The Audit, Standards and Statutory Accounts Committee met on Tuesday 2 July 2024 to discuss the progress of external audits, review the council's risk management strategy, and approve the annual governance statement. Key decisions included noting the progress of external audits for the 2022/23 and 2023/24 financial years, approving the Risk Management Strategy for 2024/25, and approving the proposed Annual Governance Statement for 2023/24.

Update on the 2022/23 and 2023/24 External Audits

The committee received an update on the external audit work for the 2022/23 and 2023/24 financial years. The Chief Accountant, Katherine Burston, explained that while the draft accounts for 2022/23 were published in June 2023, the external audit had been delayed due to national issues. A limited scope audit would now be completed for this period. The full external audit for 2023/24 had commenced, with draft accounts published in early June 2024.

Concerns were raised about the delays in the external audit process, which have been attributed to complex technical accounting issues, staffing challenges within both local authorities and the auditing firm Ernst & Young (EY), and delays related to the COVID-19 pandemic. Ben Lazarus of EY, the authority's appointed external auditor, explained that audit fees are reviewed by Public Sector Audit Appointments (PSAA), which analyses the factual information provided by EY to justify proposed fees.

The committee noted that the value for money element of the 2022/23 external audit had been substantially completed, with no significant issues identified for Richmond. A Ministerial Direction issued in Autumn 2023 aims to maximise assurance for 2022-23 and establish a sustainable auditing programme going forward. Richmond was considered to be in a more positive position compared to other authorities with multiple outstanding audits. The committee was assured that the Internal Audit Team annually reviews the authority's financial systems and controls.

The committee agreed to draft a letter to the responsible minister outlining ongoing concerns regarding external auditing issues. The Chair and Vice-Chair of the Committee would review this letter before it was sent.

The committee resolved to:

• Note EY's 2023-24 Audit Planning Report as Appendix A.
• Note the audit fees update in Section 5.

Annual Review of Risk Management

The Assistant Director of Fraud and Risk, Kevin Holland, presented the report detailing the council's strategic governance arrangements for risk management. He explained that while each service area is responsible for its own risk management controls, the presented strategy ensures consistency and strategic oversight. External auditors had previously assessed this approach as reasonable.

In response to questions, it was clarified that the committee is responsible for the overarching risk management structure, with individual service committees addressing specific issues in procurement or capital projects. The committee was assured of the framework's effectiveness, noting that it relies on officers to provide information. The possibility of inviting risk management specialists, such as a cybersecurity specialist, to future meetings was confirmed. Mr. Holland offered to conduct a session for committee members to explain how service areas consider risk, their mitigation controls, and reporting processes. Some adjustments were still being made to controls, templates, and guidance at an operational level.

The committee resolved to:

• Receive as information the results of the annual review of the Risk Management Strategy carried out by Executive Directors.
• Approve the Risk Management Strategy for 2024/25 at Appendix A.

Review of the Council's Governance Arrangements Incorporating Internal Control, the Proposed Annual Governance Statement and the Head of Audit's Opinion on Risk Management, Control and Governance

The Assistant Director of Audit Shared Service, Andrew Hamilton, presented the report on the annual review of the authority's governance arrangements. This included the Head of Internal Audit's annual opinion on risk management, control, and governance, and the proposed Annual Governance Statement for 2023/24, which required committee approval for inclusion in the council's annual accounts.

Head of Internal Audit Annual Opinion: The Head of Internal Audit's opinion stated that the authority has reasonable risk management arrangements, internal control framework, and governance arrangements in place. This opinion is based on audit work completed during the year, with 92% of assurance work resulting in a positive audit opinion of either 'Reasonable' or 'Substantial'.

Concerns were raised regarding two outstanding Priority 1 recommendations with missed deadlines. The authority's internal auditors have implemented more robust monitoring of such recommendations, including limiting extensions for implementing necessary changes. The committee agreed that service area managers responsible for Priority 1 recommendations would be invited to future committee meetings if deadlines are significantly missed, unless the Head of Internal Audit deems it reasonable to suspend this requirement. The Finance Systems Manager and Building Maintenance Manager will be invited to the committee meeting after 30 November 2024 if their assigned Priority 1 recommendations remain unresolved, with their respective Executive Directors also being informed.

Annual Governance Statement: The committee was informed that the council is responsible for reviewing its governance framework annually and publishing an Annual Governance Statement in accordance with CIPFA/SOLACE guidance. The statement is an open and honest self-assessment of the council's governance arrangements, covering all corporate systems and activities. It outlines how the council adheres to seven core principles of good governance and identifies significant governance risks. The conclusion of the statement indicated that the council's governance arrangements are generally effective, with satisfactory results in most services. Where control issues were identified, action plans have been agreed with Executive Directors.

The committee resolved to:

• Note the Council's statutory annual review of its governance arrangements.
• Note the Head of Internal Audit's annual opinion on risk management, control, and governance.
• Approve the proposed Annual Governance Statement for 2023-24 in Appendix B for signature and publication with the Council's accounts.

Forward Plan

Mr Martin Baker addressed the committee as a registered speaker regarding the replacement of health suite facilities at Pools on the Park with a group exercise studio. He raised concerns about alleged irregularities in the decision-making process and stated that the council's constitution was quietly updated in February 2024 without member approval. He also expressed dissatisfaction with the corporate complaints process and the refusal of Freedom of Information requests.

In response, the Assistant Director of Shared Audit Service explained that Leisure Services is part of the forthcoming audit plan, but the specific decision regarding Pools on the Park would not be reviewed as it was taken by the appropriate service committee. The requested work was considered consultancy, not assurance, and could not be undertaken due to current resources.

The committee discussed items on the Forward Plan for the remainder of the municipal year, noting that only one item was scheduled for the January 2025 meeting. The Assistant Director of Shared Audit Service will liaise with the Monitoring Officer regarding reports for that meeting. The Chair indicated that reports on Twickenham Riverside and the Change Programme would likely need to be considered, and a risk specialist invited to a future meeting. Items for future meetings will be discussed outside of the meeting in consultation with the Assistant Director of Shared Audit Service and the Assistant Director of Fraud and Risk.