The Audit Committee convened to discuss key governance and financial matters, including the appointment of a vice-chair, the approval of the audit committee's terms of reference, and the review of the 2024-25 draft statement of accounts. Councillors also discussed the external auditor's plan, progress on statutory recommendations, the annual governance statement, and the updated whistleblowing policy.

Appointment of Vice-Chair

Councillor Harun Miah was appointed as Vice-Chair of the committee.

Audit Committee Terms of Reference, Membership, Quorum and Dates of Meetings

The committee approved the terms of reference, membership, quorum, and meeting dates for the municipal year. Councillor Mufeedah Bustin noted the importance of acknowledging best practices, such as excluding executive members from the committee, and ensuring risk is appropriately addressed.

Approval of Unrestricted Minutes

The committee approved the minutes from the previous meeting held on 24 April 2025, with a request from Councillor Mufeedah Bustin to resurrect matters arising as a separate document to track agreed actions. Councillor Kabir Ahmed noted that his apologies were not recorded.

External Auditor's Plan

Stephen Reid, partner from EY, presented the external auditor's plan for 2024-25, highlighting key audit risks including management override, fraud, valuation of land and property, and the implementation of IFRS 16 leases¹. He noted the inclusion of the transfer of planning powers from the London Legacy Development Corporation (LLDC) back to the council as a new area of focus.

Councillor Mufeedah Bustin questioned the timeline for improving the risk profile and raising materiality, to which Stephen Reid responded that materiality would not likely change until consistent evidence demonstrated that identified issues were being addressed. He also clarified the process for unwinding a disclaimer of opinion, suggesting it could take up to three years, with a target of 2027-28 for the council, provided there were no further difficulties.

Councillor Mufeedah Bustin asked about ensuring sufficient time and resources for the planned level of testing, particularly regarding planning, and Abdulrazak Kassim, interim corporate director of resources and section 151, assured the committee of prioritised account closures, increased resources, and regular catch-ups with EY.

Councillor Kabir Ahmed questioned the large gap in materiality between EY and Deloitte, and Stephen Reid clarified that the level of materiality is a judgement for the audit partner, and that apples and apples were not being compared.

Councillor Kabir Ahmed also raised concerns about the risk factor related to the mayor being previously removed from office, questioning what measures could be put in place to mitigate this risk. Stephen Reid clarified that this factor was a statement of fact, but the council could address other risk factors, such as responding to the best value inspection and addressing prior year weaknesses.

Councillor Marc Francis sought clarification on whether the risk related to the electoral circumstances or PwC's original audit of 2014, and Stephen Reid confirmed it was the entire circumstances and outcome that drove the consideration.

Council's Response to the Audit Plan

The committee then discussed the council's response to the audit plan. Asan Khan, corporate head of financial and technical accounting, summarised the EY audit plan and its recommendations, including noting the plan and considering the materiality thresholds.

Councillor Marc Francis asked about the transfer of powers from the LLDC and the mitigations in place. Asan Khan explained that the risk was the income transferred to the council and how it was treated, as well as the planning powers transferred back. He stated that the income received had been treated in accordance with Section 106 agreements² and regulations.

Councillor Kabir Ahmed declared an interest as the lead member of the Section 106 board.

Councillor Mufeedah Bustin raised concerns about the IFRS 16 new requirement and the challenges of gathering lease information. Stephen Reid confirmed this was a significant audit risk due to data availability and valuations. Ahsan Khan and Nilesh Kakard, interim chief accountant, outlined the council's approach to gathering data and conducting reviews.

Draft Statement of Accounts

Ahsan Khan presented the draft statement of accounts for 2024-25, noting that the accounts had been published by the statutory deadline and were now subject to external audit. He highlighted movements on the fixed asset register due to capital expenditure and economisation, as well as changes in the value of assets impacting the INE³.

Councillor Kabir Ahmed thanked the officers for their hard work and enquired about the status of interim audits, to which Ahsan Khan confirmed that an interim audit had taken place in April.

Councillor Mufeedah Bustin asked about the operational mechanism of requesting and providing audit evidence, and Ahsan Khan confirmed that EY had a secure portal and that communication was open between the council's team and the EY team.

Councillor Mufeedah Bustin asked about the increase in gross expenditure for the chief executive on the INE, and Ahsan Khan clarified that it was largely related to technical adjustments related to pension costs.

The audit committee recommended noting the publication of the 24-25 Draft Statement of Accounts, and also to note the significant accounting judgments made in producing the Statement of Accounts.

Update on Statutory Recommendations

David Dobbs, head of internal audit, presented an update on the statutory recommendations issued by the external auditor, focusing on closing of accounts, financial reporting process, internal control, and procurement and contract management.

