The Audit and Governance Committee of Newham Council met on Wednesday 16 October 2024 to discuss a range of financial and governance matters. Key discussions included the annual complaints report, performance development scheme appraisals, mandatory training updates, internal audit findings, counter fraud progress, risk management, savings delivery, and the significant challenges surrounding the local audit backlog. The committee also reviewed the council's statement of accounts for 2022/23 and received an update on the 2023/24 accounts.

Annual Complaints Report and Local Government Ombudsman Findings

The committee received the annual complaints report for 2023-24, which detailed the reasons for resident complaints and the council's performance in addressing them. Officers explained that an increase in maladministration rates from 33% to 87% was partly due to the Housing Ombudsman Service becoming a more prominent advocate for residents, particularly concerning damp and mould issues, and the backlog of legacy cases. The Regulator of Social Housing (RSH) regime was also discussed, with officers confirming its link to Grenfell Tower and the additional pressures it places on services. The committee noted that a new casework system, replacing i-CaseWork, would be introduced for member complaints, aiming for a better user experience. Assurance was sought on safeguarding legitimate complaints from persistent complainers, with officers agreeing that this safeguarding would be explicitly stated in the policy. The Chief Executive acknowledged the need for engagement improvement in different parts of the council regarding the timeliness of responses to ombudsman enquiries. The committee resolved to note the council's performance in complaints handling and the improvement actions planned for 2024-25, including the delivery of a new case management system. An action was raised to add the recent RSH Inspection and Complaints report to the Forward Plan.

Performance Development Scheme (Appraisals) Update

The committee reviewed the council's performance development (PDS) arrangements for its workforce. Councillors sought assurance on the completion rates of performance appraisals, with officers stating that ideally, this should be 100%. The discussion also touched upon sanctions for senior managers who fail to undertake PDS for their staff, with officers confirming that while increments could be withheld for senior managers, there were no capability cases based solely on appraisal non-compliance for those below that level. A briefing was requested on why PDS compliance was particularly low in the marketing department, with officers attributing this to staff turnover and the department's small size. Members also referenced the Tell Jane briefing on toxic management and sought assurance on sanctions for underperforming managers, beyond workshops. The Chief Executive and Head of HR committed to working with unions to create safe spaces for staff and to address challenging behaviours. The committee resolved to note the report. An action was raised for a briefing on the low PDS compliance in the marketing department.

Mandatory Training Update

The committee received an update on mandatory training requirements and completion rates. It was noted that the number of mandatory training courses had been reduced from 16 to 5, making a like-for-like comparison of completion rates impossible. Officers explained that calendar invites were used to prompt staff completion and that they were exploring additional methods. Members questioned whether the Fusion software could be interrogated to provide automatic reminders or prompts for mandatory training compliance. The committee resolved to note the report.

Quarterly Internal Audit Update

Internal Audit's work between July and September 2024 was presented, including two limited assurance reports for Park Primary and Salisbury Primary schools. The Director of Education and Inclusion was present to address questions. It was noted that governance and finance training is provided through partners, and that lessons learned from the audits were being applied to other schools. Both schools were reported to be taking the audit action plan seriously. The committee resolved to note the report.

Quarterly Counter Fraud Progress Report

The committee received an update on Counter Fraud activity. Members sought assurance on housing data, and officers explained the use of data matching and intelligence markers to identify potential fraud. The committee resolved to note the report. An action was raised to advise the committee of the directorates under investigation.

Quarterly Update on Risk Management and Risk Register

The report included the Corporate Risk Register, the Inherent Risk Register, and risk registers for Transformation Projects, Community Wealth Building Projects, and the HRA Capital Programme. A member requested that the risk register for Inclusive Economy and Housing be presented more clearly, differentiating between the various services within the directorate. Concerns were raised about the Strategic Climate Change risk, specifically that the mitigation column was not filled in, despite the council not expecting to meet its net-zero targets. Officers explained that funding was a significant factor and that the Just Transition Plan was the intended mitigation. The committee resolved to note the report. Actions were raised to present the risk register more clearly for the Inclusive Economy and Housing directorate and to add Decent Homes to the Corporate Risk Register.

Quarterly Reports on the Savings Delivery Programme

The committee reviewed the savings tracker, noting that £22 million of savings actions were agreed for 2024/25. Officers explained that slippage in savings for the marketing department was due to timing issues related to staff restructuring, and that central budget management savings would be higher in the following year. A member commented on a perceived culture of the council not achieving its intended savings. The committee noted that 84% of the £32 million savings target had been met and resolved to note the report.

Local Audit Backlog Rebuilding Assurance

The committee received a report on the Financial Reporting Council (FRC) guidance regarding the rebuilding of assurance in the audit process, acknowledging the national issue of uncompleted audits. Members noted that the use of qualified and unqualified opinions in clearing audit backlogs might not be fully understood by the public. The committee resolved to note the report.

London Borough of Newham Statement of Accounts 2022/23

The committee received the final statement of accounts for 2022/23, which included the external auditors' Value for Money Report and the Annual Governance Statement. Members were reminded that a full audit had not been possible due to national issues, and that EY would issue a disclaimed audit opinion by 13 December 2024. The committee resolved to note the Statement of Accounts 2022/23, delegate authority to the Chair and the S151 Officer to approve the statement upon completion of EY's work, and approve the final Annual Governance Statement for 2022/23.

Update on 23/24 Accounts

Officers explained that due to delays in preparing the 2021/22 financial statements and concerns about the quality of working papers, the submission of the 2023/24 draft accounts to auditors was delayed. This, coupled with an amended backstop date for audits, meant that EY would not be able to complete the audit of the 2023/24 accounts. While some work had been undertaken, an unmodified opinion would not be possible. Members expressed disappointment at the situation, and the committee resolved to note the report. The committee was informed that a step change in the authority's approach to producing financial statements and supporting audits would be required to meet future deadlines, with capacity, rather than competency, identified as the primary issue.

Year Ahead Forward Plan

The committee reviewed the draft year ahead forward plan. It was agreed to add the Regulator of Social Housing (RSH) report to the forward plan. The committee resolved to note the report.

The date of the next meeting was confirmed as Wednesday, 15 January 2025.