Agenda and minutes

Audit & Governance Committee - Thursday, 21st September, 2023 6.30 pm

Venue: Council Chamber, Town Hall, Katherine Street, Croydon, CR0 1NX

Contact: Hannah Cretney, Democratic Services  Email:

No. Item


Disclosure of Interests

Members are invited to declare any disclosable pecuniary interests (DPIs) they may have in relation to any item(s) of business on today’s agenda.


There were none.


Minutes of the Previous Meeting pdf icon PDF 111 KB

To approve the minutes of the meeting held on 20 July 2023 as an accurate record of the proceedings.


The minutes of the previous meeting were agreed as an accurate record pending the inclusion of Scrutiny Health and Social Care Sub Committee and an edit to the figure within the Financial Accounts 2019-20 item, as the capital receipt generated had been for £112 million not £75 million.



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.


Audit & Governance Committee Action Log pdf icon PDF 50 KB


Officers agreed to provide updates for due actions.


Audit & Governance Committee Work Programme 2023-24 pdf icon PDF 227 KB


Dave Philips, Head of Internal Audit advised a first draft of the assurance mapping following the assurance mapping workshop would be developed and brought to Committee for review alongside the Committee Work Programme.


The Committee requested Officers to ensure future training arrangements did not create clashes with other Committees where possible. 



Update on Cultural Transformation Programme pdf icon PDF 99 KB

A presentation will be given to update the committee on the development of the People & Cultural Transformation Strategy.


For the reasons set out in the report Audit & Governance Committee are recommended to:

Receive the presentation and update.



Elaine Jackson, Assistant Chief Executive introduced the report for members and Dean Shoesmith, Chief People Officer gave their People & Cultural Transformation Update presentation to the Committee. Officers agreed to share the progress pillars slides with the Committee. There had been significant activity across the organisation and a recognition of the impact previous culture and the Report in the Public Interest (RIPI) had on staff. Efforts were ongoing to ensure staff felt able to speak out on issues and to build trust from the roots of the organisation.


The Committee queried the governance arrangements in place and how it could have assurance on its effectiveness. Officers advised following the adoption of the new organisational model in July 2021 a review of the council’s governance model had been undertaken. As a result the Equality Diversity and Inclusion and Workforce Internal Control Boards had been established. These encompassed staff from across the council at all levels of seniority, were chaired by the Chief Executive and reported to Corporate Management Team meetings (CMT) each month. Additionally, a Transformation Board had been established in January 2022 to oversee service delivery work programmes. The newly recruited Director of Transformation was working closely with the Chief People Officer to support the alignment of the cultural transformation and programme delivery. Officers advised their attendance and reporting to Audit and Governance Committee would provide assurance and suggested it would be beneficial for the Committee to hear directly from staff in the future.


The Committee was pleased to note best value for residents was included but queried whether any benchmarking data had been utilised. On best value, officers noted that control mechanisms such as the spending control panels were in place but advised that the council was at the beginning of a journey to embed staff ownership of best value. The council had created internal data dashboards for workforce equality, diversity and inclusion (EDI) which profiled the workforce and reported to the EDI Internal Control Board. Progress towards greater representation within the workforce had been made. There had been issues with staff non-disclosure of their protected characteristic information which had now improved following internal awareness-raising campaigns. Dashboards for supporting internal data reporting on recruitment were used to monitor recruitment practice improvements. Benchmarking from London Councils which included the Human Capital Metrics datasets which covered a range of metrics e.g., staff turnover, sickness absence and staff EDI profiles analysis was used; however this did not cover all areas.


The Committee noted the presentation had not been made available to Members ahead of the Committee meeting, making it challenging to prepare for the discussion and members of the public wishing to understand the agenda item would not have the detail of the presentation. The Committee requested officers to include a summary of presentations within their reports in future. Officers advised the presentation was internal, but a shareable version could made available.

The Committee asked how the council was ensuring the engagement of all staff particularly those less willing to engage. Officers felt  ...  view the full minutes text for item 17/22


Annual Treasury Management Report 2022-23 pdf icon PDF 517 KB

This Report reviews the Council’s Treasury Management activities for the year 2022/23. It 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 codes recommend that Members are advised of the treasury management activities for the whole of each financial year and of compliance with the various strategies and policies agreed by the Council.  The report:

-        Reviews compliance with the Treasury Management Strategy Statement and Annual Investment Strategy as agreed by full Council (Budget Council) on 7 March 2022 (Minute A6/21 applies);

-        Reviews treasury borrowing and investment activity for the period 1 April 2022 to 31 March 2023; and

-        Demonstrates compliance with agreed Treasury and Prudential Indicators (Appendix E) and the CIPFA 2017 Prudential Code for Capital Finance.

The Audit and Governance Committee is recommended to note the contents of the annual report on the treasury management activity for 2022/23.


