No apologies were received.

Members are asked to declare any interests in matters for consideration at the meeting.

No declarations of interest were heard.

To approve the minutes of the meeting held on 15 June 2010.

The minutes of the previous meeting held on the 15^th June 2010 were agreed as a correct record and the Chair authorised to sign them.

There were no representations received.

This report of PKF, Accountants and Business Advisors is presented to the Audit Committee in accordance with the provisions of International Auditing Standard 260 (“ISA 260”), which requires a report to Members with responsibility for financial reporting (those charged with governance) containing the key findings from the audit, prior to issuing of an opinion on the financial statements.

Members will be asked to note the contents of the report.

The Committee received a report of the external auditors PKF, the purpose of which was to present the Annual Governance Report 2009/2010.  Leigh Lloyd Thomas of PKF addressed the Committee; he explained that this would be the last report of PKF who would no longer be the external auditors for the council.  This was due to the mandatory time limit set by the Audit Commission on one external auditor auditing one organisation.  He explained that the report was before the committee before the opinion had been given and would be before the committee again at its next meeting for information.

He reported two key issues identified within the report as items for consideration by the committee:

·         £325k still remained in cash accounts from the sale of homes in the 1980’s and this needed to be realised and redistributed to the relevant London Boroughs

·         legal registration of buildings had been found to be outdated in some cases.

The Statement of Accounts was described as of very high quality and there had only been minor amendments.

Despite this it was not possible to issue the annual statement due to a legal challenge against unlawful income.  This could not be issued until the case had been resolved.  He confirmed in response to questions however that the financial cost to the council had not been prohibitive to date.  The committee discussed the nature of the challenge and whether it could be classed as persistent and vexatious but were informed that there was a legal basis behind the claim.  There would be a written judgement published soon and this would provide a steer on the way forward for LBRuT.

The committee discussed the report; in particular they discussed the following themes:

·         Payments being made without purchase orders.  Mark Maidment reported that some of the payments reported were of small values.  Controls were important but should not be unwieldy or unworkable.  The committee requested information on the amounts identified.

·         The annual pension fund report had not been completed by this meeting but would be ready in time for the statutory deadline of the 1^st December.  Mark Maidment reported that this was a future aim.

It was RESOLVED that the information be noted.

The Committee was introduced to Lyndsey Mallors of the Audit Commission who would be taking over from Leigh Lloyd Thomas as external auditor for Richmond and Sarah Ironmonger who would manage the day to day account.  This tenure would be shorter than the usual as the Audit Commission would be disbanded in 2012.  In line with the Secretary of State’s abolition letter the private sector would compete to be the authorities’ external auditor but for the next couple of years the Audit Commission would try to create a smooth transition.

This report of the Director of Finance and Corporate Services comments on external audit fee proposals for 2009/10 and 2010/11.

The committee received  a report of the Director of Finance and Corporate Services the purpose of which was to report and comment upon external audit fee proposals for 2009/2010 and 2010/2011.  In addition it contained information on additional fees in respect of IFRS implementation and from an objection to the 2009/2010 accounts and future years audit fees that included reductions following the curtailment of the Use of Resources assessment.

The committee discussed the following themes:

• The objections to the fees made by officers and the Committees approval of them
  
  
• The implications for fees after the abolition of the Audit Commission.

It was RESOLVED that the report be noted.

This report of the Head of Internal Audit and Risk Management summarises the work carried out by internal audit since April 2010.

Councillor Cardy declared a personal interest during this item as Hampton Hill School featured in the report, where he was a governor.

The committee considered a report of the Head of Internal Audit and Risk Management the purpose of which was to summarise and report the worked carried out by internal audit since April 2010.

Officers reported that the priority 1 recommendations were those to which the committee should pay the highest regard.  These were Accounts Payable and Parking.  In addition although a priority 2 recommendation it was noted that Self Directed payments were also still featured as a risk.

The committee heard that as at the end of Quarter 2, 50% of the plan had been completed or in progress. This was as compared to 33% at the same time the previous year. 

