Homes for Haringey Audit and Risk Committee Meeting ... · Adjustments were also being made to some fire door closers. 49/18 Internal Audit Progress Report MJ highlighted progress

Homes for Haringey

Audit and Risk Committee Meeting

Confidential Papers

Tuesday 26 February 2019

Refreshments 6.15pm

Meeting 6.30pm - 8.30pm

Conference Room 1

48 Station Road

Wood Green

London

N22 7TY

Item Subject Presenter Status Page Time

1 Welcome and apologies Chair Public - 18.30

2 Declarations of interest Chair Public - 18.31

3 Minutes of the meeting held on 16

October 2018

Chair Public 1 18.32

4 Actions log Chair Public 6 18.33

5 External audit plan 2018/19 PWC Public 9 18.35

6 Internal audit programme:

i) Internal audit progress report

ii) Recommendations tracker

iii) Appraisals and performance

management

iv) Safeguarding vulnerable

individuals

v) Budgetary control

vi) Responsive repairs

vii) Data security

viii) Counter fraud report Q3 18/19

ix) Internal audit plan 2019/20

Mazars

&

Executive Team

Public

46

50

55

65

75

83

93

103

110

18.45

7 Draft budget 2019/20 Financial Controller Public 115 19.35

8 Risk strategy Director of Corporate

Affairs

Public 121 19.45

9 Risk register Q4 2018/19 Director of Corporate

Affairs

Public 137 19.55

10 Arrears write off proposals Executive Director of

Operations

Public 156 20.10

11 Safeguarding annual report Executive Director of

Operations

Confidential 163 20.20

12 Any other business Chair - 20.30

Audit and Risk Committee Meeting

Agenda

Homes for Haringey

Audit and Risk Committee Meeting 16 October 2018

Meeting: Audit and Risk Committee Meeting

Date & Time: 16 October 2018, 6.25pm

Venue: Conference Room 1, 48 Station Road, Wood Green

Present: Adzowa Kwabla-Oklikah (AKOk) – Chair, Andrew Crompton (AC), Anne

Gibson (AG)

Officers in

Attendance:

Chris Liffen (CL), Astrid Kjellberg-Obst (AKO), Denise Gandy (DG),

Puneet Rajput (PR), Minesh Jani (MJ)

Apologies: Anastasia Bloom (AB), El-Farouk Cheik (EFC), Sean McLaughlin (SM),

David Sherrington (DS), Esther Campbell (EC)

Item Minutes Action

46/18 Welcome, Apologies and Declarations of Interest

The Chair welcomed officers to the meeting.

Apologies were noted as above.

There were no declarations of interest.

47/18 Minutes of the Meeting 10 July 2018

The minutes of the meeting held on 10 July were reviewed and

approved as an accurate record of the meeting and signed by the

Chair.

48/18 Actions Log

CL confirmed that all sheltered housing schemes will have been

visited and their fire doors assessed by the end of October.

Adjustments were also being made to some fire door closers.

49/18 Internal Audit Progress Report

MJ highlighted progress with the internal audit plan for 2018/19.

There had been slippage with the safeguarding and budgetary

control audits but he was confident that all audits would be

completed by year end. There was a conversation around how evenly

and fairly the audits had been scheduled. The audit plan for

2019/20, to be agreed with the Committee at its next meeting in

February 2019, would look to build on the improved scheduling of

2018/19.

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Homes for Haringey


Item Minutes

Action

In response to a question from AKOk, the executive confirmed they

were comfortable with progress and confident the 2018/19 plan

would be completed by year end.

50/18 Internal Audit Outstanding Recommendations

The Committee noted the progress that had been made to reduce the

number of outstanding recommendations. PR pointed out that some

recommendations were reliant upon the Council and its timescales

and there was, therefore, a risk of further slippage. The Committee

asked that where this was the case for it to be flagged on the report.

In relation to a recommendation from the audit of bespoke systems

relating to the reporting of bespoke systems to management, it was

confirmed that this would be done by the end of the calendar year. It

was also pointed out that the use of bespoke systems would need to

continue until the housing management IT system was upgraded and

that this was reliant upon Council timescales.

AG asked about the accuracy of the same data held in different

systems, citing variations in her address on different documentation

as an example. This would be looked into and reported back.

PR

PR

51/18 Internal Audit – Management Arrangements for Contracts and

Partnerships

This audit had received limited assurance.

MJ presented the key findings and control weaknesses from the audit.

AG queried the high level of spend with non contracted suppliers. CL

explained that this was generally where engagement with suppliers

had continued following lapse of existing contracts. There were

usually good reasons, the original terms and conditions were still

enforceable and the supplies and services continued to be managed

in accordance with the original contracts. An analysis of this category

of spend with explanatory commentary would be reported at the next

meeting of the Committee.

CL/PR

52/18 Internal Audit – Corporate Governance

This audit had received a substantial assurance.

The Committee was reassured with the substantial assurance given in

relation to the Board’s governance of HfH.

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Item Minutes

Action

AG asked about the recent risk training for the Board and the low

level of attendance. It was agreed to arrange a special meeting of the

Committee to focus on the continuing development of the risk register

and to extend an invitation to the Board to attend the meeting which

could also serve as a learning event based on actual HfH risks.

PR

53/18 Internal Audit – Gas safety Checks

This audit had received substantial assurance.

The Committee sought assurance that in relation to the 5% of

properties that contractors cannot access, the gas service is still

completed within the target time. This was confirmed to be the case.

New gas contracts were being procured for commencement in the

new year. These would incorporate key performance indicators to aid

performance monitoring.

54/18 Internal Audit – Counter Fraud Report

MJ presented performance on counter fraud activity for the second

quarter of the year. A number of proactive counter fraud projects

were underway in relation to employees and other areas.

DG informed the Committee of additional resources funded through

the Flexible Housing Support Grant to help with undertaking targeted

visits to recover properties in which people were no longer living.

MJ added that data sets had been submitted to the Cabinet Office for

detailed analysis to identify any trends / anomalies for investigation.

He would make enquiries with the Electoral Roll, who would shortly

be starting the process of updating the Electoral Register, about

feeding back any relevant findings to Haringey.

MJ and DG left the meeting at this point.

MJ

55/18 Risk Review – Workshop Discussion

The Committee and the Executive participated in an exercise to review

risks and the risk management process including building up a

worked example. Key points from the exercise included:

i) A scoring of “1x5” was different to “5x1” despite having

the same severity score and it was important to flag this

distinction in any reporting

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Homes for Haringey


Item Minutes

Action

ii) The Committee felt that a review of the whole register

would be more useful

iii) The identification of failure / distraction from new business

initiatives as a new risk for the register and once specific

initiatives are agreed for these to be risk assessed and

added to the register

iv) For the last register reviewed by the Committee to be re-

circulated to the Committee and once a revised register is

produced by the Executive for this to be shared with the

Committee and email feedback sought

v) If at all possible, a risk workshop to be scheduled for the

Committee with an invitation to Board members

PR

PR

56/18 Medium Term Financial savings Plan

The Committee felt greater knowledge of budget setting and budget

performance was needed in order to be able to agree a target level

of efficiency saving. It was also important to be able to agree with the

Council the position in relation to retention of savings over a five year

period.

It was agreed to pursue this in tandem with the Board over the period

January to March 2019 with a view to making a final decision at the

Board in March 2019.

SM

57/18 Arrears Write Off Proposals

AKO gave an explanation of recovery actions attempted in relation to

the arrears being proposed for write off. She made available the

detailed case listings to the Committee. AC felt there was little value

in even attempting to recover arrears under £25 and focusing time

and resource in this area did not represent value. AKOk commented

that whilst the level of write off was higher than preferred there was

little choice but to agree the recommendation. She urged greater

focus and effort on prevention activity.

The Committee agreed to approve the proposed write offs for

recommendation to the Council for final approval.

58/18 Safeguarding Exception Report

AKO provided an update on the safeguarding case currently under

Safeguarding Adult Review (SAR). A learning event had been

organised for 5 November at which HfH alongside other agencies

would be participating. HfH was now also a member of the

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Item Minutes

Action

Safeguarding Adults Board (SAB) and was looking at adopting

specific pledges in relation to safeguarding vulnerable adults.

AKOk asked about a Board Champion for safeguarding. This would

be followed up at the Board away day.

PR/

AKOk

59/18 AOB

There was no other business

The meeting closed at 19:55

Signed:

Date:

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Homes for Haringey

Audit and Risk Committee Meeting 26 February 2019

Action log

Date of

meeting

Agenda

item

Action Action

owner

Target

completion

date

Status and comments

10/07/18 41/18 Briefing note on counter fraud work

for Council Lead Member to be

shared with the Committee.

AKO/

MJ

Oct-18 The briefing note is being prepared by HfH and

will be shared once drafted.

16/10/18 50/18 Flag internal audit outstanding

recommendations that rely on input

from the Council.

PR Feb-19 Complete – this has been flagged in the

accompanying report

16/10/18 50/18 Accuracy of personal data held in

different systems to be reviewed

PR May-19 This is the subject of an internal data quality

audit, the findings from which will be reported to

the committee in May.

16/10/18 51/18 Analysis of non contracted spend to

be reported to the Committee

PR/CL Feb-19 Complete – an analysis accompanies this

actions log

16/10/18 52/18 Additional meeting to be arranged to

focus on continuing development of

the risk register

PR Dec-18 Unfortunately this did not prove possible at the

time.

Summary of Decisions 16 October 2018

Agenda Item No. Decision

Medium Term Financial Savings Plan 56/18 It was agreed to develop target efficiency savings as part of the budget setting

process and in conjunction with the Board.

Arrears write off proposals 57/18 The Committee agreed to recommend £2.6m of arrears write offs relating to

1,051 cases to the Council for write off.

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Homes for Haringey


Action log

Date of

meeting

Agenda

item

Action Action

owner

Target

completion

date

Status and comments

16/10/18 54/18 Electoral Roll input to be sought in

the identification of potential fraud.

MJ Feb-19 Complete – The NFI data matching exercise has

just reported on potential errors, anomalies and

frauds. A meeting has been convened of co-

ordinators (including HfH) on 14 February to set

out the approach to investigating the matches,

including those that can help identify housing

fraud.

16/10/18 55/18 Circulate existing risk register and

new register once developed.

PR Dec-18 Complete – the previous register was circulated

at the time and a draft revised register is on the

agenda for discussion

16/10/18 56/18 Confirmation from Council to be

sought for retention of savings over

the term of the MTFS

SM Feb-19 Complete – the Council’s draft 5 year MTFS is

based on the 2017/18 management fee level

with no targeted cost efficiency contribution.

16/10/18 58/18 Board champion for safeguarding to

be considered at Board away day

PR Nov-18 Complete – at the away day the Board agreed to

move away from having dedicated Board

Champions with portfolios.

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Homes for Haringey


Non Contracted Spend Analysis

An internal audit of the management arrangements for contracts and partnerships which looked at HfH company expenditure in 2017/18

identified:

Spend with contracted suppliers 13,063,341.57 47.29%

Spend with non contracted suppliers 14,566,778.93 52.71%

Total spend 27,630,120.50

An analysis of spend with non contracted suppliers has identified:

Level of Compliance Value % Comments

Not applicable 9,759,002 67% Represents spend with the Council, e.g. SLA services, and spend below £10k (Contract Reg.

threshold)

Part compliant 2,415,247 17% Incomplete information to fully substantiate e.g. tender report or copy of contract

Non-compliant 1,574,755 11% No evidence available of procurement process e.g. reports, quotes, contracts

Council operated 403,544 3% E.g. Royal Mail, mobile phone, IT related – Council operated contracts

Compliant 318,223 2%

Exempt 95,368 1% Official exemption in Contract Regs. E.g. interest in land, rental or lease arrangements

Total 14,566,139

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www.pwc.co.uk

Homes for Haringey Limited

External Audit Plan 2018-2019

Report to the Finance, Audit and Risk Committee

External Audit Plan

Year ending

31 March 2019

Strictly private and confidential

21

http://www.pwc.co.uk/

PricewaterhouseCoopers LLP, 1 Embankment Place, London WC2N 6RH T: +44 (0) 20 7583 5000, F: +44 (0) 20 7212 7500, www.pwc.co.uk

PricewaterhouseCoopers LLP is a limited liability partnership registered in England with registered number OC303525. The registered office of

PricewaterhouseCoopers LLP is 1 Embankment Place, London WC2N 6RH.PricewaterhouseCoopers LLP is authorised and regulated by the Financial Conduct Authority

for designated investment business.

Finance, Audit and Risk Committee Homes for Haringey Limited 48 Station Road Wood Green London, N22 7TY 12 February 2019

Ladies and Gentlemen,

We are delighted to present to you our Audit Plan for the year ending 31 March 2019, which includes an analysis of our draft assessment of audit risks, our proposed audit strategy, audit and reporting timetable and certain other matters.

Discussion of our strategy with you enables our engagement team to understand your concerns and agree on mutual needs and expectations to provide the highest level of service quality.

If you have any questions regarding matters in this document please contact Andy Lowe ([email protected]) on 07720 555415 or Hannah Parker on 07706 284727.

As requested, we will plan to attend the Audit Committee meeting on 26 February 2019 and look forward to discussing the contents of our Audit Plan with you then.

Yours faithfully Andy Lowe For and on behalf of PricewaterhouseCoopers LLP

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mailto:[email protected]

External Audit Plan 2018/19

Homes for Haringey Limited PwC Contents

Contents

Introduction 1

Audit approach 2

Risk of fraud 7

Your PwC team 9

Your audit fees and timetable 10

Appendices 12

Appendix A. Risk and response 13

Appendix B. Communications plan 15

Appendix C. Recent developments 17

Reports and letters prepared by appointed auditors and addressed to members or

officers are prepared for the sole use of the audited body and no responsibility is

taken by auditors to any member or officer in their individual capacity or to any

third party.

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Homes for Haringey Limited PwC 1

Purpose of this Audit Plan We have prepared this Audit Plan to provide the Finance, Audit and Risk Committee and management of Homes for Haringey Limited with information about our responsibilities as external auditors and how we plan to discharge them for the audit of the financial statements for the year ending 31 March 2019.

Framework for our external audit We will conduct our audit in accordance with International Standards on Auditing (UK) and the relevant requirements of these Standards and the Financial Reporting Council’s Ethical Standard.

The remainder of this document sets out how we will discharge our responsibilities and undertake the audit - and we welcome any feedback or comments that you may have.

We explain our audit responsibilities and the objectives, procedures and limitations of the audit in our letter of engagement which we update each year. This letter also explains our approach to reporting findings to the Directors, which takes account of your requirements as well as our professional responsibilities. There are no substantive changes from the engagement letter signed by the Directors in the prior year.

Introduction

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The PwC Audit

We work to ensure a high quality and efficient audit.