Matthew Hallett, Pension Fund Investment Manager introduced the report to the Committee. The report was based on the Treasury Management strategy set in March 2022. The Treasury Management aim was to ensure cash availability for ongoing expenditure and investment of excess balances. The report confirmed there had been no liquidity events and where investments had been made these complied with counter-party limits. On the capital programme the borrowing figure at 2022/23 year end was £1.73 billion with external borrowing at £1.345 billion, resulting in an under-borrowed position and internal borrowing (use of reserves) of £380 million. This was within the limits set by the 2022 strategy, the authorised borrowing limit was £1.674 billion and the council had averaged £1.385 billion with a maximum £1.435 billion over the year. There had been £87 million of external borrowing repaid and the effective interest rate 2.8% had been under the target set for interest payable by approximately £5 million.  


The Committee queried whether there was risk attached to internal borrowing’s use of reserves particularly if the council needed large expenditure in a situation such as Covid. Officers advised the Committee that the council maintained a cash balance of approximately £100 million, the council’s monthly working capital was £40-50 million monthly and anything above £100 million was utilised to repay borrowing, leaving a £50 million cushion.


The Committee RESOLVED to: note the contents of the annual report on the treasury management activity for 2022/23.



Annual Head of Internal Audit Report pdf icon PDF 127 KB

This report details the work completed by Internal Audit in 2022/23 and the overall level of assurance for the Council’s internal control environment to support the Annual Governance Statement (AGS).  The AGS is included on the agenda for this committee and will be published on the Council’s website in due course alongside the final accounts.

From the Internal Audit work undertaken in 2022/23, it is the Interim Head of Internal Audit’s opinion that Internal Audit can provide only Limited Assurance in relation to the system of internal control, and that the internal controls within financial and non-financial systems operating throughout the year were unsatisfactory in some cases.

The Audit and Governance Committee is asked to note the Head of Internal Audit Report 2022/23 (Appendix 1) and the overall Limited level of assurance of the Council’s systems of internal control.



Additional documents:


Dave Phillips, Head of Internal Audit introduced the annual report to the Committee, noting the report was an annual requirement in line with the Public Sector Internal Audit Standards. The report gave the council an overall Limited Assurance level, and highlighted the key issues based on the work undertaken by Internal Audit.  Some were recurring issues and the challenge was to progress these.  An update on those outstanding issues would be included in the Annual Governance Statement update report due to come to the Committee in October.  Updates on the implementation of Internal Audit recommendations were also included in the report and the council had made some good progress on actioning recommendations.


The Committee noted the limited assurance level had not been a surprise in previous years but queried the higher level of nil assurance reports, indicating a downturn during the reporting period, and what this implied about the improvement environment generally.


Officers noted there were areas of improvement; for example, corporate governance had been upgraded from unsatisfactory to satisfactory.  It was found while top level governance had improved, the lower levels still required improvement. Many of the previous year’s reports were working through the backlog of historic recommendations which had taken some time, due to issues such as staff turnover or recommendations requiring systems change work to be completed. The Limited Assurance level had been expected due to the issues unearthed during the opening the books exercise in 2022/23 and the Section 24 recommendations and interim reports by the external auditors. Improvements in engagement with the Annual Governance Statement (AGS) process had been made across the organisation. Engagement with internal audit reports had generally improved compared with the previous year and CMT was monitoring this closely. A session with Mazars was planned to improve the process. Officers noted plans to bring the AGS to Committee before the summer in 2024 and hoped it would show assurance improvements but noted there were still areas requiring improvements such as financial and HR systems. Audit reports also tended to be backward looking, due to the nature of gathering evidence, so were not as reflective of recent improvements.


The Committee raised concerns around limited/non-engagement by teams and queried if this was due to capacity or cultural issues. The Committee asked for an approximate breakdown of slow engagement versus complete non-engagement. The Committee also queried the report citing ‘further strengthening of financial internal controls have taken place’ despite the assurance being down in comparison with the previous year.


Officers advised that of 80 Internal Audit reports planned there were 2 or 3 where non-engagement had been an issue.  This had been raised at the CMT focus group. Staff were reluctant to engage due to capacity and a culture of teams working in silos, which was something the organisation was working to improve. Internal Audit planned to implement a calendar of audits for the year to provide greater notice to management.  There was work to be done to change organisational perception of audit to something  ...  view the full minutes text for item 19/22


Dedicated Schools Grant (DSG) Deficit Management Plan pdf icon PDF 183 KB

This report provides some important updates regarding the Dedicated Schools Grant (DSG) Deficit Management Plan which has been in place since 2019/20. The management plan had proved successful however there is a level of risks from increasing numbers of Children and Young People with complex Special Education Needs.