In response to comments raised and questions asked the committee heard the following further information from officers:

• That it was not possible to estimate when the reconciliation between income from permits / season tickets issued would be complete. However it was not considered that the issue was related to fraud or maladministration but rather a problem in formatting between the sources and presentation of data.   The team within parking would be moving to corporate finance as part of the restructure and the Director of Finance and Corporate Services reported that he was confident this reorganisation would lead to a quicker resolution. 
• Vetting of voluntary group volunteers who have access to LBRuT vulnerable adults. Officers reported that although LBRuT was not required to vet volunteers there was also no evidence that the Council sought confirmation from the voluntary group that they had conducted checks.  It was suggested that in addition to checking those organisations already working LBRuT vulnerable adults vetting should be included in any future service level agreements.

It was RESOLVED that

1. that the monitoring report and current performance of Internal Audit be noted
   
   
2. that the assurance levels and management action in respect of audit reviews undertaken be noted.

This report of the head of Internal Audit and Risk management summarises the progress on previously reported audits.

The committee received a report of the Head of Internal Audit and Risk Management summarising the progress on previously reported audits.  There were five with recommendations outstanding and these were detailed in appendix B. 

The committee discussed some of the outstanding recommendations

Leisure Contracts – the delay had been caused by an initial underestimation of the complexity of the issue at hand.  It was hoped that the contract negotiations would be competed by January 2011.

SEN Transport – it was confirmed that the contract for SEN Transport would be retendered shortly.

It was RESOLVED that the information within the report be noted.

This report of the Head of Internal Audit and Risk Management sets out a revised Anti-Fraud and Corruption Strategy, Prosecution Policy and Whistleblowing Policy.

The Committee considered a report of the Head of Internal Audit and Risk Management, the purpose of which was to set out the revisions to the Anti-fraud and Corruption Strategy, Prosecution and Whistleblowing policies and to seek endorsement of the revised versions from the committee.  The Committee is also asked to recommend the revised Anti-fraud and Corruption Strategy and the Whistleblowing Policy for approval by Council on January 25^th 2011.

The Head of Internal Audit presented the report and explained the key changes to, and themes within the Strategy and Policies.  The committee discussed the following pertinent issues:

·         That not only results of Data matching undertaken as part of the National Fraud Initiative (NFI) but also their existence be publicised further as a deterrent to those who may have claimed fraudulently.  This should also be applied to blue badge checks and prosecutions.

·         Reactive Fraud Work and successful prosecutions or disciplinary action. 

·         Proactive Fraud Work – 30% of the Proactive strategy had been completed but would now be delayed by the need to fill a vacant post and training posts within the department.  As part of this work the committee welcomed the news that fraud briefing sessions for senior officers had been provided and that on-line fraud training for all staff was due to go live before the 1^st April 2011..

·         That it would be beneficial if steps could be made towards these strategies and polices being applied to other organisations who are commissioned by the council and to ensure they are adhered to. Also that permission for Internal Audit to inspect documents is explicit in contracts.  The Committee asked that information be provided on major contracts and in the future asked that rights for internal audit to access is  included on all new contracts (where relevant).

·         Risks surrounding planning consents and the measures in place to negate those risks, including monitoring and the separation of duties.

·         Benchmarking against other local authorities may be helpful in identifying whether the use of the Whistleblowing policy at Richmond is below average.

It was RESOLVED that

1. that authority be delegated to the Joint Heads of Internal Audit to make minor amendments to the Strategy and Policies

Subject to 1. above:

2. that the Anti-fraud and Corruption Strategy be endorsed and recommended for approval by Council
   
   
3. that the Whistleblowing Policy be endorsed and recommended for approval by Council
   
   
4. that the Prosecution Policy be endorsed and adopted

This report of the Head of Internal Audit and Risk management sets out a revised Anti Money Laundering Policy for LBRuT.

The Committee received a report of the Head of Internal Audit and Risk Management the purpose of which was to provide details of the revised Anti Money Laundering Policy.  The Head of Internal Audit explained that the revision had been wide reaching to align with recommended best practice and the committee were considering in effect, a new policy. 

The Committee heard that the council must prove that it is doing as much as it can to protect itself from becoming involved in any money laundering activities. 

The committee discussed high risk areas and the measures in place to protect the authority against illegal activity in these areas and heard that the LBRuT measures were stricter than the statutory criteria which was welcomed.

It was RESOLVED that the revised Anti Money Laundering Policy be approved.