Our unique methodology involves our people, a tailored audit approach and our use of technology:

Smart People The members of our audit team have been primarily taken from our dedicated Government and Public Sector team. Our team members therefore have a wide and deep knowledge of the housing sector. Centre of Excellence We have a Centre of Excellence in the UK for the housing sector. This is a dedicated team of specialists that advises, assists and shares best practice with our audit teams in more complex areas of the audit. Your audit team works side-by-side with the Centre of Excellence in order to ensure that we are executing the best possible audit approach. Service Delivery Centres We use dedicated delivery centres to deliver parts of our audit work that are routine and can be done by teams dedicated to specific tasks; for example these include confirmation procedures, preliminary independence

checks and financial statements quality checks. The use of our delivery centres frees up your audit team to focus on the areas of the audit that matter to you. Client Connect We have developed a service called “Client Connect”. It is a website that helps us to securely exchange information with clients and track the status of requests. It will help HfH and us improve the planning and management of our audit, letting us know the latest status of our deliverables and when important dates are due.

PwC’s audit is builton a foundation of smart people, a smart approach and smart technology. This together with oursix-step audit process, results in an auditthat is robust, insightful and relevant.

1. Client acceptance & independence

2. Deep business understanding

3. Relevant risks

4. Intelligent scoping

5. Robust testing

6. Meaningful conclusions

Audit approach

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Smart Technology We have designed processes that automate and simplify audit activity wherever possible. Central to this is PwC’s Aura software, which has set new standards for audit technology. It is a powerful tool, enabling us to direct and oversee audit activities. Aura’s risk-based approach and workflow technology results in a higher quality, more effective audit and the tailored testing libraries allow us to build standard work programmes.

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Our ‘Smart’ Approach underpins your audit. The core elements of our audit are outlined below:

Client acceptance & independence Our audit engagement begins with an evaluation of HfH on our ‘acceptance & continuance database’ which highlights an overall engagement risk score and highlights areas of heightened risk.

At the beginning of our audit process we are also required to assess our independence as your external auditor. We have made enquiries of any PwC teams providing services to you and of those responsible in the UK firm for compliance matters and there are no matters which we perceive may impact our independence and objectivity of the audit team.

Therefore, at the date of this Plan, we confirm that, in our professional judgement, we are independent with respect to yourselves, within the meaning of UK regulatory and professional requirements and that the objectivity of the audit team is not impaired.

Relevant risks Our audit is risk based which means that we focus on those areas which, in our judgement, are most likely to lead to a material misstatement in the financial statements.

We have carried out an initial draft risk assessment for 2018-2019, prior to considering the impact of controls, as required by auditing standards, which draws on our deep business understanding.

We determine if risks are (a) significant, (b) elevated or (c) normal - and whether we are concerned with fraud, error or judgement as this helps to drive the design of our testing procedures:

Significant Those risks with the highest potential for material misstatement due to a combination of their size, nature and likelihood and which, in our judgement, require specific audit consideration.

Elevated Although not considered significant, the nature of the balance/area requires specific consideration.

Normal We perform standard audit procedures to address normal risks in all other material financial statement line items.

The following table highlights the risks which we consider to be either (a) significant or (b) elevated in relation to our audit for the year ending 31 March 2019 - and we have summarised our response to these risks in Appendix A.

Risk Rating

1 Risk of management override of controls (significant)

2 Risk of fraud in revenue recognition (significant)

3 Going concern (significant)

A ‘normal’ risk that we would note is the accounting for the pension fund assets and

liabilities and the reliance by management on the actuary Hymann Robertson for the

provision of data.

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Intelligent scoping Materiality

Benchmark

Homes for Haringey Limited

2% of turnover

Homes for Haringey Residential Community Interest Company

A separate, balance sheet derived, materiality will be

individually set for this subsidiary company

Materiality is the amount which, if unadjusted, would influence the decision of a user of a set of financial statements. We use principles in auditing standards to set a preliminary estimate of materiality and then review it throughout the audit. We set overall materiality to assist our determination of the overall audit strategy and to assess the impact of any adjustments identified.

Overall materiality has been set at the chosen benchmark as listed above for the year ending 31 March 2019. The nature of the benchmark used for each entity is determined by reference to the principal activities of that entity.

ISA (UK) 450 requires that we record all misstatements identified except those which are “clearly trivial” i.e. those which we clearly do not expect to have a material effect on the financial statements even if accumulated. This threshold is proposed at 5% of overall materiality.

We have summarised our reporting requirements for the financial statements and other areas of work required in our communications plan in Appendix B.

Robust testing Where we do our work As previously mentioned, our audit is risk based, which means we focus our work on the areas that matter. In summary, we will:

Consider the key risks arising from internal developments and external factors such as policy, regulatory or accounting changes;

Consider the robustness of the control environment, including the governance

structure, the operating environment, the information systems and processes and the financial reporting procedures in operation;

Understand the control activities operating over key financial cycles, which affect the production of the year-end financial statements;

Test key controls relevant to the audit approach; and

Perform substantive procedures on transactions and balances as required.

When we do our work Our audit is designed to keep you informed of any issues as they arise so that we deliver a no surprises audit at all times. This involves open and timely communication with management to ensure that we meet all statutory reporting deadlines. We engage early, enabling us to debate issues with you whilst not getting ahead of management’s decision making.

Meaningful conclusions We believe fundamentally in the value of the audit and its crucial position in providing confidence to the board and other stakeholders. In addition, we believe that audits need to be designed to be valuable to our clients to properly fulfil our role as auditors.

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Audit value comes from the same source as audit quality so the work that we do in support of our audit opinion also means that we should be giving you value through our observations, recommendations and insights. We have set out some recent developments in Appendix C and we will provide other insights and observations to you in our audit reports throughout the year.

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International Standards on Auditing (UK) state that we, as auditors, are responsible for obtaining reasonable assurance that the financial statements taken as a whole are free from material misstatement, whether caused by fraud or error.

The respective responsibilities of auditors, management and those charged with governance (the finance, audit and risk committee and the board of directors) are summarised below:

Auditors’ responsibility Management’s responsibility

Responsibility of the Finance, Audit and Risk Committee

Our objectives are:

To identify and assess the risks of material misstatement of the financial statements due to fraud;

To obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses; and

To respond appropriately to fraud or suspected fraud identified during the audit.

Management’s responsibilities in relation to fraud are:

To design and implement programmes and controls to prevent, deter and detect fraud;

To ensure that the entity’s culture and environment promote ethical behaviour; and

To perform a risk assessment that specifically includes the risk of fraud addressing incentives and pressures, opportunities, and attitudes and rationalisation.

Your responsibility as part of your governance role is:

To evaluate management’s identification of fraud risk, implementation of anti-fraud measures and creation of appropriate ‘tone at the top’; and

To investigate any alleged or suspected instances of fraud brought to your attention.

Conditions under which fraud may occur

Management or other employees have an incentive or are under pressure

Circumstances exist that provide opportunity –ineffective or absent control, or management ability to override controls

Culture or environment enables management to

rationalise committing fraud – attribute or values of those

involved, or pressure that enables them rationalise

committing a dishonest act

Incentive pressure

Opportunity

Rationalisation / attitude

Why commit fraud?

Risk of fraud

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Your views on fraud We enquire of you, as members of the Finance, Audit and Risk Committee:

whether you have knowledge of fraud, actual, suspected or alleged, including those involving management;

what fraud detection or prevention measures (e.g. whistle-blower lines) are in place in the entity;

what role you have in relation to fraud; and

what protocols/ procedures have been established between those charged with

governance and management to keep you informed of instances of fraud, either actual, suspected or alleged.

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The individuals in your PwC team have been specially selected to bring you extensive audit experience and from working in the sector. We also recognise that continuity in the audit team is important to you and the senior members of our team are committed to continue to develop longer term relationships with you.

The core members of your audit team are:

Audit Team Responsibilities

Engagement Leader

Andy Lowe

07720 555415

[email protected]

Andy is responsible for independently delivering the audit in line with Auditing Standards (including agreeing the Audit Plan and the ISA (UK) 260 Report to Those Charged with Governance), quality of outputs and signing of opinions and conclusions.

Engagement Manager

Hannah Parker

07706 284727

[email protected]

Hannah is responsible for leading the team, including the audit of the financial statements and governance aspects of our work. This also includes regular liaison with your finance team.

Client service is extremely important to us and we continuously strive to improve our service and do everything we can to make sure that we’re exceeding your expectations.

If you would like to discuss how we can improve our service please contact Andy Lowe, in the first instance. We will seek feedback at the end of the audit.

Your PwC team

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Our proposed audit fee (excluding VAT and out of pocket expenses) for the 2018-2019 financial year (as agreed via the re-proposal process) is set out as follows:

Annual audit (*) £27,267

*Fee has been uplifted based on RPI annual inflation as at December 2018 of 2.7%.

This fee includes:

Audit of the financial statements of HfH and its subsidiary;

Ongoing dialogue with the management team;

Partner and manager time to ensure that our reporting and recommendations are relevant and commercial;

Clear, timely and concise reporting on key matters in respect of internal financial controls, accounting systems and other business issues; and

Attendance at finance, audit and risk committee meetings, as necessary.

In the formulation of our audit strategy and throughout the completion of our audit work, we aim to anticipate and respond to the concerns of HfH. Our timetable and reporting cycle have been discussed with management and are structured to ensure that all significant matters arising from our work are brought to the attention of the appropriate levels of management promptly. The reporting timetable is anticipated to be:

Month Key event

February 2019 Audit Plan sent to management for review

26 February 2019 Finance, Audit and Risk Committee at which our Audit Plan will be discussed

18 March 2019 Interim audit commences

May 2019 Final audit visit commences

June 2019 Draft ISA 260 report to management

9 July 2019 Finance, Audit and Risk Committee meeting (present draft report and discuss draft annual report and financial statements)

30 July 2019 Signing of annual report and financial statements

Your audit fees and timetable

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We have based the fee level and timetable on the following assumptions:

There is no significant deterioration in the efficiency of the financial statement production process. The annual report and financial statements do not require significant adjustment (and we do not need to review more than three versions of any of these documents).

There is no significant deterioration in the entity’s control environment, and we are therefore able to draw comfort from the management controls within HfH.

There is no significant change in the size or audit risk profile of the entity.

There are no changes in auditing standards which impact on the level of work we need to undertake.

Our financial statements opinion is unmodified.

If the above assumptions are not met, we may seek a variation to the agreed fee. We would always discuss any such variations with management.

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Appendices

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Risk Significant / elevated

risk

Reason for risk identification

Planned audit approach

Significant risk

Risk of management override of controls

ISA (UK) 240 requires that we plan our audit work to consider the risk of fraud, which is presumed to be a significant risk in any audit. This includes consideration of the risk that management may override controls in order to manipulate the financial statements.

We will perform procedures to:

Test the appropriateness of journal entries;

Review accounting estimates for bias and evaluate whether circumstances producing any bias, represent a risk of material misstatement due to fraud;

Evaluate the business rationale underlying significant transactions; and

Perform certain ‘unpredictable’ procedures.

Significant risk

Risk of fraud in revenue recognition

Under ISA (UK) 240 there is a (rebuttable) presumption that there are risks of fraud in revenue recognition. The risk of fraud has been considered for each of the revenue streams recognised as follows:

The majority of the HfH’s

revenue is received via the management fee with the Council. The Council pays the management

fee on a monthly basis.

In addition to the management fee, the HfH generates revenue from other services including repairs administration, decent homes administration, and other charges to the Council and third parties.

We will understand and evaluate key controls relating to this risk to assess if we can place reliance on such controls. We will evaluate and test the application of the accounting policy for income recognition to ensure that this is consistent with the requirements of the accounting policy (and UK GAAP). We will also perform detailed testing of revenue transactions, focussing on the areas we consider to be of greatest risk.

Appendix A. Risk and response

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Risk Significant / elevated

risk

Reason for risk identification

Planned audit approach

There is a risk that, for these revenue streams, the accounting policies the HfH adopts, or the accounting treatment of the revenue transactions, may lead to revenue not being recognised in accordance with accounting standards. This is particularly relevant around year-end in how management may manipulate the accounting policy for income recognition.

Significant risk

Going concern

Haringey Council is considering whether to perform a review into the activities of HfH within the next 12-18 months. The outcome of this will be unknown at the time of signing the 2018-2019 financial statements, but could result in some or all of the activities of HfH ultimately being absorbed into Haringey Council. The subsidiary company was given a loan from Haringey Council to fund its first year operations. However its activities have now ceased and the loan is expected to remain outstanding as at 31 March 2019, since the subsidiary does not have the ability to repay. There is a risk that the Council demand repayment of the loan, forcing the subsidiary company into liquidation.

We will take into account the Council’s latest articulated views on the future of housing management in the borough. We will obtain representation from the directors and the Council that funding (and operations) will be in line with the management agreement and continue for at least 12-months after the signing of the financial statements. We will obtain representation from the Council that the subsidiary company loan will not be required to be repaid. We will also understand and evaluate any commercial agreements and funding arrangements the subsidiary has in place with the Council or external parties.

37


ISA (UK) 260 ‘Communication of audit matters with those charged with governance’ requires auditors to plan with those charged with governance the form and timing of communications with them. We have assumed that ‘those charged with governance’ are the Finance, Audit and Risk Committee. Our team works on the engagement throughout the year to provide you with a timely and responsive service.

We will produce two key documents reporting on the progress and overall results of the engagement:

Report Purpose Presentation to the Audit & Risk Committee

Audit Plan Sets out our planned audit

approach and response to the risks

we have identified for the audit to

date. This includes a summary of

key issues arising from our

planning work.

February 2019

Report to the Finance, Audit and Risk Committee

Summarises the key issues and

matters arising from the annual

audit.

July 2019

Below is a summary of when we expect to provide the Finance, Audit and Risk Committee with the outputs of our audit.

Required communication Planning Completion As required

Copy of engagement letter to those charged with governance

Independence and objectivity confirmation

Details of all non-audit work performed by the firm and related fees (if any)

Nature and scope of work together with timing of expected reports

Expected modifications to the auditors’ report

Uncorrected misstatements

Appendix B. Communications plan

38


Required communication Planning Completion As required

Significant deficiencies in internal financial controls identified during the audit

Views about the qualitative aspects of the entity’s accounting practices and financial reporting

Matters specifically required by other ISAs (UK) to be communicated to those charged with governance

Draft of representation letter

Any other audit matters of governance interest

39


Audit and accounting updates

Area of focus Audit impact

Financial Reporting Council developments

The Financial Reporting Council (FRC) is responsible for monitoring the compliance of financial statements and strategic reports with the law and does so through the monitoring work performed by its Corporate Reporting Review (CRR) team. In addition, the FRC uses thematic reviews to focus on topical areas of corporate reporting. During 2018 the CRR team completed three thematic reviews covering interim disclosures in the first year of application of both IFRS 9 and IFRS 15, as well as a broader review of smaller listed and AIM quoted companies.

