Agenda and minutes

General Purposes & Audit Committee - Thursday, 14th January, 2021 6.30 pm

Venue: This meeting is held remotely; to view the meeting, please click here.

Contact: Michelle Ossei-Gerning
020 8726 6000 x84246  Email:

No. Item


Minutes of the Previous Meeting pdf icon PDF 227 KB

To approve the minutes of the meeting held on Wednesday 2 December 2020 as an accurate record.


The minutes of the meeting held on Wednesday 2 December 2020 were agreed as an accurate record, with the following amendment to:


To change names in Recommendation 6 from Councillor Stuart Millson to Councillors Stephen Mann and Steve Holland who had asked the question.




Disclosure of Interests

In accordance with the Council’s Code of Conduct and the statutory provisions of the Localism Act, Members and co-opted Members of the Council are reminded that it is a requirement to register disclosable pecuniary interests (DPIs) and gifts and hospitality to the value of which exceeds £50 or multiple gifts and/or instances of hospitality with a cumulative value of £50 or more when received from a single donor within a rolling twelve month period. In addition, Members and co-opted Members are reminded that unless their disclosable pecuniary interest is registered on the register of interests or is the subject of a pending notification to the Monitoring Officer, they are required to disclose those disclosable pecuniary interests at the meeting. This should be done by completing the Disclosure of Interest form and handing it to the Democratic Services representative at the start of the meeting. The Chair will then invite Members to make their disclosure orally at the commencement of Agenda item 3. Completed disclosure forms will be provided to the Monitoring Officer for inclusion on the Register of Members’ Interests.


There were none.


Urgent Business (if any)

To receive notice of any business not on the agenda which in the opinion of the Chair, by reason of special circumstances, be considered as a matter of urgency.


There were no items of urgent business.


Grant Thornton - Audit Progress Report pdf icon PDF 410 KB

To receive the progress report from the Council’s external auditors, Grant Thornton.


Officers present spoke to the Grant Thornton Audit Progress Report and provided more detail of the audit, highlighting that the report addressed the progress made rather than any definitive findings, and would report a conclusion of the audit upon completion.


In previous updates at past meetings, officers discussed how they had updated their risk assessment and various different judgments. This report included a sample of these from 2020 in comparison to 2021, thus far noting that a lot was being asked of the finance team this year due to the change in various judgments.


The progress report showed where the audit team was at present, addressing all the samples within the report that were required to be completed before the audit was finalised.


Grant Thornton officers highlighted that despite the volume of issues that the finance department was currently experiencing, they remained committed to the audit, which was important to note during this audit.


The Chair raised a question on whether there was any cause for concern within the audit. The officers advised there was concern about how quickly the audit could be completed, as the service had not reached a conclusion on the vast majority, therefore they were unable to draw any overall conclusions.


Officers highlighted the issue of the number of journals that were self-authorised, which was a control weakness. Journals should have a two-stage authorisation process to ensure accuracy within the work. This would be reported within the audit findings report. Members heard about payroll and the particular approach used for the process, and testing carried out on what was known as the full equivalent list.


Following the information shared by officers, Members discussed the report and made various comments.


Members commented on the management override of control journals and the two-step authorisation process, with a single personal authorisation process resurfacing this year having not previously been an issue, and queried whether there was evidence of it being the same departments or individuals; furthermore whether movement between journals to correct the budget was something that was common. Officers responded that the reasons auditors focused on journals was the movement of expenditure within the Council’s ledger, which raised risk and a lot of attention. Auditors were seeing a handful of self-authorised journals and wanted to build extra review around this to put retrospective controls in place. Officers further added that it was not just the finance team who could undertake journal transfers, the wider organisation was able to do this too, as such, a subsequent review was to be conducted to address the issue. Journal transfers, in summary, were income that came into one of the organisation’s bank accounts, allocated to a cost centre, which would need to be moved into the relevant departments budget; or it could be expenditure incurred on one cost centre but relate to three or four cost centres, as within the organisation not everyone would be entitled to a purchasing card for strict control; however, more measures were being put in place to  ...  view the full minutes text for item 4/21


Treasury Management Strategy Statement and Annual Investment Strategy Mid-Year Review 2020/2021 pdf icon PDF 540 KB

This Report is prepared in accordance with the requirements of the Chartered Institute of Public Finance and Accountancy (CIPFA) codes of practice in respect of capital finance and treasury management.


The Committee is asked to note the contents of the report.


The Head of Pensions and Treasury spoke to the report which was part of a suite of three. The first report, which was provided in March had set the budgets that had reviewed progress halfway through the year and provided the Committee with evidence that they were compliant with the Prudential Code, Capital Finance, and the Treasury Management Code of Practice.