This report focuses on the overall performance of the DSG Deficit Management plan against key qualitative and quantitative performance metrics for the 2022/23 financial year as well as the outturn forecast as at period 2 of this financial year.


The Audit and Governance Committee is asked to note:


a)        The key performance targets set under the DfE Safety Valve agreement.

b)       The overall performance of the Deficit Recovery Plan against the target and challenges and risks of delivery.

c)        The impact on the accounting treatment of the DSG deficit as provided for in the Local Authorities (Capital Finance and Accounting) (England) Regulations 2003/3146, as amended by the Local Authorities (Capital Finance and Accounting) (England) (Amendment) Regulations 2020 and the Local Authorities (Capital Finance and Accounting) (England) (Amendment) (No. 2) Regulations 2022.



Shelley Davies, Director of Education introduced the report to the committee and explained the expectation on local authorities setting a deficit budget in relation to the dedicated schools grant to have a management plan in place, to set out the pay down of the cumulative deficit and reduce in-year spend. Croydon’s overspend had been reduced from £5.4 million to £2.05 million over the past two years. Croydon’s position as part of the safety valve programme required liaison with the Department for Education (DfE) and signing of a safety valve agreement which outlined how the council would reduce its in year overspend to zero and subsequently receive grant funding from central government over 3 years to pay off the culminative overspend. Croydon had received the first two tranches of payment and was working to meet the Key Performance Indicators (KPIs). Officers assured the committee the council was monitoring against the KPIs regularly and noted the balance of focussing both on finance and ensuring it was meeting the needs of children and young people with Special Educational Needs and Disabilities (SEND).


Charles Quaye, Principal Accountant highlighted the success within the service of meeting the non-financial targets and noted the good performance of the deficit management plan. Last year’s balance had been £15.384 million and this was expected to be £12.749 million by the end of this financial year. By 2026/27 a surplus was expected.


The Committee advised it was pleased to see the progress being made and queried whether the safety valve agreement was particular to Croydon. Officers advised a number of local authorities were part of the programme, Croydon did not have the highest deficit level in relation to its population. All safety valve agreements were bespoke and contextual to individual local authorities. The main basis for savings in Croydon was through educating children locally by ensuring enough in-borough provision was available, including post-16 years and post-19 years.


The Committee raised concerns about how unforeseen expenditure on capital or other issues would be mitigated.  Officers advised any capital expenditure sat elsewhere in the budget and SEND provision was ringfenced. 


The Committee queried how SEND provision for children in mainstream school settings was being managed to ensure their needs were met. Officers noted the importance of this issue and explained Croydon’s implementation of Croydon Locality SEND Support (CLSS). CLSS provided specific funding for mainstream schools to provide early intervention support for children, particularly during transition from nursery to reception. This did not impact Education Health and Care Plan (EHCP) assessments which were a statutory requirement and ongoing. The CLSS initiative was for early intervention to provide support when needed more quickly. It had started in 2 locations and was now rolled out across borough, and the provision was widening to include maintained nursery classes. Implementation and areas for improvement were being monitored and the council was working in partnership with schools and encouraging peer to peer support between schools.  


The Committee asked how the services were evaluated as offering best value for  ...  view the full minutes text for item 20/22


Independent Member Appointment pdf icon PDF 120 KB

This report identifies the recommended candidate to be appointed as an independent co-opted non-voting Member on the Audit and Governance Committee.

The Audit and Governance Committee is asked to:

·      Support the recommendation of the recruitment panel for the preferred candidate David Clarke to be appointed as an independent co-opted non-voting member of the Committee; and


·      Recommend to Full Council that David Clarke be appointed as an independent co-opted non-voting member of the Audit and Governance Committee for an initial period of 1 year, to be extended thereafter for another 3 years and that said appointment be subject to standards of conduct which encompass the Nolan Principles.




Dave Philips, Head of Internal Audit advised the committee of the amendment to the tenure of the appointment which had been changed to a 1 year appointment initially with a further 3 years following a review of performance.


The Committee queried the inclusion of ‘audit only functions’ in relation to the independent member’s appointment and whether as an Audit and Governance Committee this was appropriate. Officers explained the independent member would be non-voting and the recommendation was for appointment to the Audit and Governance Committee.


Committee RESOLVED to:


a)    Support the recommendation of the recruitment panel for the preferred candidate David Clarke to be appointed as an independent co-opted non-voting member of the Committee; and


b)    Recommend to Full Council that David Clarke be appointed as an independent co-opted non-voting member of the Audit and Governance Committee for an initial period of 1 year, to be extended thereafter for another 3 years and that said appointment be subject to standards of conduct which encompass the Nolan Principles.

The Chair thanked Officers for their support in the appointment process. Officers confirmed the next step was for the Audit and Governance Committee to recommend the appointment in a report to Full Council.


The Chair thanked Members for their engagement and attendance at the meeting.