Monitoring activity

The FRC has identified a number of areas of focus in its communications to stakeholders in recent months. We have summarised these below. We have also highlighted certain areas that have frequently been challenged by the CRR team in the past year (in addition to the broader themes). Further information on the FRC’s findings from its thematic

reviews, and other useful publications, can be found on the

FRC’s website at:

https://www.frc.org.uk/news/november-2018/frc-publishes-thematic-review-findings-of-ifrs-9-a https://www.frc.org.uk/news/november-2018/frc-highlights-where-reporting-by-smaller-companie https://www.frc.org.uk/accountants/corporate-reporting-review/annual-review-of-corporate-reporting

Cash flow statement

Classification of cash flows as between operating, investing and financing.

Inclusion of explanations of any restrictions over cash.

Inadequate disclosures on the cash flow effect of exceptional

items and key cash flows.

Inadequate disclosures of the company’s cash position in the strategic report.

Consideration should be made as to whether any of these findings will have an impact on the 2018/2019 financial statements. Relevant audit risk: Normal level of risk

Appendix C. Recent developments

40

https://www.frc.org.uk/news/november-2018/frc-publishes-thematic-review-findings-of-ifrs-9-a

https://www.frc.org.uk/news/november-2018/frc-publishes-thematic-review-findings-of-ifrs-9-a

https://www.frc.org.uk/news/november-2018/frc-highlights-where-reporting-by-smaller-companie

https://www.frc.org.uk/news/november-2018/frc-highlights-where-reporting-by-smaller-companie

https://www.frc.org.uk/getattachment/f70e56b9-7daf-4248-a1ae-a46bad67c85e/Annual-Review-of-CG-R-241018.pdf


Judgements and estimates

Applies to both judgements and estimates

Differentiation between judgements and estimates.

Clear, specific descriptions of judgements and estimates,

avoiding use of boiler plate language.

Judgements

Include judgements that are significant. To determine if a

judgement is significant, consider if a different judgement were

used, would this have a significant impact on the financial

statements?

Estimates

Disclose sufficient information to enable users to understand material sources of estimation uncertainty (examples include sensitivity analysis, range of possible outcomes)

Quantification of the specific amounts at risk of material adjustment e.g., specific provision vs the total provision balance.

The FRC expects the assumptions underlying estimates to be

quantified when investors need this information to fully

understand their effect.

Income taxes

Providing information on the effective tax rate reconciliation to enable users of the accounts to understand both:

1) The relationship between tax expense and the accounting profit; and

2) The significant factors that could influence that relationship in future.

Ensure all significant reconciling items are explained along with the impact on the effective rate.

Provide explanations of the basis for recognising a deferred tax asset.

Ensure tax relating to share based payments has been appropriately allocated between equity and the income statement.

Pensions

Identification and explanation of valuation bases and the

differences between them e.g. IAS 19 vs. funding valuation.

Clear quantification of funding requirements in future years

and the funding mechanisms adopted.

Provision of clear information about the maturity profile of

pension obligations.

Clear explanation of investment strategies and associated risks,

including any asset-liability matching strategy.

Net pension assets - disclosure of significant judgements made when assessing trustee rights.

Presentation of meaningful classes of plan assets.

Disclosure of the valuation methodology for unquoted assets.

Strategic Report – consideration of whether aspects of the company’s pension schemes constitute a principal risk or uncertainty, consideration of whether pensions disclosures in the accounts should be supplemented with additional disclosures in the strategic report.

41


Brexit

Whether risk disclosures are sufficiently company-specific.

Companies should include reasons for any change in risk assessment and a range of mitigating options.

If companies are considering a range of possible scenarios, they should include disclosure on this along with stress testing in viability reporting.

Accounting policies

Use of boilerplate disclosures.

Lack of clear policies for significant transactions and balances.

Policies for transactions and balances that companies don't have.

Accounting developments for UK GAAP reporters

The FRC has carried out its first triennial review of the UK accounting standards. In December 2017, incremental improvements and clarifications to FRS 102 were published, together with amendments to the other accounting standards.

Many of the amendments to FRS 102 are editorial in nature or are intended to clarify the existing requirements rather than change the accounting treatment. However, some of the changes might impact Homes for Haringey’s accounting policies or result in additional choices or exemptions.

The main amendments to FRS 102 which are relevant to Homes for Haringey are:

The definition of a ‘basic financial instrument’ is expanded to include more types of instrument through the inclusion of a principle-based description to support the detailed classification conditions.

For small entities, a loan from a person within a director’s group of close family members that includes at least one shareholder in the entity is permitted to be initially measured at transaction price rather than present value. This follows on from an optional relief, effective immediately, which was introduced in May 2017 as an interim measure.

An accounting policy choice is introduced for investments in another group entity that are within the scope of section 11 on financial instruments.

Most of the amendments are effective for accounting periods

beginning on or after 1 January 2019, with early application

permitted provided all amendments are applied at the same

time. The only exceptions to applying all amendments at the

same time are amendments relating to directors’ loans and the

tax effects of gift aid payments, for which early application is

permitted separately.

Consideration should be made as to whether any of these amendments will have an impact on the 2018/2019 financial statements. Relevant audit risk: Normal level of risk

Housing wide developments PwC’s Public Sector Matters blog looks at issues affecting the government and public sectors with regular postings from our sector experts. See the links below to access this site and keep up to date with the latest postings.

Housing specific section: http://pwc.blogs.com/publicsectormatters/housing/

42

http://pwc.blogs.com/publicsectormatters/housing/


Full Public Sector Matters blog: http://pwc.blogs.com/publicsectormatters/

Some of the key a sector developments we are seeing are set out below. We would welcome the opportunity to share further insights from our experience in the sector on any of the below or other matters you may wish to discuss.

Area of focus Considerations

Risk management considerations

PwC housing sector risk profile report

We have recently published our annual risk profile report. As part of our research and work in the housing sector, we reviewed the risk registers across a range of housing associations.

For the first time since we started undertaking this analysis, Welfare Reform is no longer the top sector risk. The top risk for 2018 is compliance with Health and Safety Regulations. Given the Grenfell tragedy in June 2017, this was not unexpected.

In contrast to previous years, there are two people related risks in the Top 5, one around attracting and retaining talent and the other in relation to leadership and governance. Risks around changes in government policy, changes in the economic climate, and changes in demand have all dropped to lower down the rankings.

Perhaps this is a reflection of the sector becoming more resilient to the volatile local and national political and economic climate and recognising that getting the right people in place to lead, govern and work within associations is essential to face the future and meet strategic objectives.

We encourage the Board to read our report to consider their own views on risks across the sector and the relevance to the company’s strategy and the wider risk management activities.

PwC’s sector blogs look at issues affecting the housing and real estate sectors with regular postings from our sector experts. See the links below to access this site and keep up to date with the latest postings.

Housing specific section >>

http://pwc.blogs.com/publics

ectormatters/housing/

Real Estate section >>

https://www.pwc.co.uk/indu

stries/real-estate.html

Full Public Sector Matters

blog >>

http://pwc.blogs.com/publics

ectormatters/

Social housing green paper: a ‘new deal’ for social housing

The social housing green paper, published in August 2018, aims to rebalance the relationship between residents and landlords, tackle stigma and ensure that social housing can be both a stable base that supports people when they need it and support social mobility.

The green paper sets out five core themes:

Tackling stigma and celebrating thriving

communities The green paper aims to break down inequalities in social housing and ensure tenants feel at home in their community rather than seeing it as just a place to live.

Expanding supply and supporting home ownership The paper outlines plans to build on the new borrowing capacity granted to local authorities by exploring new flexibilities on how they spend the money from homes sold under the Right to Buy scheme, and not requiring them to sell off vacant, higher value stock.

Effective resolution of complaints The paper asks how the current complaints process can be reformed so that it is quicker and easier; especially important when dealing with safety concerns. The consultation asks how residents can access the right advice to make a complaint and have it resolved quickly and effectively.

Management may wish to consider the green paper when deciding on the content and messages of the front half of the Group financial statements. Follow the link below to read the full green paper;

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/atta

43

http://pwc.blogs.com/publicsectormatters/




https://www.pwc.co.uk/industries/real-estate.html

https://www.pwc.co.uk/industries/real-estate.html








Area of focus Considerations

Empower residents and strengthen the regulator Delivering good quality and safe social homes with the right services from landlords relies on a robust regulatory framework. It has been almost eight years since the last review of social housing regulation and the proposals in this green paper present the opportunity for a fresh look at the regulatory framework.

Ensuring homes are safe and decent Progress has also been made on improving standards of decency. The green paper will consider how the Decent Homes Standard should be reviewed to ensure it delivers the right standards for social housing residents and reflects the Government’s current and forthcoming priorities.

Government announces further protection for tenants against unfair letting fees

This is a further measure added to the Tenants Fee Bill to bring an end to fees imposed by a landlord or agent. The Bill is currently in the House of Lords with Royal Assent expected for the Spring of 2019.

Under the new default fee provision, a landlord or agent will only be able to recover reasonable incurred costs, and must provide evidence of these costs to the tenant before they can impose any charges.

Other amendments to the Bill brought forward by the government include taking steps to ensure tenants get their money back quickly by reducing the timeframe that landlords and agents must pay back any fees that they have unlawfully charged.

Homes for Haringey should keep abreast of the changes and review how each of their subsidiaries are affected where private rented sector (PRS) activities are undertaken the future. The Group may need to directly or indirectly interact with new obligatory standards and regulation. More details of the Bill can be found at:

https://www.gov.uk/government/collections/tenant-fees-bill

Three-quarters of associations to reduce

maintenance spending

A survey of the sector has found that three-quarters

(74%) of housing associations have plans to reduce their

maintenance spending to deal with budget constraints.

Nine in 10 (92%) associations consider themselves

under pressure to cut costs in line with government

funding decreases and austerity targets.

And 82% intend to lay off staff in a bid to curb

spending, with 96% of associations expecting to reduce

expenditure in the next 12 months.

Law firm Gowling WLG, which carried out the survey of

50 housing associations, said planning rules should be

relaxed to help affordable housing development in

difficult funding conditions.

This is an interesting survey result, which is arguably

against some messaging in the Green Paper and public

views given by housing associations who are looking to

invest more in their social housing properties.

It is important for Homes for

Haringey to be clear on the asset

management strategy that is

right for Homes for Haringey

plans and resident interests.

Messages given internally and

externally should also be

consistent.

A full copy of the report can be

found below:

https://omghcontent.affino.com/AcuCustom/Sitename/DAM/105/Gowling_WLC_report.pdf

44






In the event that, pursuant to a request which Homes for Haringey Ltd has received under the Freedom of Information Act 2000, it is required to disclose any information contained in this report, it will notify PwC promptly and consult with PwC prior to disclosing such report. Homes for Haringey Ltd agrees to pay due regard to any representations which PwC may make in connection with such disclosure and Homes for Haringey Ltd shall apply any relevant exemptions which may exist under the Act to such report. If, following consultation with PwC, Homes for Haringey Ltd discloses this report or any part thereof, it shall ensure that any disclaimer which PwC has included or may subsequently wish to include in the information is reproduced in full in any copies disclosed.

This report has been prepared for and only for Homes for Haringey Ltd and for no other purpose. We do not accept or assume any liability or duty of care for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

© 2019 PricewaterhouseCoopers LLP. All rights reserved. 'PricewaterhouseCoopers' refers to PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom) or, as the context requires, other member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.

45

Homes for Haringey Internal Audit Progress Report February 2019

This report has been prepared on the basis of the limitations set out on page 5.

This report (“Report”) was prepared by Mazars LLP at the request of London Borough of Haringey and terms for the preparation and scope of the Report have been agreed with them. The matters raised in this Report are only those which came to our attention during our internal audit work. Whilst every care has been taken to ensure that the information provided in this Report is as accurate as possible, Internal Audit have only been able to base findings on the information and documentation provided and consequently no complete guarantee can be given that this Report is necessarily a comprehensive statement of all the weaknesses that exist, or of all the improvements that may be required. The Report was prepared solely for the use and benefit of London Borough of Haringey to the fullest extent permitted by law Mazars LLP. accepts no responsibility and disclaims all liability to any third party who purports to use or rely for any reason whatsoever on the Report, its contents, conclusions, any extract, reinterpretation, amendment and/or modification. Accordingly, any reliance placed on the Report, its contents, conclusions, any extract, reinterpretation, amendment and/or modification by any third party is entirely at their own risk.

Please refer to the Statement of Responsibility at the end of this report for further information about responsibilities, limitations and confidentiality.

46

Internal Audit Progress Summary – February 2019

2

Delivery of 2018/19 Internal Audit Plan Current progress with delivery of the 2018/19 Internal Audit Plan is detailed below. Final Reports on Appraisals and Performance Management, Safeguarding Vulnerable Individuals, Responsive Repairs and Data Security have been issued since the last meeting of the committee

The following table sets out the audits that were finalised since the last meeting of the Audit and Risk Committee and the status of the systems at the time of the audit.

Audit Title Date of Audit Date of Final

Report Assurance

level Direction of Travel

Number of Recommendations

(Priority)

1 2 3

2018/19

Staff Performance Management August 18 November 18 Limited N/A 3 6 0

Safeguarding Vulnerable Individuals April 18 January 19 Limited 2 2 2

Data Security October 18 February 19 Substantial N/A 0 3 0

Responsive Repairs October 18 November 18 Substantial 0 3 1

Budsgetary Control August 18 February 18 Substantial 0 0 1

47

Homes for Haringey Internal Audit – February 2019 3

Current progress with delivery of the 2018/19 Internal Audit Plan is detailed in the following table:

Ref Audit area Agreed start date

Status Assurance Comments

1

HR - Staff Performance Management

20/8/18 Final Limited Final Report issued

2

Use of Consultants/Agency staff

18/2/19 In progress

3 Corporate Governance 9/7/18 Final Substantial Final Report issued

4

Safeguarding 16/4/18 Final Limited Final Report issued. Report delayed awaiting outcomes of serious incident reviews.