With regards to the economic forecast and the interest rates forecast, the consensus of opinion was that interest rates would be fairly flat. The economic update was very difficult to capture due to the pandemic. In terms of capital, Members learned that that borrowing was slightly suppressed and as a result, the limit on the amount that was needed to finance was also suppressed. Again this was clearly a response to the current pandemic.


Furthermore, officers shared that the report noted the operational boundary and the authorised limits, which was the mechanism by which the Council controlled the amount of money that was borrowed. At the time of drafting the reports the amount of borrowing held incurred by the Council was £1.4465 billion pounds, which was a large sum, and the average weighted cost of borrowing was 2.89%, which was competitive with other boroughs across London. Each month, the Council carried approximately £82.6 million pounds worth of cash which was the ongoing float invested in the investment instruments described in Appendix D. There had been no opportunities for debt restructuring.


Members thanked officers for the comprehensive report and a helpful overview, and queried the mid-year position, asking officers what their main concerns were in planning of the next six months. Officers responded noting the state of the markets and the impact of Brexit were the main concerns as there would be a more resource demanding process to secure financing and secured debt, which would be harder as it would require more evidence before lending.


Members discussed Appendix D in the report of the investment strategy in more detail and had commented that Croydon had a much higher risk because of the level of debt in place, along with the issues of day to day management. A question about whether other local authorities effectively were treated like a company when they were looking to lend or borrow additional amounts. Officers confirmed that under section 114 notices it highlighted what actions could be taken. Local authorities in this instance understood the whole process of setting budgets and taking hard decisions. Banks were familiar and a set of banks would make a deal with local authorities. With the Public Works Loan Board, for Croydon, they had changed the way they lent, reducing their rates. Although this was good news, they had set much more onerous requirements, such as officers having to provide documentation for the financial director to provide their opinion as to the Council’s affordability in writing. Officers further noted that the Public Works Loan Board changes were across the sector and not Croydon specific.


Other Members asked about the approach  ...  view the full minutes text for item 5/21


Internal Audit Update Report pdf icon PDF 192 KB

This report details the work completed by Internal Audit so far during 2020/21 and the progress made in implementing recommendations from audits completed in previous years.


The Committee is asked to note the content of the report.

Additional documents:


The Head of Internal Audit spoke to the internal audit report which was a regular interim update. The report covered the period following the annual report provided in the October 2020 meeting.


In summary, the contractor was behind in completing the audit work. In section five of the report it showed the progress against the plan. The principle reason was that because of COVID-19 very little audit work had been done at the start of the year as contractor staff were furloughed and thus work did not commence until July. The contractor had indicated that resource could be available to complete the audits by the year end, however, given the organisation’s capacity the plan would not be finished within the year. Nonetheless there should be enough work completed for an annual Head of Internal Audit opinion in the annual report.


The report showed progress on follow ups where improved progress had been made on the older tasks.

Further to the report there was more information available on individual audit reports, as they are published on the website and available for public to also review.

Members asked for clarity about where the original audit plan would not be completed due to capacity issues and requested for a document to indicate which of the planned programme would not be carried out. The Head of Internal Audit indicated that a slightly amended plan was attached to the back of the report and that all of that work would be completed, albeit not by the year end.

A question was raised on whether all the follow ups would be completed as scheduled, and whether officers compared this expectation at this stage in the cycle. The Head of Internal Audit explained that follow-ups and implementation of recommendations was largely where expected. Implementation of the most recent years was usually slightly behind target, but would always catch-up.

Other questions raised included whether there was any specific risks that was raised for the Council as a whole by the inability to conclude the internal audit programme this year or be entered on the risk register and the Head of Internal Audit confirmed again that the plan would be completed, just not by the year end.

There were also questions about the audit of the Fairfield Halls delivery audit, which reported in November 2020. Additionally, Members noted that work was awarded to Brick by Brick without a competitive process and without a formal contract, which led to a question on whether this was usual for a redevelopment of that size by the council. Officers informed Members that using a license instead of a contract was not a conventional way of working, though it was not known whether it had been done on any other large project as such. Further, there was a no assurance on the Fairfield Halls audit as mentioned in the report, and officers had recently commissioned a value for money review on the Fairfield Halls project governance, which was expected to take four to six  ...  view the full minutes text for item 6/21


Anti-Fraud Update Report pdf icon PDF 219 KB

This report details the performance of the Council’s Corporate Anti-Fraud Team (CAFT) and includes details of the team’s performance together with an update on developments during the period 1 April 2020 – 30 November 2020.


The Committee is asked to note the Anti-fraud activity of the Corporate Anti Fraud Team for the period 1 April 2020 – 30 November 2020.



