The Governance, Audit, Risk Management and Standards Committee (GARMS) convened to discuss a range of topics, including the council's anti-fraud strategy, risk management, internal and external audit progress, treasury management, and member development programmes. The committee noted the progress made in various areas and provided feedback on proposed plans, particularly regarding member training and induction.

Treasury Management Update

The committee discussed the treasury management performance update for the second quarter of 2025/26. A key concern raised was the sustainability of the current pace of borrowing, with questions directed to officers regarding its implications for the revenue budget and the medium-term financial strategy (MTFS).

The Head of Finance, Nicholas Stylianou, clarified that borrowing aligned with capital projects was considered prudent and affordable, but borrowing to support exceptional financial support (EFS) was not a sustainable long-term solution. He acknowledged that externalising some of the debt was due to lower reserves, which had previously allowed for internal borrowing without incurring capital financing costs.

Councillor Alex Prager raised concerns about the potential impact on the revenue budget, describing the forecasted borrowing as spiraling . Nicholas Stylianou confirmed that the revenue impact of borrowing is factored into the MTFS, but borrowing to plug a budget gap exacerbates the issue.

Another concern was raised about the contingency plans should interest rates not fall as forecasted. Nicholas Stylianou explained that the current strategy involves short-term borrowing and refinancing, with the risk that interest rates could be higher upon refinancing. The council is also monitoring available information and working with treasury advisors to identify opportunities to lock in long-term borrowing if interest rates fall to a certain level.

Councillor Alex Prager questioned the council's advisor, MUFG, asking if there was a specific reason why the council's major advisor in this is a Japanese bank. Nicholas Stylianou initially stated that MUFG used to be called Link Treasury Advisors and prior to that they were Capita, and he did not believe they were linked to the Japanese bank. Councillor Matthew Perlberg then clarified that MUFG Link were bought out by Mitsubishi USG Financial, so they are now a subsidiary of MUFG.

Councillor Matthew Perlberg also asked about a reported 60% decrease in the council's capital expenditure forecast for 2025/26 in relation to borrowing, seeking details on which specific capital schemes were removed or deferred to achieve this reduction. Nicholas Stylianou agreed to provide a response to this question after the meeting.

Richard Harbord, Independent Member, enquired about contingency plans for refinancing short-term borrowing towards the end of March, when such borrowing becomes scarcer. He also asked whether the Housing Revenue Account (HRA) capital programme was fully compliant with building safety requirements and the regulator's demands. Nicholas Stylianou confirmed that the council had recently achieved the highest grade in its social housing inspection, indicating compliance with building safety standards. He noted that the council has avoided local authority lending due to the volatility in the sector.

External Audit Progress Report

The committee received an update on the external audit progress for 2024/25. The audit is being conducted by BDO.

Paul Lemon, introduced the report, noting the government's focus on reducing the number of disclaimed audit opinions across the sector. He emphasised the importance of completing as much work as possible for the 2024/25 audit to rebuild assurance.

Ajay Jha, Audit Manager, detailed the progress made, including the completion of planning, risk assessment, interim testing, and work on system migration to Oracle. He noted that 50% of the fieldwork had been completed. Challenges remained, particularly regarding the timely production of annual accounts.

Councillor Nick Mearing-Smith asked why it was so difficult for the council to provide the information required for testing debtors and creditors. Nicholas Stylianou responded that the council was working closely with the auditors to provide the necessary information and that communication had improved.

Councillor Alex Prager raised concerns about risks remaining in the council's IT and financial systems, a recurring theme in previous reports. Ajay Jha clarified that their concerns related to the Oracle system and the system migration, but they had not found any material issues with the data migration.

Councillor Kath McGuirk asked what the council could do to mitigate the risks it faces, given the current climate. Paul Lemon responded that the council should focus on producing high-quality accounts, ensuring borrowing is asset-backed, and making difficult choices to manage costs.

Parris Williams, Director at BDO, provided an update on the pension fund audit. He noted that the 2023/24 audit had resulted in a disclaimed opinion, but the goal for 2024/25 was to audit all closing balances and transactions. He expressed optimism that this could be achieved, which would allow for a move away from a disclaimed opinion in the future.