Ahsan Khan discussed increased capacity, the closing champions group, training sessions, and the interim audit. He acknowledged challenges with debtors and creditors balances and the summer recess impacting school responses.

David Dobbs discussed the implementation rate of management actions, noting improvements from March but also acknowledging that some recommendations had lost their currency due to staff turnover.

Andy Grant, corporate head of procurement, discussed the restructure of the procurement team, controls around the RFQ⁴ system, and contract management.

Councillor Amin Rahman asked if the corporate director thought enough progress had been made on the statutory recommendations, and Abdulrazak Kassim stated that significant progress had been made but that it was a journey.

Councillor Mufeedah Bustin commented that the committee had not seen an action plan for the second recommendation on internal audit, and David Dobbs responded that the report of the last meeting was intended to be that action plan. Councillor Mufeedah Bustin suggested that the dates that the recommendations went to CLT be included in the next report, along with a brief summary of what was discussed.

Councillor Marc Francis asked about the alleged criminal offence that took place against the authority, and Andy Grant responded that there was no evidence of any criminality. He also asked about rolling contracts and consultants, and Andy Grant stated that the new structures would provide oversight of what was going on.

Annual Governance Statement

David Dobbs presented the draft annual governance statement for 2024-25, noting that it was a draft for discussion and would be subject to further iterations.

Councillor Kabir Ahmed requested that the document celebrate the positive gender pay gap within the council. Councillor Marc Francis stated that the document painted too rosy a picture and did not adequately reference the best value inspection or its conclusions. Councillor Mufeedah Bustin requested that Councillor Francis's comments be taken back to the CEO.

Councillor Mufeedah Bustin asked if the committee would have another chance to look at the document in the autumn, and David Dobbs confirmed that it would come back with the final draft accounts.

Councillor Mufeedah Bustin asked that Councillor Francis's comments be responded to in the interim.

Councillor Mufeedah Bustin asked if the committee was happy to approve the new whistle blowing policy, and it was approved.

Internal Audit Annual Report

David Dobbs presented the internal audit annual report, summarising the internal audit work undertaken during 24-25 and providing the overall opinion of reasonable assurance on the control environment.

Councillor Mufeedah Bustin asked how the improved audit findings and closure of actions had been reconciled with the external audit opinion on risks in the council, and David Dobbs responded that his opinion was heavily weighted towards the work his team had undertaken directly.

Councillor Mufeedah Bustin asked about draft reports not being finalised, and David Dobbs responded that the position was improving but there were still some that were sticking. Councillor Mufeedah Bustin also asked about benchmarking of the fraud team, and David Dobbs stated that he hoped to bring more anti-fraud reporting to the committee in the near future.

Annual Schools Internal Audit Report

David Dobbs presented the annual schools internal audit report, noting that the audits were undertaken on the council's behalf by BDO. He stated that the results were largely consistent with previous years, with a couple of limited assurance reports.

Councillor Mufeedah Bustin asked if BDO promoted best practice or provided support for schools, and David Dobbs responded that the results were fed back to the schools governance team and schools finance. He also noted that the council had recontracted with a new supplier.

Annual Insurance Report

David Dobbs presented the annual insurance report, noting that insurance was a big budget pressure for the council.

Councillor Amin Rahman asked if the council's approach to insurance was well judged, and David Dobbs responded that it was a very professional team with robust management arrangements in place.

Councillor Kabir Ahmed asked about the risks related to damp and mould and the controls in place, and David Dobbs stated that housing was probably the most challenging area and that things had improved since housing had moved back in house.

Councillor Marc Francis asked about the impact of the increase in housing related claims on the ability to procure an insurance policy, and David Dobbs responded that it would have an impact on premiums.

Updated Whistleblowing Policy

David Dobbs presented the updated whistleblowing policy, noting that it was for approval.

Councillor Mufeedah Bustin asked about paragraph 8.1 and whether the reports made under it were the whistleblowing reports themselves, and David Dobbs responded that it would form part of the anti-fraud reports.

Audit Committee Work Plan

Councillor Marc Francis noted that there were only four meetings in the municipal year and asked if there was a particular reason for that. He also asked where the committee would look at the accounts.

Councillor Mufeedah Bustin responded that there would be an extraordinary meeting in December to sign off the value for money paper and the accounts.

Councillor Francis also asked whether the directors would come and speak to the committee in relation to the risks in their portfolio, and David Dobbs responded that the risk report due in October would incorporate the deep dive for the resources directorate.

Finally, the committee moved to exclude the press and public to discuss a restricted item.