5 Health & Safety (Gas Safety) 9/7/16 Final Substantial Final report issued.

6 Data Security (GDPR) 1/10/18 Final Substantial Final report issued

7 Budgetary Control 6/8/18 Final Substantial Final report issued

8 Payroll - Overtime 2/1/19 Draft Draft Report issued

9 Accounts Payable 2/1/19 Draft Draft Report issued

10 Leaseholder Charges 17/9/18 Review In Progress. Fieldwork complete. In internal quality assurance prior to issue of draft report

11

Housing Rents 9/1/19 Review In Progress. Fieldwork complete. In internal quality assurance prior to issue of draft report

12

Homelessness 24/1/19 Review In Progress. Fieldwork complete. In internal quality assurance prior to issue of draft report

13 Responsive repairs 15/10/19 Final Substantial Final Report issued

14 Management Arrangements for contracts and partnerships

8/5/18 Final Limited Final Report issued

48

Homes for Haringey Internal Audit – February 2019 4

Statement of Responsibility

We take responsibility to the London Borough of Haringey for this report which is prepared on the basis of the limitations set out below. The responsibility for designing and maintaining a sound system of internal control and the prevention and detection of fraud and other irregularities rests with management, with internal audit providing a service to management to enable them to achieve this objective. Specifically, we assess the adequacy and effectiveness of the system of internal control arrangements implemented by management and perform sample testing on those controls in the period under review with a view to providing an opinion on the extent to which risks in this area are managed. We plan our work in order to ensure that we have a reasonable expectation of detecting significant control weaknesses. However, our procedures alone should not be relied upon to identify all strengths and weaknesses in internal controls, nor relied upon to identify any circumstances of fraud or irregularity. Even sound systems of internal control can only provide reasonable and not absolute assurance and may not be proof against collusive fraud. The matters raised in this report are only those which came to our attention during the course of our work and are not necessarily a comprehensive statement of all the weaknesses that exist or all improvements that might be made. Recommendations for improvements should be assessed by you for their full impact before they are implemented. The performance of our work is not and should not be taken as a substitute for management’s responsibilities for the application of sound management practices. This report is confidential and must not be disclosed to any third party or reproduced in whole or in part without our prior written consent. To the fullest extent permitted by law Mazars LLP accepts no responsibility and disclaims all liability to any third party who purports to use or reply for any reason whatsoever on the Report, its contents, conclusions, any extract, reinterpretation amendment and/or modification by any third party is entirely at their own risk. Mazars LLP London February 2019 In this document references to Mazars are references to Mazars LLP. Registered office: Tower Bridge House, St Katharine’s Way, London E1W 1DD, United Kingdom. Registered in England and Wales No 4585162. Mazars LLP. Mazars LLP is the UK firm of Mazars, an international advisory and accountancy group. Mazars LLP is registered by the Institute of Chartered Accountants in England and Wales to carry out company audit work.

49

Homes for Haringey

Audit and Risk Committee 26 February 2019

Report for Audit and Risk Committee

Title Internal Audit Outstanding Recommendations

Agenda item 6ii

Report for Discussion

Classification Public

Report author Puneet Rajput, Director of Corporate Affairs

Contact email [email protected]

Contact telephone 020 8489 3728

1. Introduction

1.1 This report presents the committee with information on outstanding internal

audit recommendations for review and discussion.

2. Summary Position

2.1 Summary KPIs in relation to outstanding recommendations accompany this

report. Progress continues to be made to action outstanding recommendations.

Movement since the last report to the Committee shows:

No. of outstanding recommendations at October 2018 31

No. of new recommendations from subsequent audits 23

No. of recommendations actioned (24)

No. of outstanding recommendations at February 2019 30

3. Internal Audit Outstanding Recommendations

3.1 A full list of all outstanding recommendations is set out in the table

accompanying this report.

3.2 There are 15 recommendations that currently exceed their original target date.

Of these:

4 are dependent on the Council (2 Business Continuity related and 2

OHMS application related)

2 relate to the approval of a new risk strategy which has been delayed

from January to March at the Board’s request

1 is being queried with the internal auditor following introduction of

GDPR (the recommendation to self-assess against information

governance standards)

1 relates to the implementation of value for money related initiatives

which is substantially complete and now at an ongoing stage.

50

1 2 3 1 2 3

Housing Demand 0 0 0 0 Housing Demand 0 0 0 0

Corporate Affairs 5 18 2 25 Corporate Affairs 4 15 2 21

Housing Operations 1 2 0 3 Housing Operations 1 2 0 3

Property Services 1 2 0 3 Property Services 0 5 1 6

Total 7 22 2 31 Total 5 22 3 30

22.6% 71.0% 6.5% 100.0% 16.7% 73.3% 10.0% 100.0%

1 2 3 1 2 3

Housing Demand 0 0 0 0 Housing Demand 0 0 0 0

Corporate Affairs 3 13 1 17 Corporate Affairs 2 8 1 11

Housing Operations 1 1 0 2 Housing Operations 1 0 0 1

Property Services 0 0 0 0 Property Services 0 2 1 3

Total 4 14 1 19 Total 3 10 2 15

21.1% 73.7% 5.3% 100.0% 20.0% 66.7% 13.3% 100.0%

Total Total

0 0

0 0

3 0

0 1

2 2

0 0

2 1

3 2

1 1

0 1

5 3

0 2

0 0

4 9

5 2

2 2

1 0

1 1

1 1

0 1

1 1

31 30

Responsive Repairs

Value for Money (as critical friend)

Total Audits

Gas Safety Checks Gas Safety Checks

Mgmt Arrangements for Contracts & Partnerships

OHMS Application Audit

Payroll

Safeguarding

Sheltered & Supported HousingTenancy Management

Value for Money (as critical friend)

Total Audits

Data Quality

Data Security

Fire Safety

Housing Rents

Human Resources

Budgetary Control and Financial ManagementBusiness Continuity arrangements and BC Plan (incl.

suppliers BCP)

Choice Based Lettings

Contracts and Procurement

Corporate Governance - Board Effectiveness

Outstanding Audits by Area:

CURRENT

Internal Audit Title

Accounts Payable

Application of HR policies

Bespoke Systems

All Outstanding Recommendations:

CURRENT

DirectoratePriority

Total

Outstanding Recommendations Exceeding Original Target Date:

CURRENT

Sheltered & Supported Housing

Corporate Governance - Board Effectiveness

Mgmt Arrangements for Contracts & Partnerships

Human Resources

OHMS Application Audit

Payroll

Safeguarding

Data Quality

Decent Homes

Housing Rents

Application of HR policies

Budgetary Control and Financial ManagementBusiness Continuity arrangements and BC Plan (incl.

suppliers BCP)

Bespoke Systems

Fire Safety

Choice Based Lettings

Contracts and Procurement

All Outstanding Recommendations:

October 2018

Outstanding Recommendations Exceeding Original Target Date:

October 2018

DirectoratePriority

DirectoratePriority

Outstanding Audits by Area:

October 2018

Internal Audit Title

Accounts Payable

Total

Total DirectoratePriority

Total

51

INTERNAL AUDIT TRACKER 2018/19

Service Prty Audit AreaAssurance

levelAudit Recommendation Management Response

Original

Deadline

Revised

Deadline

Executive

DirectorResponsible officer's update (show date)

Corporate

Affairs2 Human Resources Limited

All policy and procedural documentation concerning

Human Resources should be reviewed and updated to

ensure it reflects current practices. The document

control sections should be updated accordingly to

confirm reviews have taken place.

Agreed. ACAS are being commissioned to support a

review and update of all HR policies and procedures.Jul-18 31/05/2019 Puneet Rajput

The process of reviewing all HR policies is underway. An additional

resource is currently being recruited to assist with the work to align

policies with the new HR Strategy

Corporate


Key performance targets for the HR Service should be

developed as part of the HR Strategy, which is subject to

formal agreement.

Agreed. Sep-18 01/04/2019 Sean McLaughlin

Performance targets for the HR service will be developed as part of a

review of Council SLAs to be completed by November.

Feb 19 - A revised SLA has been reviewed by ELT and performance

targets agreed for implementation from 1 April 2019.

Corporate


The performance targets for the HR Service that are

formally agreed as part of the HR Strategy should be

reported and monitored by senior management on a

regular (at least quarterly) basis.

Agreed. Sep-18 30/04/2019 Sean McLaughlinTargets agreed in the SLA to be introduced from 1 April 2019 will be

monitored on a quarterly basis thereafter

Corporate

Affairs2

Business Continuity

arrangements and BC

Plan (incl. suppliers

BCP)

Substantial

HfH, in liaison with the Council, agree a programme to

ensure that appropriate testing of the BCPs is

undertaken.

Agreed – once the new Business Resilience Manager

is appointed at LBH this discussion will occurSep-17 01/04/2019 Puneet Rajput

The Council has implemented plans for testing of BCPs and this will

include HfH.

Feb 19 - HfH has reviewed its BCPs and submitted these to the

council. We await council feedback and a timescale for testing.

Corporate

Affairs2

Business Continuity

arrangements and BC

Plan (incl. suppliers

BCP)

Substantial

Lessons learnt from testing of the Business Continuity

Plans including real life incidents, to be reported to the

Executive Leadership Team and communicated to staff.

The Business Continuity Plans to be revised where

necessary.

Agreed – this will follow from the above point so

enough time is being left to enable a test to occur and

follow up lessons learned to be identified.

Dec-17 01/05/2019 Puneet Rajput A lessons learned report will be produced by the Council.

Housing

Operations1 Safeguarding Substantial

Management information reports covering the

safeguarding process, including performance measures

and serious case reviews, should be produced on a

periodic basis. The reports should be submitted to HfH

Safeguarding Group and Haringey Council Safeguarding

Adults Board and Local Safeguarding Children’s Boards

on a periodic basis for review.

The recommendation is accepted. A working group

has been formed to develop a suite of management

information and a reporting process.

Jun-17 01/03/2019Astrid Kjellberg-

Obst

Sep-17 - This is still in progress. The expected completion is revised to

December 2017.

Dec-17 This has not yet been progressed and will be addressed as an

urgent priority at the next meeting of the group.

Mar-18 - We have carried out initial scoping of what we need to collect

and the process/pathway for safeguarding referrals. I now need to

follow up with HIT to be able to produce a report detailing what we

want. If we could set the target at June as I am uncertain how easy this

will be and the level of priority it can have, with all else that is going on.

Oct-18 - Revised to December 2018. The Head of Service is working

with IT to ascertain the relevant performance indicators and

dashboards. Due to unforeseen circumstances, the lead person will

return to work on the 22/10/18 after several months absence. This

work will be completed by the end of November 2018.

Feb-19 - This has not progressed due to other priorities and lack of

resources. It will now be picked up by the Safeguarding Group as part

of an action plan to implement the recommendations of the 2018

internal audit. JS

Feb-19 - A first partner annual report was submitted to the Haringey

Adult Board in August 2018. The first annual safeguarding report is

being submitted to the Audit and Risk Committee in February 2019.

Further ongoing work is being developed further, particularly to

continuously align pathways and referrals between agencies. AKO

Corporate

Affairs1

Value for Money (as

critical friend)Substantial

HfH should develop dedicated webpages concerning

VFM on both the Intranet and Internet. The webpages

should contain links to key documentation, articles

concerning cost savings realised and provide

opportunity for individuals to share VFM ideas and

suggestions

Agreed Sep-16 31/03/2019 Puneet Rajput

The Board has approved a new VfM strategy and the Audit Committee

will approve target efficiencies for a 5 year MTFS. A project plan is in

place to promote and embed the objectives of the strategy.

Corporate

Affairs2 Data Quality Limited

Self-assessments against applicable information

governance standards should be undertaken on at least

an annual basis.

Agreed Jul-17 30/11/2018 Puneet Rajput

The standard in question is ISO 8000:2015. This will be re-considered

in light of current efforts to ensure compliance with GDPR.

Feb 19 - We have queried the appropriateness of this recommendation

with the internal auditor with a view to having it removed.

52



Original

Deadline

Revised

Deadline

Executive


Corporate

Affairs2

OHMS Application

AuditSubstantial

An exercise should be conducted to map / understand

how the system permissions are configured in sufficient

detail to demonstrate, which members of staff can carry

out each key function within the organisation.

This is a significant piece of work due to the age of the

system and the number of different roles that have

existed throughout its time of use. The audit was able

to evidence that critical data is managed by a

controlled and limited group so the risk is low. When

we move to a new system in the next 12- 18mths we

will have the opportunity to review and rationalise the

permissions so that they are clearer going forward.

Mar-18 30/09/2019 Puneet Rajput

Dec-17 Given the lack of a decision on the future application strategy

this target is likely to slip.

Jul-18 This will be part of the migration from OHMS to NPS in 2019

estimated date for completion Sept 2019

Corporate

Affairs1

OHMS Application

AuditSubstantial

A formal disaster recovery exercise of the OHMS

application should be conducted as soon as is possible

(given the requirement to introduce a new application

server). Results of the exercise should be reported

formally to senior management and any corrective

actions required are reflected in an updated DR Plan.

Agreed. We are in the process of moving the

application to a new server which will allow us to test

DR. We have been unable to test DR on the current

server due to the significant risk of crashing the server.

A provisional date for Qtr 1 2017/18 has been agreed

in principal with the supplier, Northgate, and the

network team.

Jun-17 01/04/2019 Puneet Rajput

Jun-17 - the date for completion has been delayed to Q2. The DR will

be completed and reported on by the end of 2017.

Dec-17 New server has been deployed and the OHMS application has

been migrated to a fully supported version on compliant operating

systems. A request for resources from the Shared Digital service to

carry out a DR test has not yet been approved so the deadline will need

to be moved to June 2018.

Jul-18 This will be part of the migration from OHMS to NPS in 2019

estimated date for completion April 2019

Corporate

Affairs2

Contracts and

ProcurementLimited

The review and update of Contract Regulations should

be included as an annual item on the Board Forward

Plan. The Forward Plan should also be amended to

allow for a review and update of the Procurement

Strategy and the Procurement Code of Practice.

We propose two years for the Contract Regulations

review. Procurement Code of Practice will be updated

in 18 months and the business will make a decision

regarding the need for a Procurement Strategy.

May-19 31/05/2019 Puneet Rajput

The Regulations are scheduled for Board approval in May 2019 and a

Code of Practice is in place. Director of Corporate Affairs & Head of

Procurement.

Housing

Operations2

Sheltered &

Supported HousingLimited

All policy and procedural documentation concerning the

Sheltered and Supporting Housing Service should be

reviewed and updated to ensure it reflects current

practices. Document control sections should be updated

accordingly to confirm when reviews have taken place.

Accepted. The Policy and Procedure manual will be

reviewed and updated during 2018/19. Funding has

been identified for a dedicated officer to progress this

work. However, all current procedures are still relevant

and there is no current impact on operations from

having procedures that are due for review.

Mar-19Astrid Kjellberg-

Obst

Oct 18 - On target - Policies covering the Support and Wellbeing

Service are monitored through the Policy Register (this was created by

Business Improvement to ensure the organisation’s policies are in

date/remain relevant). All are currently in date. We are looking to bring

in a temporary resource to ensure our policies and procedures reflect

good practice. We expect to begin this piece of work in the New Year.

Feb 19 - On target - Policies covering the Support and Wellbeing

Service are monitored through the Policy Register (this was created by

Business Improvement to ensure the organisation’s policies are in

date/remain relevant). All are currently in date. We are currently

working with New NHS Alliance, who have carried out a gap analysis to

progress the policy and training work. AKO

Property

Services2 Fire Safety Limited

All repairs and works done should be given a level of

priority and expected date of completion to ensure that

effective remedial action is taken.