Councillor Kath McGuirk asked about bank reconciliations and why they were not being done regularly. Nicholas Stylianou acknowledged that there had been significant turnover in the pensions team, which had impacted performance. He stated that the aim was to get back on track with good practices and utilise technology to improve efficiency.

Corporate Anti-Fraud Team (CAFT) Half Yearly Progress Report

The committee reviewed the Corporate Anti-Fraud Team's (CAFT) half-yearly progress report for the second quarter of 2025/26. The report highlighted the results achieved in the first six months of the year, including two criminal executions related to fraud and prevention work in social care. The total amount of corporate fraud was approximately £1.7 million.

A query was raised regarding the likelihood of recovering funds via the Proceeds of Crime Act 2002. An officer explained that the government runs an incentivisation scheme that splits the recovered funds, with the council receiving about 33% after deductions.

Councillor Alex Prager noted that tenancy fraud and corporate fraud were the two biggest areas for potential recovery, and asked if there were any thoughts around prioritising those areas. An officer responded that while those areas are significant in terms of monetary value, proceeds of crime investigations only arise after an actual fraud case has been identified with recoverable assets.

Councillor Paul Lemon thanked the officers and staff for their work, emphasising the importance of taking fraud seriously.

Quarterly Risks Report

The committee received an overview of the quarterly risk report, which covered risks across various service areas. The report identified 183 open risks, with 24 considered strategic and seven high-level strategic risks.

A question was raised about a risk related to the depot, specifically concerning land owned by Network Rail. An officer confirmed that Network Rail had requested the land back, and part of the depot function was moving to North London Business Park. An assessment would be done on the potential impacts of the move on the service that the depot provides.

Councillor Alex Prager asked about risks related to the North London Waste Authority (NLWA) and potential increases in the treatment levy. An officer explained that there were concerns around the delivery of the North London Heat and Power Project and that the chief executives, directors of environment, and director of finance were reviewing possible outcomes. The risk reflected uncertainty around the delivery of the heat network. Additional costs resulting from delays to the programme could be shared by the seven authorities involved.

Internal Audit Exception, Recommendations and Progress Report

The committee reviewed the internal audit exception, recommendations, and progress report for the second quarter of 2025/26. The report indicated that 52% of the annual internal audit programme had been delivered, meeting the target. Eight reviews were completed, including an assurance report for Shalom Noam Jewish Primary School.

A decline in the rate of completed actions was noted, with 67% of actions due confirmed as implemented, below the target of 90%. The lower rate was attributed to management not completing agreed actions or providing evidence on time.

An officer explained that delays in implementing actions related to asset management were due to the procurement and implementation of a new asset management system called Concerto. The system is expected to be implemented in property services in January.

Councillor Alex Prager noted that 67% of actions were implemented in Q2, below the target, and expressed hope for improvement in the next quarter. He also raised concerns about the council's borrowings and the lack of a meeting of the Capital Strategy Board (CSB). An officer responded that the board is due to meet in the new year and that work is underway to refresh the dashboard and provide information on spend and other relevant factors.

Member Development Programme Update

The committee received an update on the member development programme for 2022-2026. The report provided information on the training sessions delivered and attendance.

Fiona Ray, Scrutiny Manager, highlighted that the council was on track to maintain its Charter Plus status, which demonstrates good levels of training.

Councillor Kath McGuirk raised concerns about the accessibility of training sessions for people with normal jobs and suggested exploring alternative formats to encourage wider participation. Councillor Nick Mearing-Smith echoed these concerns, noting the average age of councillors and the need to accommodate younger councillors with other priorities. He suggested recording sessions for councillors to review at their convenience.

Member Induction Programme

The committee discussed the draft member induction programme for 2026 onwards. The programme was developed in consultation with the member development steering group, senior officers, and feedback from previous induction programmes.

Fiona Ray noted that feedback had been incorporated into the programme, including ensuring sessions are engaging and avoiding overloading new members at the start.

Councillor Arjun Mittra noted that the support for new members elected via by-elections had improved. Councillor Alex Prager suggested incorporating training on community infrastructure levy (CIL) and neighbourhood community infrastructure levy (NCIL) allocation processes. Fiona Ray confirmed that training on CIL and NCIL was planned, scheduled to coincide with relevant meetings.