The Head of Anti-Fraud spoke to the anti-fraud report, and summarised the report in three parts. The first was focused on the performance of the team. In the report, officers guided Members to the figures which were slightly down although the number of investigations was broadly the same as last year. Officers advised the inability to complete a lot of the investigations was due to the pandemic and due to the restrictions working in key areas, visiting residents and interviewing people suspect of fraud.


In response to the previous committee meeting, officers had added a couple of case studies relating to the Covid-19 business grants, which was to give the Committee an illustration of some of the things seen.


Officers further added in the report staff internal investigations. Following a request from the December 2020 meeting, there was a very high level of data provided.


The Chair and Members thanked officers for the good report that included case studies, which helped understand data better, and the work operated by officers in doing thorough work.


Members discussed the case study and noted the issues that were being investigated, and raised a question as to how the case studies became referrals in the first instance, and in terms of investigations how it was granted. Officers responded that in the first grant scheme they had built an application process, which asked applicants to provide details about their business, about who they were. Some of the fraud cases had been picked up through the application process as they had been identified early and in many of these cases money was stopped from being paid out. With the examples provided, officers were able to identify the suspicious activity early to address the fraudulent activity to stop paying out the grants that the individual was never entitled to. Supplementary, Members asked how convinced officers were in finding any misdemeanours in the application process by other means. Officers informed that they had built a fairly tight application process, addressing the fraud risks, and had put in place fraud prevention from the start. Officers was assured that they had a good scheme as they were learning new things all the time.


Further to the case studies, Members commented on lessons learned, and enquired whether the lessons learned were easy for all to learn from and to replicate in the future, and whether there was any mechanism for feeding back to the Treasury Chancellor. Officers responded that they were accountable to the Department for business energy and industrial strategy in terms of grants, and that department also had seen the reports and would have seen how these frauds were occurring. Officers were seeing more requirements on the website and noted that it was being fed back to government which was making a difference. 


Members raised a question relating to fraud and in the context of the pandemic which was fast changing and the type of fraud committed. In particular, in the digital world what the officer’s approach was  ...  view the full minutes text for item 7/21


Corporate Risk Register pdf icon PDF 129 KB

The report updates the General Purposes & Audit Committee Members on the corporate risk register. The Committee is asked to note the content of the Corporate Risk Register as at January 2021.

Additional documents:


The Head of Risk & Insurance spoke to the risk register report, which were risk rated at twenty or twenty-five. Officers informed that there was twenty-five risks, which was currently rated as corporate red.


The risks were categorised into one of three categories:


The first category was large numbers of existing risks, which were identified as being the existing stock demand, budget gap risks in areas such as Adult Social Care, Special Educational Needs, Unaccompanied Asylum Seekers and so forth;


The second category of risks was specifically related to the pandemic and Covid-19, and responded to the public health emergency, which was developing on a daily basis, which officers were very focused on from a risk point of view; and


The third set of risks related to the major financial challenges arising from the section 114 notice and governance issues, which were highlighted in the report in the public interest, and the ability of the council to respond to the to the report in the public interest (RIPI).


Officers advised that the risk management team, had been doing a significant amount of work with Members and new members of the executive leadership team, in particular, to review the register.


Officers added that an area of development was in relation to target dates for future control measures, and a lot of work was being done around this. In other cases, there would be control measures set up with the risk owners for a more definitive target date, so that there was assurance on the progress towards achieving those future control measures where appropriate. One risk register, which took twelve months was the horizon scan, and thus as a future controller, officers would look to achieve it within that time scale.


Officers concluded following Members queries that future reports would include a one page guide to rating risks both for likelihood and impact, which would help interpret the risk register to decipher a rating of five for likelihood to a rating of four for impact, for example.


Members welcomed the comprehensive report and discussed some of the risk register in detail.


The first comments were in relation to the tracking of long standing risks and long standing future controls, it was asked whether there was the potential to have a report highlighting future controls not delivered within that twelve month period. Officers responded that it was feasible to effectively investigate using the Council's risk management software to review how long those future controllers had been on the register. In the short term officers or risk owners should be asked whether a future control could be delivered in twelve months, in which case, it would provide data alternatively to the reality of existing controls.


Members made comments relating to individual risks particularly EHCSC001 in the report, where the future controls seemed very sensible with a robust set of measures. Although with the scales, if it was to be implemented or mitigated, it suggested that management did not believe the Council would be able to  ...  view the full minutes text for item 8/21


Exclusion of Public and Press

The following motion is to be moved and seconded where it is proposed to exclude the press and public from the remainder of a meeting:


“That, under Section 100A(4) of the Local Government Act, 1972, the press and public be excluded from the meeting for the following items of business on the grounds that it involves the likely disclosure of exempt information falling within those paragraphs indicated in Part 1 of Schedule 12A of the Local Government Act 1972, as amended.”



This was not required.