delays with the audit of its accounts.

To address the backlog, and following a period of consultation, the system leaders developed a solution involving ‘backstop dates’. As a result, a large number of financial statements would be published with modified opinions. To mitigate any potential reputational risk and so that local bodies were not unfairly judged due to disclaimed or modified opinions, auditors would be expected to provide clear reasons for the issuing of such opinions. Havering’s draft accounts were published on the Council's website. The 2021/22 accounts were published on the 29th of July 2022, and the 2022/23 accounts were published on the 31st of May 2023.

The local audit backstop arrangements had been established to set dates by which an authority must publish a final version of its statement of accounts for a particular year, irrespective of the progress that had been made by the auditor. It was to be noted that thefirst of these dates was the 13th of December 2024, by which time the 2022/23 should be published. The 2021/22 and 2022/23 statement of accounts that the Committee were asked to approve were unchanged from the draft versions which were previously published on the Council’s website. The auditor had done a value of money for both years and the pension fund accounts for both years were also audited.

A number of procedures were preformed to ensure understanding of the entity and fraud risks through letters to management, the Audit chair, internal audit and the Monitoring Officer. Limited comparative and casting cheques that made recommendations were made to ensure consistency. Page 8 of the report gave the reason for the disclaimer and the background of  ...  view the full minutes text for item 8.

The Head of Assurance introduced the report that summarised the cumulative outcomes of audit and counter fraud work from 1st April to 31st October 2024, including actions taken by management in response to audit and counter fraud activity, which supports the governance framework of the authority.

The Accounts and Audit Regulations required the Council to undertake an effective internal audit to evaluate the effectiveness of its risk management, control and governance processes, taking into account the Public Sector Internal Auditing Standards (PSIAS) and other guidance.

Internal audit was a key component of corporate governance within the Council. The three lines of defence model, as detailed in the report, provided a framework for understanding the role of internal audit in the overall risk management and internal control processes of an organisation. The Council’s third line of defence included internal audit, which should provide independent assurance to senior management and the Audit Committee on how effectively the first and second lines of defence had been operating.

An independent internal audit function would, through its risk-based approach to work, provided assurance to the Council’s Audit Committee and senior management on the higher risk and more complex areas of the Council’s business, allowing management to focus on providing coverage of routine operations. The work of internal audit was critical to the evaluation of the Council’s overall assessment of its governance, risk management and internal control systems, and formed the basis of the annual opinion provided by the Head of Assurance which contributed to the Annual Governance Statement. It could also perform a consultancy role to assist in identifying improvements to the organisation’s practices.

The limited assurance reports issued since the last Audit Committee were included in Appendix 1 and it was confirmed that the authority had operated within the Treasury and prudential indicators set out in the TMSS; all Treasury management operations had been conducted in full compliance with the authority's treasury management practises.

Key indicators would be produced for the next quarter and it was explained that schools were reviewed every 3 years. However, the Towers requested the review was brought forward due to some concerns and there was work on-going to resolve those issues and the progress would be checked on in the next 6 months to ensure any risk was mitigated. In regard to the first recommendation, the control process to ensure all procurements were subject to appropriate governance etc. It was explained that implementation was due in February 2025 and Officers would go through and look at the detail of the average balance over the course of the year and processes were in place and provide clarification.

A debt board was created and the first meeting was being held in January which looked at assurance issues and ensured a process was in place to pursue and recover payments from non-payers.

RESOLVED that the Committee noted the contents of the report and raised any issues of concern and asked specific questions where required.

The Capital Strategy Manager provided a report that covered activity on treasury managed investments and borrowings and the associated monitoring and control.

The CIPFA TM Code required that authorities report on the performance of the treasury management function to Full Council at least twice per year (mid-year and at year-end), and the report covered the period from 1st April 2024 to 30th September 2024.

The Authority’s Treasury Management Strategy Statement (TMSS) 2024/25 was approved by Full Council on the 1 March 2024. The TMSS aimed to bring together the Council’s capital programme and its budget to ensure borrowing decisions were affordable and sustainable in line with regulation.

It was explained that the average cash balance was about 90 million and the average of the authorities’ performance was 5.36% for the full year.

RESOLVED that the Committee noted the treasury management activities to the end of September 2024 as detailed in the report.