It was proposed that the fire risk assessment team

would have access to tablets whereby they could raise

jobs with pictures/ descriptions and appropriate SORs

on site, with the correct priority/ timeframe and risk

significance, these jobs would then be automatically

filtered into the FIRE category by our system and

diarised directly to operatives the same day, giving a

seamless digitally auditable trail and moreover

continuity from start to end. The current existing

model can ever only hold basic information else the

document becomes discombobulated and unreadable.

Dec-18 01/03/2019 Chris Liffen

The current FRA work are all raised under a planned priority and then

emergency or urgent repairs prioritised by the line manager. The IT

system development will allow for the FRA's to be done electronically

with priorities allocated by the Fire Risk Assessor at the point of

assessment. The system is on track to be rolled out in December. The

system was due to go live in December but due some amended

requirements from the Fire risk assessors this has been delayed until

March. However HRS are assessing each element of the FRA's with

H&S as they are issued and prioritising the FRA repairs manually.

53



Original

Deadline

Revised

Deadline

Executive


Housing

Operations2 Fire Safety Limited

The Tenant’s Terms & Conditions should be updated to

include fire specific responsibilities, to ensure that

tenants have acknowledged the importance of their role

in maintaining a safe environment to live in.

Please refer to the detailed management response in

the internal audit report.Mar-20

Astrid Kjellberg-

Obst

Oct-18 - on time - After careful consideration, it has been agreed that

amending the Tenancy Agreement (as set out by the Auditors) is not

the best approach to take. The current tenancy agreement outlines

tenant’s and our responsibilities when it comes to fire safety. Moreover,

only new tenants would have the revised tenancy agreement. Instead,

to capture as many residents as possible, we are introducing

alternative ways to communicate and remind our tenants about health

and safety and their responsibility to contribute to fire safety. This

includes newsletter campaigns, leaflets and explanations at sign up

and where there are known issues. This has been discussed with Audit

and an overview has been provided for feedback.

Feb-19 - on time - After careful consideration, it has been agreed in the

autumn that amending the Tenancy Agreement (as set out by the

Auditors) is not the best approach to take. The current tenancy

agreement outlines tenant’s and our responsibilities when it comes to

fire safety. Moreover, only new tenants would have the revised tenancy

agreement. Instead, to capture as many residents as possible, we are

introducing alternative ways to communicate and remind our tenants

about health and safety and their responsibility to contribute to fire

safety. This includes newsletter campaigns, leaflets and explanations

at sign up and where there are known issues. This has been discussed

with Audit and an overview has been provided for feedback. We are

putting together a programme of engagement for 2019/20 and the fire

safety board will be updated on the programme, its progress and

impact. AKO

Property

Services2 Fire Safety Limited

Fire safety signage should be implemented in all shared

communal residential blocks, including low and midrise

blocks.

Tower blocks have evacuation signage installed with

other properties having evacuation signage installed

via HRS on a rolling programme to be completed with

18 months. This has been challenging due to high

levels of vandalism where signage has been removed

requiring re-visits for new signage to be installed.

Street conversions will have signage installed as part

of the installation of Automatic Fire Detection

programme.

Nov-19 David Sherrington

Jul-18 - The property list indicating which signage should be installed

has been passed to HRS (21/6/18) and they are currently reviewing the

resources that are required to accelerate the programme. Feb 19 The

programme to change and update signage is underway

Corporate

Affairs2

Management

Arrangements for

Contracts &

Partnerships

Limited

While there is limited guidance on contract management

in the Procurement Code of Practice, there is no

documented contract management process in place for

HfH. We were informed the Code of Practice has been

updated and includes greater guidance on contract

management.

Periodic sample checking of contracts will be added to

the programme of audits undertaken by the Business

Improvement team.

Apr-19 30/04/2019 Puneet Rajput A programme of sample checking will commence from April 2019.

Property

Services2

Management

Arrangements for

Contracts &

Partnerships

Limited

Guidance on contract management should include the

requirement that on the award of any contract, the

identified Contract Manager should complete an

assessment of the dependence of HfH on the supplier

should be undertaken. Where suppliers are identified as

critical, the service should develop a plan to maintain

services in the event of supplier failure.

The need to identify ‘critical suppliers’ and ‘critical

supply’ is set out in the Procurement Code of Practice.

Where criticality is identified such contracts will be

supported with a contingency plan.

Feb-19 Chris Liffen

Every new supplier is being assessed by the contracts manager to

identify whether they are critical to operations. A contingency plan will

be put in place for critical suppliers.

Corporate

Affairs3

Corporate

Governance – Board

Effectiveness

Substantial

HfH should utilise the knowledge gained from the risk

management training day and embed within the revision

of the Risk Management Framework.

Agreed. The strategy and framework will be updated

following training and presented to the Board for

approval in January 2019.

Jan-19 26/03/2019 Sean McLaughlin

The strategy was reviewed by the Board and directed to the Audit

Committee for more detailed review in February and then final approval

by the Board in March. PR

Corporate

Affairs2

Corporate

Governance – Board

Effectiveness

Substantial

HfH should review and update the Risk Management

Framework including the Risk Management Strategy

and Risk Register. Furthermore, the Risk Management

Strategy should be amended to include a document

control section to detail approval and review dates.

Agreed. The strategy and framework will be updated

following training and presented to the Board for

approval in January 2019.

Jan-19 26/03/2019 Sean McLaughlin

The strategy was reviewed by the Board and directed to the Audit

Committee for more detailed review in February and then final approval

by the Board in March. PR

54

Final Internal Audit Report 2018/19

London Borough of Haringey

Homes for Haringey: Appraisals and Performance Management

November 2018


This report (“Report”) was prepared by Mazars LLP at the request of London Borough of

Haringey and terms for the preparation and scope of the Report have been agreed with them.

The matters raised in this Report are only those which came to our attention during our

internal audit work. Whilst every care has been taken to ensure that the information provided

in this Report is as accurate as possible, Internal Audit have only been able to base findings

on the information and documentation provided and consequently no complete guarantee

can be given that this Report is necessarily a comprehensive statement of all the weaknesses

that exist, or of all the improvements that may be required.

The Report was prepared solely for the use and benefit of London Borough of Haringey. To

the fullest extent permitted by law Mazars LLP accepts no responsibility and disclaims all

liability to any third party who purports to use or rely for any reason whatsoever on the Report,

its contents, conclusions, any extract, reinterpretation, amendment and/or modification.

Accordingly, any reliance placed on the Report, its contents, conclusions, any extract,

reinterpretation, amendment and/or modification by any third party is entirely at their own

risk.

Please refer to the Statement of Responsibility at the end of this report for further information

about responsibilities, limitations and confidentiality. 55

Internal Audit Report – The London Borough of Haringey – Homes for Haringey: Appraisals and Performance Management 2018/19

1

Introduction As part of the 2018/19 Internal Audit Plan, agreed by the Audit & Risk Committee,

we have undertaken an internal audit in relation to Appraisals and Performance

Management.

An effective staff appraisal programme is essential for Homes for Haringey (HfH) in

order to develop its workforce and achieve strategic objectives through:

• Improving communication between management and employees enabling

working relationships to be developed;

• Identifying staff training and development needs;

• Utilising performance appraisals as a motivational tool to drive performance

by setting objectives or long-term goals in order to achieve employees’ career

aspirations; and

• Providing feedback for areas of good work and areas of improvement in order

to reinforce desired outcomes.

Audit Opinion &

Direction of Travel

None Limited Substantial Full

No previous audit

Key Findings

• It was determined through discussions with the Head of Human Resources that there is general guidance

but no policy that centrally governs the appraisal process known as the 'Performance Management

Conversation', which is held between line managers and staff members.

• Performance Management Conversations are intended to be continuous between line managers and staff

members, but as an absolute minimum these are expected to occur every six months. Responsibility for

the frequency of these conversations does not lie solely with the line manager, and conversations can be

requested by staff at any time.

• It was determined through discussions with the Head of Human Resources that there is no official,

documented staff appraisal programme in place that clearly outlines the roles and responsibilities of line

managers and members of staff.

• It was determined that objectives are set in the Performance Management Conversations and are

recorded under the first section of the Performance Management Conversation record. Managers are

required to set Specific, Measurable, Achievable, Realistic, and Timely (SMART) objectives. We

requested the Performance Management Conversation records for 10 randomly selected employees and

could not identify any cases where all of the objectives set were SMART.

o For employees 10724, 40220, and 42010 there was no record available of Performance

Management Conversations taking place.

o For employee 10966 the usual Performance Management Conversation record was not used. As

a result objectives were not set and recorded with specific timescales. Instead, the conversation

was a record of staff performance rather than objectives and development plans.

o For employee 11057 the objectives set were actions to be completed for the next period instead

of personal objectives. There were also no defined deadlines or development areas.

o For employee 11296 there were no defined timescales against the objectives.

L

56


2

o For employee 11522, two of the objectives set were not specific and the third objective did not

appear to be measurable. Furthermore, no deadlines were set.

o For employees 22970 and 39996 the objectives were job roles and tasks rather than wider

objectives.

o For employee 44106 the employee started working with HfH within the past six months so no

conversations were due by the time of this audit.

• Examination of the same 10 randomly selected Performance Management Conversation records

confirmed the following:

o In four cases, there were records to show that Performance Management Conversations have

been occurring on a six monthly basis.

o In two cases (employees 10966 and 2297) the records obtained showed that meetings have not

occurred as regularly as every six months.

o In three cases (employees 10724, 40220, and 42010) there was no record of Performance

Management Conversations happening.

o In one case (employee 44106) the employee started working with HfH within the past six months

so no conversation was due at the time of testing.

• It was determined through discussions with the Head of Human Resources that development plans are

not centrally recorded anywhere, and are managed and discussed locally between line managers and

staff. Examination of the Performance Management Conversation record confirmed there is an opportunity

to discuss 'continuous improvement' both within the team and individually. A review of the same 10

randomly selected Performance Management Conversation records confirmed the following:

o In four cases, development areas were agreed.

o In two cases (employees 10966 and 11057), the normal Performance Management Conversation

record format was not used and no development areas were therefore recorded on the appraisal

forms.

o In three cases (employees 10724, 40220, and 42010), there was no record of Performance

Management Conversations occurring.

o In one case (employee 44106), the employee started less than six months ago and therefore a

Performance Management Conversation was not due.

o We did not identify any cases within the sample selected where development areas had been

monitored between Performance Management Conversations.

• It was determined through discussions with the Head of Human Resources that the Senior Leadership

Team and Human Resources do not currently receive any management information regarding the

appraisals process or staff performance.

57


3

Area of Scope Adequacy of

Controls

Effectiveness of

Controls

Recommendations Raised

Priority 1 Priority 2 Priority 3

Policies & Procedures Red Red 1 0 0

Appraisal Programme Green Red 1 4 0

Professional Development Green Amber 0 2 0

Management Information Red Red 1 0 0

Total 3 6 0

Please refer to Appendix B for a definition of the audit opinions, direction of travel, adequacy and

effectiveness assessments and recommendation priorities.

Acknowledgement We would like to thank the management and staff from Homes for Haringey for their

time and co-operation during the course of the internal audit.

58

London Borough of Haringey – Internal Audit Report – Homes for Haringey: Appraisals and Performance Management 2018/19 4

Ref Issue Risk Recommendation Priority Management

Response

Responsible

Officer(s)

Deadline

Policies and Procedures

1 It was established that there is

no formal singular policy or

procedure in place to govern

the appraisal and staff

performance management

process across the

organisation.

Where there is no appraisal

and performance

management policy in place,

there is an increased risk

that inconsistencies occur in

the application of the

appraisal process across

service lines.

Homes for Haringey should

compile an appraisal and


policy that is subject to

regular scheduled reviews

and made available to all staff

members.

1 Agreed. A new

appraisal policy

will be developed

in consultation

with employees

and

management for

implementation

in the new

financial year.

Head of HR April 2019

Appraisal Programme

2 It was established that there is

no documented appraisal

process or guidance in place

that outlines the roles and

responsibilities for completing

the formal process.

Where there is no

documented appraisal

programme in place, there is

an increased risk managers

and service line staff are

unaware of their

responsibilities with respect

to appraisals and

performance management.

An appraisal programme

should be compiled that

outlines the roles and

responsibilities of

management and staff across

the organisation.

2 Agreed. An

appraisal

procedure that

sets out

respective roles

and

responsibilities

will be written to

accompany the

policy.


3 Examination of 10 randomly

selected Homes for Haringey

employees confirmed, in three

cases (employee numbers

10724, 40220, and 42010) no

‘Performance Management

Conversation’ records could be

recovered from management.

Where Performance

Management Conversations

do not occur or are not

recorded, there is an

increased risk individual

objectives are not set or

universally understood.

The appraisals programme

should be centrally monitored

to identify any managers and

employees with overdue

appraisals.

2 Agreed. An

interim

monitoring

arrangement will

be put in place

whilst an

automated

solution is

developed.

Head of HR

Records

Manager

November

2019

January

2019

59



selected Homes for Haringey

employees confirmed there

were no cases where ‘SMART’

objectives were set.

Where the objectives set are

not SMART, there is an

increased risk they are not

effective in driving

improvements in

performance.

Training on SMART

objectives should be provided

to appraisers so that they can

then be applied to the

appraisals process.

1 Agreed. Training

on objective

setting will be

added to the

training calendar.

Head of HR December

2019

5 It was established through the

examination of Performance

Management Conversation

records and discussions with

the Head of Human Resources

that performance is not being

measured against set

objectives.

Where performance is not

measured against set

objectives, there is an

increased risk objectives

become outdated and

irrelevant, hindering on

development in other areas.

A review of objectives set

should be undertaken to

ensure they are measurable.

Appraisers should monitor

and record performance

between appraisal meetings

to determine if and when

objectives are met.

2 Agreed. The

appraisal policy

will address this.



selected employees confirmed,

in 5 cases (employee numbers

10724, 10966, 22970, 40220,

and 42010) that Performance

Management Conversations

had not been occurring on a 6

monthly basis.

Where appraisal meetings

do not occur on a regular

basis, there is an increased

risk staff are unaware of poor

performance and no action is

taken to rectify poor

performance.

Central monitoring of

appraisal and related

meetings should be

undertaken to ensure

managers are meeting their

appraisees at the required

intervals.

2 Agreed. An

interim

monitoring

arrangement will

be put in place

whilst an

automated

solution is

developed.

Head of HR

Records

Manager

November

2019

January

2019

Professional Development

7 It was established through the

examination 10 randomly

selected Conversation’ records

reviewed that, in three cases

(employee numbers 10724,

40220, and 42010) there was

no record of conversations

occurring and therefore no

record of development plans

being implemented.

