The Governance, Audit, Risk Management and Standards Committee of Harrow Council met on Wednesday 2 April 2025 to review audit strategies, directorate risk updates, and annual plans for internal audit and anti-fraud measures. Key discussions included the audit strategy for the upcoming financial year, risk assessments across various directorates, and the approval of plans for internal audit and corporate anti-fraud activities for 2025/26.

Audit Strategy 2024/2025

The committee received an update on the audit strategy for the London Borough of Harrow Council for the year ending 31 March 2025. The external auditors, Forvis Mazars, presented their approach, highlighting significant audit risks and areas of key judgement. These included the mandatory significant risk of management override of controls, the valuation of the net defined pension liability, property, plant, and equipment, and investment property. Risks associated with the migration of payroll data and the implementation of IFRS 16 were also identified. The auditors outlined their planned responses to these risks, which involve detailed testing and critical evaluation of management's arrangements.

The committee also noted the audit strategy for the Harrow Pension Fund, which identified similar significant risks, including management override of controls, the valuation of investments within level 3 of the fair value hierarchy, and the migration of payroll data. The audit approach for the Pension Fund will focus on these areas, with planned procedures to address each risk.

The committee was informed about the audit fees for 2024/25, with scale fees set at £421,115 for the main audit and £85,000 for the pension fund audit. Fees for additional work, such as payroll data migration and IFRS 16 implementation, were to be confirmed.

Directorate Risks Update Q3 2024-2025

Culture, Environment and Economy Directorate Risks Update

The committee reviewed the Culture, Environment and Economy Directorate Risk Register for Q3 2024/25. The directorate, recently established, presented three open risks, none of which were rated as 'red'. Two risks were rated 'amber' and one 'green', with all remaining stable from the previous quarter.

The most significant risks identified were:

• Failure to continue provision of Leisure Services: Rated Amber D2 (Low Likelihood - Critical Impact), this risk is due to procurement delays, potentially requiring a contract extension. A report to Cabinet recommended an extension, and a tender for a new operator was issued.
• Failure to procure build contractors for the Future High Streets Fund (FHSF) Meanwhile Use and Kiosk projects: Rated Green D3 (Low Likelihood – Moderate Impact), with work on the Art Park - Meanwhile Space completed. Delays on the kiosk programme may push completion into April, but funding is in place.
• Fraud is committed resulting in financial loss at the Directorate: Rated Amber C3 (Medium Likelihood – Moderate Impact). Mitigation measures include external monitoring, monthly procurement meetings with anti-fraud discussions, and mandatory anti-fraud training.

Housing and Regeneration Directorate Risks Update

The Housing and Regeneration Directorate presented its Q3 2024/2025 risk register, detailing 11 open risks: four rated 'red', six 'amber', and one 'green'. All risks remained stable from the previous quarter.

The most significant risks were:

• Housing do not deliver health and safety statutory duties and regulatory requirements: A corporate risk rated Red C2 (Medium Likelihood – Critical Impact), with progress being made on implementing audit recommendations.
• PFI schools contracts remain unmanaged without sufficient controls: A new risk rated Red B2 (High Likelihood – Critical Impact), identified following an audit with 'No' assurance. Actions are being taken to secure expertise to advise the Council.
• Estates and Facilities Service unable to effectively manage and resource works: Rated Red C2 (Medium Likelihood – Critical Impact), this risk has been redrawn to better reflect service issues. A review of the Corporate Landlord function and Estates and Facilities structure is underway.
• Planning unable to meet new legislative and policy requirements: Rated Red C2 (Medium Likelihood – Critical Impact), with reviews planned in light of the Grenfell Inquiry Phase 2 report and potential new planning legislation.

Two new risks were identified: PFI schools contracts remaining unmanaged and a failure to respond sufficiently to the outcomes of the Grenfell Tower Public Inquiry Phase 2. The latter is rated Amber D2 (Low Likelihood – Critical Impact), with a Grenfell Response Board established to progress actions.

Housing Ombudsman Determination

The committee received a report detailing a determination by the Housing Ombudsman concerning a complaint from a London Borough of Harrow resident regarding defective windows and roof repairs. The Ombudsman found severe maladministration in the handling of the window defect reports and maladministration in the handling of the roof repairs and the associated complaint.

The Ombudsman ordered the Council to apologise to the resident in writing, pay £1,700 in compensation, contact the resident about recent window installation concerns, and conduct a senior management review of the case. Recommendations included attending Housing Ombudsman workshops on window complaints, knowledge management, and case handler attitudes. The Council confirmed it had complied with all orders and recommendations, receiving positive feedback from the Ombudsman on its response and commitment to service improvement.

Internal Audit Plan 2025/2026

The committee reviewed and approved the draft Internal Audit Annual Plan for 2025/2026 and the Internal Audit Charter. The plan is risk-based and aligned with the new Global Internal Audit Standards (GIAS). The Assistant Director, Audit & Anti-Fraud, confirmed that while the service has organisational independence, its objectivity is impaired due to the Assistant Director's responsibility for the Corporate Anti-Fraud Team, Corporate Risk Management, and the Annual Governance Statement. This is mitigated by management oversight and external auditor assurance. The plan is supported by 872 operational audit days, with flexibility built in for emerging risks.

Corporate Anti-Fraud Annual Plan 2025-2026

The committee reviewed and approved the Corporate Anti-Fraud Plan for 2025-2026. The plan is risk-based and informed by internal and external factors, including national fraud trends and specific reports on tenancy fraud. The plan will be delivered by an in-house team of six Accredited Counter Fraud Officers. Key workstreams include corporate fraud risk assessment, reviewing the anti-fraud strategy, coordinating the National Fraud Initiative (NFI) data match exercise, and raising awareness of new legislation under the Economic Crime and Corporate Transparency Act 2023. Specific focus areas include housing fraud, social care, council tax/business rates, disabled parking badges, and risk assessment of internal fraud allegations. The plan also outlines key performance indicators for the Corporate Anti-Fraud Team.