The Audit Manager led Members through the internal audit report to 30 September 2023 that gave details of audit matters and any emerging issues, not only in relation to audit but risk management and corporate governance.  Progress on the 2023/24 Audit Plan was currently behind schedule which was attributed to complex projects and audit overruns.  The Licensing audit would be postponed, and coverage might have to be reduced on other audits to ensure they were still deliverable. 

Two audit reports were issued in the quarter.  A third report (Housing Company Governance [HCG]) was completed in September 2023, but not issued until October 2023.  All three reports received negative assurance ratings, with ICT Asset Management providing limited assurance, and both Blackfriars Spine Road Project and HCG received minimal assurance.  An overview of the findings arising from each was given in the Executive Summaries in Appendix A to the report.

Appendix B to the report updated Members on progress made on implementing the audit recommendations reported at previous meetings.  There were currently 15 recommendations, five of which had been previously reported and a further 10 cases were made in 2022/23 and carried over.  Progress had been made in most cases.  Only four recommendations had been made up to 30 June 2023, half of which had been resolved and the rest were work in progress.

Five audits were scheduled to take place from January to March 2024, these included Creditors; ICT Governance; Treasury Management; Payroll; and Debtors.

Progress on outstanding audit recommendations continued to be monitored.

Members were given the opportunity to ask questions and the following points were noted during the discussions:

•     the outstanding audit recommendation concerning Procurement was still with Legal Services;

•     work following the ICT Asset Management Audit had progressed to reinstate robust practices and the backlog was continuing to be addressed;

•     regular reporting on the Blackfriars Spine Road project was now taking place;

•     an action plan detailing amended milestones to complete the Spine Road works and the final drawdown date of funds by March 2024 had now been sent to Homes England and was working its way through the legal process;

•     reports had been taken to Cabinet in July and November 2023 and a Member Briefing given detailing the overspend on the Blackfriars Spine Road project once its true extent was clear;

•     controls were now being put in place to ensure improved working with the Procurement Hub, procurement training for officers and improved monitoring and reporting procedures;

•     Baily Garner LLP, the original employer’s agent on the Spine Road project, had been awarded a contract under a framework agreement with the South East Consortium. This conformed with both Council and EU procurement rules, so there was no need for a competitive tendering exercise;

•     the Loan Agreement and Working Capital Agreement to the Housing Company were progressing with the legal teams and the interest on loans would be backdated;

•     the Housing Company had been at a disadvantage with their initial project being a site that had been stalled for many years and would be looking at other opportunities going forward, such as partnerships with other builders;

•     the newly formed Housing Development Strategy Task and Finish Group would be considering how to bring forward stalled sites;

•     Members thanked Councillor Thomas for his work as Chair of the Housing Company; and

•     Members thanked the Audit Manager and Senior Auditor for their work on the audits.

RESOLVED: That the Internal Audit report to 30 September 2023 be noted.

(When it first became apparent, Councillors Barnes and Drayson each declared a Personal Interest in this matter as the former Vice-Chair and a Director respectively of the Rother DC Housing Company and in accordance with the Members’ Code of Conduct remained in the meeting during the consideration thereof).

(Councillor Coupar declared a Personal Interest in this matter as a Rother DC Housing Company Director but had already left the meeting when this item was considered).

(Councillor Thomas declared a Personal Interest in this matter as Chair of the Rother DC Housing Company and in accordance with the Members’ Code of Conduct remained in the meeting during the consideration thereof).