Where development plans

are not completed, there is

an increased risk poor

performance is not rectified

resulting in continuous

inefficiencies and

unproductivity within service

lines.

Development plans should

be compiled for all staff that

outline key tasks and actions

that will drive improvements

in performance and aid in the

achievement of set

objectives.

2 Agreed. The

appraisal policy

will address this.


60


8 It was determined that

development plans are not

being continuously reviewed

and monitored between


conversations.

Where development plans

are not continuously

monitored by managers,


prolonged ineffective actions

plans being in place.

The requirement for

managers to monitor

development plans should be

included in the appraisal and


policy to be compiled.

2 Agreed. The

appraisal policy

will address this.


Management Information

9 It was determined through

discussions with the Head of

Human Resources that the

Senior Leadership Team and

Human Resources do not

currently receive any

management information

regarding the appraisals

process or staff performance.

Where management

information is not received


process, there is an

increased risk Human

Resources and the Senior

Leadership Team are

unaware of the effectiveness

of the appraisal process and

the position of the

organisation with respect to

staff performance.

Management information

should be regularly provided

to Human Resources and the

Senior Leadership Team


process. This information

should include the frequency

and dates of appraisal

meetings held by managers,

the SMART objectives set,

and the effectiveness of

development plans.

1 Agreed.

Management

information will

be provided to

the Senior

Leadership

Team in relation

to mid-year and

year end

appraisals.

Head of HR Dec 2019

61


Appendix B `– Definition of Audit Opinions, Direction of Travel, Adequacy and Effectiveness Assessments, and Recommendation

Priorities

Audit Opinions

We have four categories by which we classify internal audit assurance over the processes we examine, and these are defined as follows:

Full There is a sound system of internal control designed to achieve the client’s objectives.

The control processes tested are being consistently applied.

Substantial While there is a basically sound system of internal control, there are weaknesses, which put some of the client’s objectives at

risk.

There is evidence that the level of non-compliance with some of the control processes may put some of the client’s objectives

at risk.

Limited Weaknesses in the system of internal controls are such as to put the client’s objectives at risk.

The level of non-compliance puts the client’s objectives at risk.

None Control processes are generally weak leaving the processes/systems open to significant error or abuse.

Significant non-compliance with basic control processes leaves the processes/systems open to error or abuse.

The assurance gradings provided above are not comparable with the International Standard on Assurance Engagements (ISAE 3000) issued by the

International Audit and Assurance Standards Board and as such the grading of ‘Full Assurance’ does not imply that there are no risks to the stated

objectives.

Direction of Travel

The Direction of Travel assessment provides a comparison between the current assurance opinion and that of any previous internal audit for which the

scope and objectives of the work were the same.

Improved since the last audit visit. Position of the arrow indicates previous status.

Deteriorated since the last audit visit. Position of the arrow indicates previous status.

Unchanged since the last audit report.

No arrow Not previously visited by Internal Audit.

62


Adequacy and Effectiveness Assessments

Please note that adequacy and effectiveness are not connected. The adequacy assessment is made prior to the control effectiveness being tested.

The controls may be adequate but not operating effectively, or they may be partly adequate / inadequate and yet those that are in place may be operating

effectively.

In general, partly adequate / inadequate controls can be considered to be of greater significance than when adequate controls are in place but not

operating fully effectively, i.e. control gaps are a bigger issue than controls not being fully complied with.

Adequacy Effectiveness

Existing controls are adequate to manage the risks in this area Operation of existing controls is effective

Existing controls are partly adequate to manage the risks in this

area Operation of existing controls is partly effective

Existing controls are inadequate to manage the risks in this area Operation of existing controls is ineffective

Recommendation Priorities

In order to assist management in using our internal audit reports, we categorise our recommendations according to their level of priority as follows:

Priority 1 Major issues for the attention of senior management and the audit committee.

Priority 2 Important issues to be addressed by management in their areas of responsibility.

Priority 3 Minor issues resolved on site with local management.

63


9

Statement of

Responsibility

We take responsibility to the London Borough of Haringey for this report which is prepared on the

basis of the limitations set out below.

The responsibility for designing and maintaining a sound system of internal control and the

prevention and detection of fraud and other irregularities rests with management, with internal audit

providing a service to management to enable them to achieve this objective. Specifically, we assess

the adequacy and effectiveness of the system of internal control arrangements implemented by

management and perform sample testing on those controls in the period under review with a view

to providing an opinion on the extent to which risks in this area are managed.

We plan our work in order to ensure that we have a reasonable expectation of detecting significant

control weaknesses. However, our procedures alone should not be relied upon to identify all

strengths and weaknesses in internal controls, nor relied upon to identify any circumstances of fraud

or irregularity. Even sound systems of internal control can only provide reasonable and not absolute

assurance and may not be proof against collusive fraud. The matters raised in this report are only

those which came to our attention during the course of our work and are not necessarily a

comprehensive statement of all the weaknesses that exist or all improvements that might be made.

Recommendations for improvements should be assessed by you for their full impact before they are

implemented. The performance of our work is not and should not be taken as a substitute for

management’s responsibilities for the application of sound management practices.

Mazars LLP

London

November 2018

This report is confidential and must not be disclosed to any third party or reproduced in whole or in

part without our prior written consent. To the fullest extent permitted by law Mazars LLP accepts no

responsibility and disclaims all liability to any third party who purports to use or reply for any reason

whatsoever on the Report, its contents, conclusions, any extract, reinterpretation amendment and/or

modification by any third party is entirely at their own risk.

In this document references to Mazars are references to Mazars LLP.

Registered office: Tower Bridge House, St Katharine’s Way, London E1W 1DD, United Kingdom.

Registered in England and Wales No 4585162.

Mazars LLP is the UK firm of Mazars, an international advisory and accountancy group. Mazars LLP

is registered by the Institute of Chartered Accountants in England and Wales to carry out company

audit work.

64



Homes for Haringey: Safeguarding Vulnerable Individuals

January 2019










The Report was prepared solely for the use and benefit of London Borough of Haringey to

the fullest extent permitted by law Mazars LLP. accepts no responsibility and disclaims all





risk.


about responsibilities, limitations and confidentiality.

65

Internal Audit Report – The London Borough of Haringey – Homes for Haringey: Safeguarding Vulnerable Individuals 2018/19

1

Introduction As part of the 2018/19 Internal Audit Plan approved by the Audit & Risk Committee,

we have undertaken internal audit work in relation to Safeguarding.

Homes for Haringey (HfH) are an Arm’s Length Management Organisation (ALMO),

which was set up in April 2006 to manage Haringey’s council housing. HfH currently

manage around 16,000 tenanted and 4,500 leasehold properties. Homes for

Haringey were created as a limited liability company, whose sole shareholder is

Haringey Council.

Safeguarding is the action that is taken to promote the welfare of children and

vulnerable adults and protect them from harm.

Safeguarding involves protection from abuse and maltreatment, preventing harm to

health or development, ensuring safe and effective care and taking action to ensure

the best outcomes for those at risk from harm.

Safeguarding is a Strategic Risk Area for the organisation.

Homes for Haringey work closely with the statutory multi-agency safeguarding

partnerships to ensure that they fulfil the duties around Safeguarding. Safeguarding

issues will be reported to the Audit & Risk Committee.

A safeguarding Policy is in place. This states Home for Haringey will discharge their

responsibilities to children and vulnerable adults by:

• Valuing, listening to and respecting them,

• When a safeguarding concern arises about a child or a vulnerable adult, we will

act to raise that concern,

• Ensuring our recruitment and selection, training and vetting procedures are

effective. We ensure that, where appropriate, staff are DBS checked at enhanced

level,

• Appropriate and timely information sharing,

• Attending multi-agency meetings and joint planning to promote best interests,

and

• Effective management of staff and volunteers through supervision, support and

training; and effective partnerships with contractors.

An audit of key areas of Homes for Haringey’s safeguarding framework was

undertaken in 2016/17 and provided “Substantial” assurance. That audit focused on

operational areas and how safeguarding is delivered in practice.

Following two serious incidents, further audit work has been requested to review

controls around how Homes for Haringey discharges its responsibilities towards

vulnerable individuals. Incident reports have been issued on these two areas and we

have tried to avoid duplicating recommendations for improvement following on from

these reports as detailed action plans are in place and actions have already been

followed up by management.

66


2

Audit Opinion &

Direction of Travel


Key Findings

• We obtained the HfH Safeguarding Group Terms of Reference that outlines the purpose, responsibilities,

membership, and general governance regarding Safeguarding. The Terms of Reference states the group

will meet on a quarterly basis. We obtained minutes and therefore confirmed meetings occurred on the

following dates; 30 January 2017, 20 April 2017, 23 October 2017, 28 November 2017, and 22 January

2018.

• Examination of the Safeguarding (Children and Young People) Policy and the Safeguarding (Adults)

Policy confirmed both were due for review on 8 June 2018. Discussions with the Operational Lead for

Safeguarding confirmed this has not occurred.

• Both policies above include links in their Appendices to either the National Society for the Prevention of

Cruelty to Children website where information on recognising signs of abuse in children can be found, or

the 'Help Guide' website offering information on recognising signs of abuse in adults. Where there are

signs of abuse staff are required to fill out a 'concern card'. The concern card includes details such as the

name and address of the resident, the type of concern along with a description box for further detail, the

name of the manager being reported to, and the option to hear of the outcome of the raised concern.

Concern cards are made available to staff via the shared drive.

• During testing of a sample of 10 safeguarding alerts we were unable to determine that both, staff act

compliantly with the Council's policies and procedures in the routine processing of safeguarding issues or

whether an adequate framework is in place for the supervision and management of staff processing

safeguarding issues. When safeguarding alerts are received they are routed to the relevant team for

action. There is no formal follow up to ensure appropriate action has been completed as it is left to the

referred to team to action. There is therefore no central point where a record of actions taken is recorded.

• It was determined through discussions with the Learning and Development team that the ‘Safeguarding

Adults/Children in Housing’ training module is compulsory across the Homes for Haringey organisation.

Safeguarding is considered a responsibility of all staff members within the organisation if and when they

identify it. Therefore the training received by all members is specific to their role.

• Homes for Haringey use the Learning Management System ‘Learning Central’ to deliver Sharable Content

Object Reference Model (SCORM) compliant e-Learning courses. The courses can be reported on in real

time so the Learning and Development team always have access to the most up-to-date information

regarding learning engagement and compliance. We obtained a report produced to show those who have

and have not completed the Safeguarding e-Learning modules. According to the report, 75.85% of those

enrolled have passed these compulsory courses. Completion percentages are monitored and reported to

management as part of the monthly performance report compiled by Homes for Haringey’s Business

Improvement Service.

• Examination of the Safeguarding Adults Multi Agency Information Sharing Protocol confirmed under

Section 10, Review and Audit, the document states the protocol will be reviewed by the partner

organisations annually. There is no evidence this has occurred since 13 January 2014.

• We were unable to obtain any tangible evidence that policies and procedures governing the retention and

destruction of records containing personal information retained within the Homes for Haringey systems

have been compiled in accordance with the Safeguarding Adults Multi Agency Information Sharing

L

67


3

Protocol. However, the Records Manager for Homes for Haringey explained that the decision was made

in 2014 that all records should be kept indefinitely. This was deemed acceptable.

• It was determined through conversations with the Operational Lead for Safeguarding that Homes for

Haringey do not have a process in place to record and regularly report performance or management

information regarding the processing of safeguarding concerns.

• It was determined that neither performance nor management information regarding the processing of

safeguarding concerns is being reported back to the Board of Directors. A Board Champion was elected

to oversee matters regarding Safeguarding and report to the Board, however we confirmed that this Board

member has since left the organisation and no replacement has yet been established.


Controls

Effectiveness of

Controls



Policies and Procedures Green Amber 0 0 1

Application of Safeguarding

Processes Amber Amber 1 1 0

Training Green Green 0 0 0

Partnership Working Green Amber 0 0 1

Monitoring and

Management Reporting Red Red 1 1 0

Total 2 2 2



Acknowledgement We would like to thank the management and staff of the Safeguarding Team for their


68

London Borough of Haringey – Internal Audit Report – Homes for Haringey: Safeguarding Vulnerable Individuals 2018/19 4


Response

Responsible

Officer(s)

Deadline

Policies and Procedures

1 Examination of both the

Safeguarding (Adults) policy

and Safeguarding (Children

and Young People) policy

confirmed neither policy was

reviewed on 8 June 2018, as

scheduled.

Where policies are not

reviewed on a regular basis,

there is an increased risk the

Homes for Haringey are not

compliant with amendments

to regulations and

legislation.

A responsible officer should

be appointed to ensure that

all policies and procedures

are updated at the due time.

3 The policies are

actually due for

review on 8 June

2019, copies

have been

provided to

confirm this is the

case.

Jasper South June 2019

Application of Safeguarding Processes

2 When safeguarding alerts are

received they are routed to the

relevant team for action. There

seems to be a gap in that there

is no formal follow up to ensure

appropriate action has been

completed as it is left to the

referred to team to action

Where there is no central

monitoring of safeguarding

alerts there is an increased

risk

A central monitoring function

for safeguarding alerts should

be established to help ensure

that they are actioned

appropriately and in a timely

fashion

2 It is accepted that

this would

improve the

process in being

able to follow

through and

ensure

appropriate

actions. The

process will be

revised to put this

in place

Jasper South April 2019

69


3 We were unable to identify any

processes in place which

determine poor practice in

relation to safeguarding. It was

determined that performance

reports are not currently being

generated and distributed to

management nor the Board of

Directors.

Where poor practice cannot

be identified, there is an

increased risk staff act non-

compliantly and negligently

resulting in vulnerable

individuals receiving an

inadequate service.

Quarterly spot checks should

be undertaken to ensure

working practice is adequate

and compliant with agreed

Safeguarding policies. Where

poor practice is identified

action plans should be put in

place to ensure issues are

corrected and do not recur.

1 This is accepted,

and a system will

be put in place to

monitor and

report on cases

to the

Safeguarding

Group. This will

enable spot

checks to be

carried out on the

management of

individual cases


Partnership Working

4 Examination of the

Safeguarding Adults Multi

Agency Information Sharing

Protocol confirmed under

Section 10, Review and Audit,

the document states the

protocol will be reviewed by the

partner organisations annually.

There is no evidence this has

occurred since 13 January

2014.

Where the Safeguarding

Adults Multi Agency

Information Sharing Protocol

is not reviewed as

scheduled, there is an

increased risk its function is

no longer effective.

Partner agencies should be

approached to clarify when

the Adults Multi Agency

Information Sharing Protocol

is to be reviewed.

3 This concern will

be raised with the

Safeguarding

Adults Office,

requesting that

consideration is

given to

reviewing the

protocol.