This report of the Head of Democratic Services is to report the decision of Cabinet to note and recommend to Council for approval the Treasury Management Report for 2009/10 and the actual performance against the prudential indicators for 2009/10.  It also seeks endorsement and recommendation to full Council from the Audit Committee of the same documents.

The Committee received the report of the Head of Democratic Services to Cabinet on 9 November 2010, the purpose of which was to provide the Treasury Management Annual Report for scrutiny. 

The Committee heard that the report had been approved by Council at its meeting of 19^th October 2010 and that in particular point 8.5 should be given due regard.  This point related to the improved liquidity buffers of Building societies and also the extension of the maximum duration of deposits from 3 to 6 months in order to extend deposit options for the Council.

It was RESOLVED that the report and the Prudential Indicators in Appendix B be noted.

This report of the Head of Internal Audit and Risk Management sets out an annual review of the Council’s Risk Management Strategy and details of progress achieved since the last review in November 2009. 

The committee received a report of the Head of Internal Audit and Risk Management, the purpose of which was to set out the annual review of the Council’s Risk Management Strategy and the progress achieved since the last review in 2009. 

Two changes were referred to the committee, the addition on page 179  regarding inclusion of risks in all reports to Cabinet and Overview and Scrutiny and changes to the format of the information contained on page 199.

The committee heard that the guidance in the step by step guide contained in part two was continuing to become better engrained within managers’ day to day activities.  

The committee discussed the report and in particular a concern was raised that issues of risk were dealt with by managers within the department where the risk was identified.  It was felt that it would be useful to have an independent e-mail address, separate from whistleblowing as it would not be used to report wrongdoing, where staff could report risks that they felt were not being adequately addressed within their departments.

It was RESOLVED

1. that officers investigate the possibility of an additional pathway for risks to be reported and an update at the next meeting be received
   
   
2. That the current position as described in the report be noted
   
   
3. That the revised Risk Management Strategy be approved.

This report of the Director of Finance and Corporate Services provides an update on the Corporate Risk Register maintained by the Executive Board.

The committee received a report of the Director of Finance and Corporate Services which provided an update on the Corporate Risk Register maintained by the Executive Board. 

The Director of Finance and Corporate Services presented the report to the committee.  He explained that the report was currently not finalised but would reflect the Executive Board’s feedback.  The Committee was asked to discuss and make any comments on the register as appropriate.

The committee commented that there was no reference to risks such as a ‘1000 year flood’ or air disasters but were assured that emergency planning did prepare for such events. 

In addition, that the changes the local government and the Localism Bill should be considered for entry to the risk register.

The committee discussed the nature of the corporate manslaughter risk and the nature of prevention of knowable risk and the preparations that the council could reasonably be expected to take.

It was also suggested that the risks to the council of expanding partnership working and possible increased use of volunteers should be considered for inclusion.

It was RESOLVED

1. that the issues of the introduction of the Localism Bill and the possible increase in partnership working would be considered for inclusion
   
   
2. that the information in the report be noted.

Report of the Heads of Internal Audit and Risk Management on the future of the department and possible changes to the structure and functions there in.

The Committee received a report of the Head of Internal Audit & Risk Management, the purpose of which was to outline the issues which would impact on the future role and provision of Internal Audit Services.

The Head of Internal Audit presented the report and referred in particular to the following themes and issues:

·               The proposed transfer of Housing and Council Tax benefit fraud investigation from local authorities to the Department of Work and Pensions.  This would affect 2.5 FTE posts at Richmond

·               The proposed reduction of posts in the Internal Audit team as part of the efficiency programme.  Posts identified were currently vacant.

·               The proposed continuation of the contract arrangement with London Authorities (principally Croydon) and Deloittes.

·               Progress continued to be made in the appointment of an Audit Manager

The committee expressed concern that the audit programme may be reduced in light of proposed staffing efficiencies but were assured that although the number of days may be slightly reduced the effects would be absorbed by current staff.

It was RESOLVED that the report be noted.

The Committee will be asked to assess areas of risk or potential review for the next meeting in February 2011.  It will also consider training dates prior to the next meeting date.

The Committee discussed the date and content of the next meeting. 

It was RESOLVED:

1. that Treasury Management training be arranged before the next meeting
   
   
2. that the decision on areas of risk to be considered at the next meeting be delegated to the Chairman and Vice Chairman in conjunction with the Heads of Internal Audit Services