The Audit and Governance Committee of Waltham Forest Council met on Thursday 15 November 2012, reviewing the external auditor's annual audit letter, updating the Planning Code of Practice, and discussing breaches of contract procedure rules. The committee also received updates on the Council's compliance with the Regulation of Investigatory Powers Act 2000, the progress of the Audit, Fraud and Risk Division, and risk management.

External Auditor's Annual Audit Letter

The committee received and noted the Annual Audit Letter from the External Auditor, which summarised the findings of their 2011/12 audit work. The letter confirmed an unqualified opinion on the Council's and Pension Funds' financial statements for 2011/12, and concluded that the Council had made proper arrangements to ensure economy, efficiency, and effectiveness in its use of resources. An assurance statement on the Council's 2011/12 Whole Government Account consolidation pack was also issued, and the audit was certified as complete. Councillor Geoffrey Walker raised concerns about unadjusted misstatements identified in the financial statements at a previous meeting, but the Assistant Director of Finance explained these were considered immaterial or had no net effect on balances. The committee was also informed that the new external auditor, KPMG, would attend the February 2013 meeting to present their Audit Plan and the 2011/12 Grants report.

Updated Planning Code of Practice

The committee recommended to the Council the adoption of an updated paragraph 8.2 of the Planning Code of Practice. This update, made in October 2012, reflects the new Code of Conduct and changes in planning law, including the National Planning Policy Framework¹. A previous reference to a potential limit on the number of speakers from any one group or household, which had been in place since 2007, was removed from the Code. The aim of the update is to maintain high standards of probity and ensure transparency in the planning application process.

St Mary's Asbestos: Breach of Contract Procedure Rules

The committee noted breaches of Contract Procedure Rules by NPS London, acting on behalf of the Council, following the discovery of asbestos at the St Mary's CofE VA Primary School's Brooke Road site. The report detailed the actions taken to prevent a recurrence of such breaches. The Strategic Projects and Commercial Manager from the Major Projects team presented the report and provided an update on further preventative measures. Members expressed concern about how the asbestos was not identified during the initial survey in 2011 and requested that this issue be brought to the attention of the Overview and Scrutiny Management Committee.

Annual Review of Compliance with the Regulation of Investigatory Powers Act 2000

An annual review of the Council's arrangements for authorising investigations under the Regulation of Investigatory Powers Act (RIPA) 2000 was presented. The report highlighted changes introduced by the Protection of Freedoms Act 2011, which further restricts the use of RIPA. The Head of Legal and Democratic Services explained the legal powers under RIPA and presented the annual review of authorisations and the activities of the Surveillance Compliance Board. The committee noted that directed surveillance can now only be carried out for crimes with a maximum sentence of six months imprisonment or more, and an additional tier of authorisation from a magistrate is required. Councillor Walker inquired about blue badge fraud, and the Assistant Director of Finance (Audit, Fraud and Risk) confirmed that this is handled by external contractors appointed by Parking Services, with six to seven prosecutions currently underway. The committee noted the findings of the internal annual review and that the RIPA Procedure Manual is being updated to reflect the requirements of the Protection of Freedoms Act 2011.

Audit, Fraud and Risk Division - Progress Update

The committee received an update on the work undertaken by the Audit, Fraud and Risk Division. Internal Audit had made significant progress, with 98% of the planned reviews for 2011/12 completed to at least draft report stage, and 44% of the 2012/13 programme in progress or completed. The Counter Fraud Group had secured 35 sanctions for benefit fraud, identified £739,000 in fraudulent Housing and Council Tax benefit overpayments, and £369,000 in overpaid DWP national benefits to be recovered. The group had also been instrumental in recovering 21 illegally sublet social housing properties, with a notional value of around £1.2 million since April 2012. Councillor Geoffrey Walker asked if ethnicity information could be obtained for the breakdown of fraud prosecution sanctions, and the Assistant Director of Finance (Audit, Fraud and Risk) stated he would investigate if any monitoring information could be obtained, as the sanction policy does not currently take ethnicity into account. Councillor Michael Lewis enquired about sub-letting fraud and whether original tenants were pursued, with the Assistant Director of Finance explaining the Council's objective is to regain possession of the property for re-tenancy.

Audit, Fraud and Risk Division - Updated Annual Internal Audit Plan

The committee noted the changes made to the internal audit plan for 2012/13. The Assistant Director of Finance (Audit, Fraud and Risk) explained that the plan is dynamic and changes in line with new demands. The number of audit days had increased from 1100 to 1130, incurring additional costs that could be met from the budget. A further report on this matter was scheduled for the February 2013 meeting.

Risk Management Update

The committee reviewed and considered the Corporate Strategic Risk Register. The Assistant Director of Finance (Audit, Fraud and Risk) reported that there had been little change to the register since the previous meeting, with the addition of the fifth Council priority, achieving high standards in corporate management, and the removal of the risk associated with delivering services during the Olympic period.