Monitoring and Management Reporting

70



conversations with the

Operational Lead for

Safeguarding that Homes for

Haringey do not have a process

in place to record and regularly

report performance or

management information

regarding the processing of

safeguarding concerns.


reported back to

management on a regular

basis, there is an increased

risk poor performance is not

identifiable and therefore

remedial action cannot be

taken.

Quarterly performance

reports should be produced

for senior management to

inform them of the number of

referrals received and any

performance issues

identified.

1 This is accepted

and a system for

collating and

reporting

management

information will

be put in place

with quarterly

reports to the

Safeguarding

Group that can

form the basis for

reporting to ELT

and Audit and

Risk Committee.


6 It was determined that

performance or management

information regarding the

processing of safeguarding

concerns is not being reported

back to the Board of Directors.


reported back to the Board of

Directors on a regular basis,

there is an increased risk the

true performance statistics of

the organisation is unknown

the an inadequate service

delivery continues to

function.

An annual safeguarding

report should be made to the

Board

2 An annual

safeguarding

report will be

made to the Audit

and Risk

Committee.

Astrid

Kjellberg-

Obst

February

2019

71



Priorities

Audit Opinions





risk.


at risk.







objectives.

Direction of Travel







72





effectively.













73


9

Statement of

Responsibility



























Mazars LLP. Mazars LLP is the UK firm of Mazars, an international advisory and accountancy group.

Mazars LLP is registered by the Institute of Chartered Accountants in England and Wales to carry

out company audit work.

Mazars Public Sector Internal Audit Limited

London

January 2019

74


Homes for Haringey

Budgetary Control and Financial Management

February 2019
















risk.



75

Internal Audit Report – Homes for Haringey – Budgetary Control and Financial Management 2018/19 2

Introduction As part of the 2018/19 Internal Audit Plan, we have undertaken internal audit work in relation to budgetary control and financial management at Homes for Haringey.

The previous audit was undertaken in December 2016 and an assurance rating of

Substantial was awarded.

This report sets out our findings from the internal audit and raises recommendations to address areas of control weakness and/or potential areas of improvement. Homes for Haringey (HfH) are an Arm’s Length Management Organisation (ALMO), which was set up in April 2006 to manage Haringey’s council housing. HfH currently manage around 16,000 tenanted and 4,500 leasehold properties. Homes for Haringey were created as a limited liability company, whose sole shareholder is Haringey Council.

HfH is responsible for two separate accounts, which are the Company Account and the Managed Account. These are as follows:

(i) Company Account – This is the housing management service required by the Council and paid for through the Management Fee received by HfH from the Council. Purchases under this account must be made in accordance with the HfH Contract Procedure Rules and Financial Regulations; and

(ii) Managed Account – These are Haringey Council funds managed on the Council’s behalf by HfH. These funds are primarily the budgets whose cost is covered by fees raised from tenants and leaseholders. The Managed Account is required to be managed in accordance with the Council’s Contract Procedure Rules and Financial Regulations.

The Management Fee received by HfH from Haringey Council, which covers salaries, service level agreements and purchases, reduced from £43.9 million in 2017/18 to £43.4 million in the 2018/19 financial year as a result of efficiencies and cost reductions.

In 2016 some of the finance resources currently employed by Homes for Haringey returned to be part of the Council teams.

Audit Opinion & Direction of Travel


Key Findings

• The Budget Holder’s Handbook has been recently updated and there is now a July 2018 version.

There are several key areas which this document covers and these include: budget monitoring,

finance cycle, budget monitoring process, budget monitoring tasks, responsibilities, and definitions.

This version is not currently available on the Homes for Haringey intranet.

• The July 2018 Handbook does not provide as much detail on budget monitoring and forecasting as

was provided in the previous 2014 Budget Owner’s Handbook. The Financial Controller stated that

the shorter, more concise version is more likely to be read and understood by budget holders and

that there will be more emphasis on in-person discussions, guidance, and training. We deem this

acceptable.

• The 2019/20 budget setting timetable is not in place yet as the budget setting process will begin in

September 2018. The Budget Holder’s Handbook outlines the budget setting timetable, running from

September to January. This process is now beginning earlier in the year at the request of the new

Managing Director, who believes this will provide better outcomes.

76


• As with the Budget Holder’s Handbook, we have been informed there is a new July 2018 version of

the Scheme of Delegation. The Scheme of Delegation is to be presented to the Board in September

2018 for review and approval. The current version in place is from June 2014. A recommendation

was for the Scheme of Delegation to be approved was raised as part of the Corporate Governance

– Board Effectiveness audit that was undertaken in August 2018.

• We established that budget and finance training was provided during period 3 of the 2017/18 year.

There were two parts to the training provided: Overview of Finance and Budget Management

(Financial Awareness). We obtained the presentation slides for these training sessions and

confirmed that the Budget Management session covered all areas of the budget management cycle,

including budget setting, monitoring, forecasting, and end of year closing.

• We noted that that there is further opportunity for Budget Holders to take ownership of their delegated

budgets. As part of the budget delegation process, Budget Acceptance forms should be

implemented by HfH that are required to be completed and signed by the budget holders. The Budget

Acceptance forms should indicate that the Budget Holder has received sufficient information and

was fully involved as part of the budget setting process, that the Budget Holder is aware of any target

cost saving requirements agreed by the Board, and that the budget holder is fully aware of the budget

monitoring process and will escalate arising issues and explain variances as part of the monthly

reporting process.

• We requested a list of all virements from January 2018 to August 2018. We were informed by the

Financial Controller that the only virement which has taken place is the £685,299 reduction

adjustment to the 2018/19 management fee received by HfH from Haringey Council. This change in

fee was agreed by senior members of both parties and was then presented to the Board at their

meeting on 31 July 2018.

• We obtained the budget monitoring timetable for the 2018/19 year. The timetable covers various

areas, including what is being undertaken, who is responsible for it, and what the activity is. Each of

these actions is then given an allocated date for each period, with full budget monitoring taking place

from P3 - P11.

• After discussion with the Financial Controller, we confirmed there have been increased efforts

recently to monitor attendance of budget holders at budget meetings and ensure that they are

attending and are staying active in managing their budget efficiently. A budget monitoring meeting

spreadsheet is compiled on a monthly basis by LBH Finance which records dates of meetings,

attendance, absence reasoning, and relevant additional information. We noted that the Budget

Monitoring and forecasting meetings summary, which detail attendance at budget meetings by

Budget Holders are maintained separately for each month

• Budget monitoring reports are produced on a monthly basis by each team. From samples we

obtained, we confirmed that reports include information on: allocated budget, to-date spend, end-of-

year forecast, budget variances, and supporting explanations/narrative. However, there will be small

differences in templates/format used by each team, as well as terminology.

• The 2018/19 budget was presented to the Board at the meeting of 27 March 2018 where it was

recommended for them to approve the budget. A budget was set, with supporting explanations as

to the variances from the previous year’s budget and any potential alterations that may arise in the

future. The Board meeting minutes of 01 May 2018 state that the 2018/19 was approved at the 27

March meeting after it was presented and reviewed.

• The Executive Leadership Team (ELT) are provided with monthly reports covering Performance and

Finance. The finance section gives full explanations as to the main variances for each directorate as

well an HfH budget appendix which breaks down the full budget by team. The report for June 2018

also includes a section on the main financial risks that each directorate may potentially face

throughout the 2018/19 year along with supporting comments which explain why these may be

applicable risks and forthcoming actions. The ELT reports are presented at subsequent Board

meetings with the June finance report presented to the Board on 31 July.

77


• There is a 2018/19 Financial Management Service Level Agreement (SLA) in place between Homes

for Haringey and the London Borough of Haringey, which has been signed by senior members of

both parties. The SLA includes Key Performance Indicators and how HfH monitor the service they

receive – there are corresponding quantitative targets that HfH expects LBH to meet. Appendix 1

outlines the process in place for dealing with any performance concerns. The Financial Controller

meets on a regular basis - and has ongoing communications - with the Senior Finance Manager

from LBH to monitor performance of the SLA.


Controls

Effectiveness

of Controls



Governance Green Amber 0 0 1

Monitoring and Forecasting Green Green 0 0 0

Management Information and

Reporting

Green Green 0 0 0

Contract Management Green Green 0 0 0

Total 0 0 1

Please refer to Appendix A for a definition of the audit opinions, direction of travel, adequacy and


Acknowledgement We would like to thank the management and staff of Homes for Haringey for their


78



Response

Responsible

Officer

Deadline

Budget Acceptance Forms

1 We noted that as part of

the budget delegation

process, there is no

requirement for Budget

Acceptance forms to be

completed by HfH's

budget holders. The

completion of Budget

Acceptance Forms will

help to promote the

accountability of budget

holders as part of HfH's

financial management

and budget control

process.

Where Budget Acceptance

Forms are not completed

and signed, there is an

increased risk that there

may be difficulty in holding

budget holders to account

and HfH's financial

objectives may not be

achieved.

Budget Acceptance

Forms should be

implemented by HfH

which are completed and

signed by budget holders.

The acceptance forms

should stipulate

delegated responsibilities

of the budget holder

including that that the

budget holder has

received sufficient

information and was fully

involved as part of the

budget setting process,

and that the budget

holder is aware of target

cost saving requirements

and the importance of

raising issues

appropriately as part of

the monthly reporting

process.

3 Although we believe

that increased

accountability will

come from increased

knowledge, training

and financial

awareness, we will

implement this

recommendation and

measure the

effectiveness.

Financial

Controller

30 April

2019

79


Appendix A – Definition of Audit Opinions, Direction of Travel, Adequacy and Effectiveness Assessments, and Recommendation Priorities

Audit Opinions





risk.


at risk.





The assurance gradings provided above are not comparable with the International Standard on Assurance Engagements (ISAE 3000) issued by the International Audit and Assurance Standards Board and as such the grading of ‘Full Assurance’ does not imply that there are no risks to the stated objectives.

Direction of Travel

The Direction of Travel assessment provides a comparison between the current assurance opinion and that of any previous internal audit for which the scope and objectives of the work were the same.





80




The controls may be adequate but not operating effectively, or they may be partly adequate / inadequate and yet those that are in place may be operating effectively.

In general, partly adequate / inadequate controls can be considered to be of greater significance than when adequate controls are in place but not operating fully effectively, i.e. control gaps are a bigger issue than controls not being fully complied with.



Existing controls are partly adequate to manage the risks in this area Operation of existing controls is partly effective







81



We take responsibility to the London Borough of Haringey for this report which is prepared on the basis of the limitations set out below.

The responsibility for designing and maintaining a sound system of internal control and the prevention and detection of fraud and other irregularities rests with management, with internal audit providing a service to management to enable them to achieve this objective. Specifically, we assess the adequacy and effectiveness of the system of internal control arrangements implemented by management and perform sample testing on those controls in the period under review with a view to providing an opinion on the extent to which risks in this area are managed.

We plan our work in order to ensure that we have a reasonable expectation of detecting significant control weaknesses. However, our procedures alone should not be relied upon to identify all strengths and weaknesses in internal controls, nor relied upon to identify any circumstances of fraud or irregularity. Even sound systems of internal control can only provide reasonable and not absolute assurance and may not be proof against collusive fraud. The matters raised in this report are only those which came to our attention during the course of our work and are not necessarily a comprehensive statement of all the weaknesses that exist or all improvements that might be made. Recommendations for improvements should be assessed by you for their full impact before they are implemented. The performance of our work is not and should not be taken as a substitute for management’s responsibilities for the application of sound management practices.

Mazars LLP

London

February 2019

This report is confidential and must not be disclosed to any third party or reproduced in whole or in part without our prior written consent. To the fullest extent permitted by law Mazars LLP accepts no responsibility and disclaims all liability to any third party who purports to use or reply for any reason whatsoever on the Report, its contents, conclusions, any extract, reinterpretation amendment and/or modification by any third party is entirely at their own risk.


Registered office: Tower Bridge House, St Katharine’s Way, London E1W 1DD, United Kingdom. Registered in England and Wales No 4585162.

Mazars LLP is the UK firm of Mazars, an international advisory and accountancy group. Mazars LLP is registered by the Institute of Chartered Accountants in England and Wales to carry out company audit work.

82



Homes for Haringey: Responsive Repairs

November 2018
















risk.



83

Internal Audit Report – The London Borough of Haringey – Homes for Haringey: Responsive Repairs 2018/19

1

Introduction As part of the 2018/19 Internal Audit Plan, agreed by the Audit & Risk Committee,

we have undertaken an internal audit in relation to Responsive Repairs.

As landlord, Homes for Haringey (HfH) is responsible for repairing damage caused

by wear and tear or structural and service faults. Haringey Repairs Service (HRS)

carry out repairs which are not the responsibility of the residents including:

• Repairing or replacing kitchen units;

• Repairing or replacing bathroom units; and

• Repairing or replacing paths and paving.

HRS implemented a new system in April 2017 known as Service Connect, which is

a cloud based system and is continually being developed in an effort to improve

efficiencies within the service. The system retains data for each repair job including

the receipt of works request from the Customer Contact Centre, allocation to the

operatives’ mobile device and the actual cost of works completed.

Haringey Repairs Service total expenditure for the 2017/18 financial year was

£14.2m and a similar budget was allocated for 2018/19.

84


2

Audit Opinion &

Direction of Travel


Key Findings

• It was determined through discussions with the Interim Head of HRS Operations that the Homes for

Haringey customer services call centre will receive requests and determine the nature of the works to be

carried out. The call centre will then post the job to the appropriate team. It was determined there are 17

different teams each responsible for different types of work. We examined 10 randomly selected invoiced

responsive repairs carried out in this financial year, and confirmed in all cases that the job was recorded

in Service Connect and was allocated to the correct team.

• Examination of the same sample of 10 invoiced responsive repairs confirmed the following:

o In six cases the order was escalated from ‘WorkComplete’ to ‘FinanciallyComplete’ in Service

Connect without the need for management intervention as the completion standards were met.

o In one case the order became a referral that was then considered ‘FinanciallyComplete’ following

a visit on 30/04/2018 by the Team Leader.

o In three cases (orders 1068415, 1149506 and 1389795) the orders were escalated from

‘WorkComplete’ to FinanciallyComplete’ by the IT Support Officer for Repairs.

• It was confirmed that each job in Service Connect has a unique job code and associated standard cost

that is automatically allocated to that job once a request is received. Discussions with the IT Support

Officer for Repairs confirmed these standard costs are inflated by an index received on an annual basis

from the Royal Institution of Chartered Surveyors.

• Examination to Ten randomly selected variations confirmed, in all cases:

o The variations approval was given prior to the completion of the work with the exception of one

case (order 1050144, job code GM464005X) that is still a work in progress.

o The variations were approved by an appropriately senior member of staff in accordance with the

structural financial limits set in Service Connect.

• It was confirmed that budget monitoring reports are produced on a monthly basis. We obtained reports

pertaining to Periods 5 and 6 and confirmed discussions had regarding any variances have been recorded.

The Responsive Repairs unit was represented at these meetings by the Head of Responsive Repairs.

• It was determined that HfH have a Service Level Agreement with Bostock Marketing Group (BMG) for the

collection of feedback from Responsive Repairs works via telephone calls, and BMG issue HfH with a

monthly report. Examination of the September 2018 report confirmed the year to date has shown monthly

fluctuations in customer feedback with no indication of continuous improvement. The percentage of

positive feedback for September 2018 was 71%, the lowest in the last 12 months. It was determined

through discussions with the Interim Head of HRS Operations and a Business Improvement Officer that

this data is reported to the Business Improvement Team.

• HfH implemented a new tenancy satisfaction feedback system in June 2018. The system sends out a text

message to tenants following the completion of works with six questions. Tenants have four options to

grade each question based on their experience. Service Connect records customer satisfaction across

the six responsive repairs teams in real-time on a Key Performance Indicator (KPI) dashboard.

Examination of the dashboard confirmed, at the time this audit fieldwork took place, that the year-to-date

percentage of satisfied customers was 83%, and the year-to-date percentages of satisfied customers for

S

85


3

teams RR2, RR3, and RR4 were 74%, 69%, and 64% respectively, all below the 77% tolerance and the

80% target.

• It was determined through discussions with the Interim Head of HRS Operations that feedback is not

currently being obtained from customers receiving the out-of-hours responsive repairs service or a sub-

contracted service.

• It was determined that ‘Council Monthly Performance Management Framework Reports’ are produced on

a monthly basis with the following KPIs being reported with respect the responsive repairs:

o Percentage of Emergency and Out-of-Hours repairs completed within timescale;

o Percentage of urgent repairs completed within Government time limits (Right to Repair);

o Percentage of all repairs first time fixed (not including programmed work);

o Percentage of non-emergency repairs where appointment made and kept; and

o Percentage of tenants satisfied with quality of repair (BMG).

• Examination of the reports confirmed that where poor performance has been identified, the reasons for

the poor performance has been disclosed and action plans already taken have been reported, or where

necessary, plans to improve performance have been stated.

• The customer satisfaction data being reported in the ‘Council Monthly Performance Management

Framework Reports’ is that collected by BMG. The feedback received via the text messaging system is

not being reported. In the cases of RR3 and RR4 the current real-time customer satisfaction data is below

the 71% reported by BMG for September 2018.


Controls

Effectiveness of

Controls



Work Planning Green Green 0 0 0

Costs Green Green 0 0 0

Variations Green Green 0 0 0

Budgetary Control Green Green 0 0 0

Tenancy Satisfaction Amber Amber 0 3 0

Performance Management Green Amber 0 0 1

Total 0 3 1



Acknowledgement We would like to thank the management and staff from Homes for Haringey for their


86

London Borough of Haringey – Internal Audit Report – Homes for Haringey: Responsive Repairs 2018/19 4


Response

Responsible

Officer(s)

Deadline

Tenancy Satisfaction

1 Examination of the Service

Connect KPI dashboard

confirmed three teams (RR2,

RR3, and RR4) are all

operating below the customer

satisfaction target of 80% and

tolerance level of 77%. We saw

no evidence that actions have

been taken to make

improvements on this.

Where poor customer

satisfaction is not addressed,


continuous poor

performance will result in

reputational damage to

Homes for Haringey and

Haringey Council.


compile action plans to

improve on the current

customer satisfaction

statistics for all teams that are

performing below the 80%

target.

2 Improving

customer

satisfaction in

these areas will

be picked up as

part of

performance

management

conversations

scheduled for

November

Craig

Boulton

December

2018


discussions with the Interim

Head of HRS Operations that

feedback is not currently being

obtained from customers

receiving the out-of-hours

responsive repairs service.

Where the feedback is not

obtained from the full

population of works

completed, there is an

increased risk any feedback

obtained does not fairly

represent the entire

population.


apply their text messaging

feedback system to the

obtaining of customer

feedback with respect to out-

of-hours works.

2 A Customer

service

administrator

role is being

created as part of

a current

restructure. The

post holder will

be required to

obtain feedback

from OOH

customers.

Craig

Boulton

February

2019

87



discussions with the Interim

Head of HRS Operations that

feedback not currently being


received sub-contracted

services.

Where feedback is not


receiving sub-contracted

services, there is an

increased risk that

customers receive a poor

service on behalf of HfH

without their knowledge, and

that sub-contractors are not

accountable for poor

customer service.


apply their text messaging

feedback system to the

obtaining of customer

feedback with respect to sub-

contracted services, and

where poor performance is

identified, remedial actions

should be agreed with the

relevant contractor.

2 Subcontractor

customer

satisfaction has

started to be

measured in

October 2018

and the first

results are due

imminently.

Customer

satisfaction

surveys targeted

at subcontractors

is being

undertaken by an

external

company BMG

Chris Liffen November

2018

88


Performance Management

4 Examination of the 'Council

Monthly Performance

Management Framework

Reports' confirmed feedback

received via the text messaging

system is not being reported. In

the cases of RR3 and RR4 the

current customer satisfaction

data is below the 71% reported

by BMG in the August

management report.

Where all customer

satisfaction data is not

reported to management,


that management are

unaware of the true position

of customer satisfaction

regarding teams performing

above and below the level

reported by BMG.

Future 'Council Monthly

Performance Management

Framework Reports' should

be amended to include all

available customer

satisfaction data including

data collected from the text

messaging feedback system.

3 From December

2018, this is

being reported to

the Council as

part of monthly

reporting

Chris Liffen December

2018

89



Priorities

Audit Opinions





risk.


at risk.







objectives.

Direction of Travel







90





effectively.













91


9

Statement of

Responsibility



















Mazars LLP

London

November 2018









Mazars LLP is the UK firm of Mazars, an international advisory and accountancy group. Mazars LLP

is registered by the Institute of Chartered Accountants in England and Wales to carry out company

audit work.

92


Homes for Haringey

Data Security

February 2019
















risk.



93

Internal Audit Report – Homes for Haringey – Data Security 2018/19 2

Introduction As part of the 2018/19 Internal Audit Plan, we have undertaken internal audit work in relation to Data Security at Homes for Haringey.

Homes for Haringey (HfH) are an Arm’s Length Management Organisation (ALMO), which was set up in April 2006 to manage Haringey’s council housing. HfH currently manage around 16,000 tenanted and 4,500 leasehold properties. HfH was created as a limited liability company, whose sole shareholder is Haringey Council. HfH operates from many sites with main offices in Wood Green.

HfH handles various types of commercially sensitive data as part of its business operations including data retained in both tenancy and employee files. Data files can be held as hard copy as well as electronically including the use of SharePoint. Access to files retained on SharePoint is managed via the use of access user groups and assigning members of staff to the groups dependent on their role within the organisation.

The General Data Protection Regulations (GDPR) was approved by the European Union (EU) in April 2016 and was implemented in order to strengthen and unify data protection for all individuals within the EU. The Legislation became effective May 2018 and is enforced by the Information Commissioner’s Office, whereby companies face fines for data breaches.

As a result of the implementation of the GDPR and the increased scrutiny concerning the protection of data, HfH will need to ensure that sufficient controls are in place to manage and protect the data that it handles as part of its business operations

The management agreement states that Homes for Haringey must “abide by the Councils data protection and information security policies”

Audit Opinion & Direction of Travel

No previous audit


N/A

Key Findings

• A Data Management and Quality Procedure is in place, which became effective in May 2018 and is

due for review on an annual basis. The document was independently approved by the Director of

Corporate Affairs and is available along with other policies to all HfH staff via SharePoint.

• Review of the Data Management and Quality Procedure showed that it refers to relevant

Legislation including GDPR and other HfH policies including the Records Retention Policy. It also

stipulates the key policy principles including personal data will only be collected for a specified,

explicit and legitimate purpose and will not be further processed or archived in a manner that is

incompatible with those purposes.

• Further review showed that the procedure sets out the roles and responsibilities of key individuals

concerned with data security including the Director of Corporate Affairs, Records Manager, and the

oversight of the Audit and Risk Committee. Reference is also made to the responsibilities of all

team managers and staff to ensure that they are fully aware of their requirements following the

implementation of the new GDPR Legislation.

• We were informed by the Records Manager, that Privacy Impact assessments are being

completed and signed off by HfH. The only one that has been completed is the Surveillance

Camera Privacy Impact Assessment, which is still awaiting to be signed off. A further two Privacy

Impact Assessments are currently in progress.

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• Staff receive data security training and this is organised via HfH' Learning and Development Team.

HfH use an online Learning management System called Learning Central to host e-learning

modules for all employees to complete. The e-learning modules available include GDPR training

and new starters are required to complete a data protection module as part of their induction.

• The Learning Central system enables the training completed by each individual to be monitored

and the system automatically generates a certificate upon completion of a training course and has

the ability to add a recertification date (currently set at 2 years).

• A GDPR Completion spreadsheet is circulated weekly to senior managers to track who has and

has not completed essential e-learning modules. We noted during the review that only 90% of staff

have completed the GDPR training module.

• HfH utilises SharePoint to retain documents and data, which comprises separate libraries for

document storage. Individuals are assigned to an access group and each access group is given

access to specific libraries in order to undertake specific functions. This was demonstrated on the

system by the Records Manager. An example is the Resident Involvement Library, whereby the

Resident Engagement Role has access to contribute to the library, whereas other access groups

such as Customer Services only have read-only access in order to respond to customer queries.

• We confirmed that within the HR libraries there is a Manager/Employee Library. The library

comprises documents concerning leave and training. The Records Manager demonstrated the

restricted access to the library which showed the files under employee names and a list individuals

who have access to the employee’s individual file. The individuals with granted access are: the

employee, team managers and the manager’s managers. HR and Records Managers can access

the entire library.

• There is also an Employee Relations Library which is for HR casework, including disciplinaries,

long-term sickness, and grievances. The library is exclusively managed by HR and all other access

requires an HR decision. Any access granted is for individual files and not the entire library. We

confirmed during the review of the library that the individuals able to access the files are detailed

as contributors and are usually managers, investigators, and deciding officers. Where there is no

name only Records Mangers and HR can view these files. We were informed that the Head of HR

has notified the Housing Information Team that a possible review of this access should be

undertaken in order to determine its appropriateness.

• Access arrangements to the SharePoint system are reviewed on a regular basis, with new users

and amendments to access rights made via a formal change request. Details of the latest review of

access permissions is detailed on the Information Management Register, which was last reviewed

in July 2018

• HfH has a detailed Information Management Register in place, which was updated July 2018 and

is subject to annual review. The Information Management Register comprises information including

the date of review completed by Information Asset Managers, the relevant Business Unit / Team,

the types and purpose of personal data utilised, and the systems utilised including SharePoint.

• A Register of Data Breaches is in place. Review of the register showed that a data breach

occurred in June 2018 when 200 out of 607 letters notifying tenants of HfH's intention to seek

possession were sent to the wrong addresses.

• HfH has also implemented a detailed Register of Data Rights Requests in accordance with the

GDPR Legislation. Review of the register showed that there has only been one case in August

2018, which was for banking information to be deleted from a customer's direct debit mandate. The

request was responded to in a timely manner by the individual assigned with responsibility for

resolving the request.

• We confirmed during the review of the supporting documentation including reports and minutes for

the Board meetings held May, July and September 2018, that the Board received information

concerning data security on a consistent basis. This included an updated into the investigation

following the reported data breach

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Controls

Effectiveness

of Controls



Policies, Procedures and

Guidance

Green Amber 0 1 0

Training Green Amber 0 1 0

Security and Access Green Amber 0 1 0

Information Management Green Green 0 0 0

Reporting Arrangements Green Green 0 0 0

Total 0 3 0

Please refer to Appendix A for a definition of the audit opinions, direction of travel, adequacy and


Acknowledgement We would like to thank the management and staff of Homes for Haringey for their


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Response

Responsible

Officer

Deadline

Privacy Impact Assessments

1 We were provided with

a copy of the CCTV

Impact Assessment by

the Records Manager,

we were further

informed that the

document is awaiting

formal sign-off and

other Privacy Impact

Assessments are

currently in progress.

Where privacy impact

assessments are not

completed and formally

ratified that reflect current

Legislation and practices,


that of inconsistent practices

being adopted and non-

compliance with Legislation

leading to data breaches.

HfH suffers long-term

reputational damage and

possible fines where

investigation is undertaken

by the Information

Commissioner's Office

(ICO).

The Privacy Impact

Assessments in progress

should be completed and

formally signed-off

including the Closed

Circuit Television (CCTV)

Impact Assessment.

2 Agreed.

This will be signed off

by the responsible

Director of Service and

Data Protection Officer

Executive

Director of

Operations

8 Feb

2019

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Response

Responsible

Officer

Deadline

Monitoring of Staff training

2 We confirmed during

the audit, that HfH staff

have access to data

security training via e-

Learning courses

available on the

Learning Central

system, which

comprises both key

information and

scenarios. The e-

Learning courses

available include the

new General Data

Protection

Requirements (GDPR)

Legislation effective

from May 2018. We

were provided with a

copy of the GDPR

completion tracker and

we noted that there are

10% of staff who are

still yet to attempt and

pass the GDPR training

module.

Where training received by

HfH staff concerning data

security is not completed,


that staff do not receive

sufficient training and do not

act in accordance with

management expectations.

As a result corporate

records are not handled and

retained in accordance with

policy and Legislation such

as the Data Protection Act

and General Data

Protection Requirements

(GDPR) leading to potential

reputational damage to the

organisation and possible

fines following investigation

by the ICO.

Data security training

received by HfH staff

should be monitored by

senior management for

completion on a regular

basis (at least quarterly).

Where gaps are

identified, reminders

should be issued to

individuals.

2 Agreed. Training is

currently monitored on

an ad hoc basis.

Reports will be issued

on a regular quarterly

basis.


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Response

Responsible

Officer

Deadline

Employee Relations Library

3 The SharePoint system

comprises a number of

libraries including an

Employee Relations

Library, which is used

for HR casework

including disciplinaries,

long-term sickness and

grievances. HR staff

can access the whole

library and staff that

have contributed can

access individual files

not the entire library.

Where a review of access

permissions to the

Employee Relations Library

on SharePoint is not

completed, there is an

increased risk that access is

not appropriate and not

compliant with Legislation

including GDPR. This could

lead to reputational damage

and possible financial loss

to the organisation as a

result of fines following data

breaches investigated by

the Information

Commissioner's Office

(ICO).

A review should be

completed to ensure that

user access to the

Employee Relations

Library on SharePoint is

appropriate and is

compliant with

Legislation.

2 The review has been

completed and access

arrangements are

confirmed to be

appropriate.

Records

Manager

Complete.

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Appendix A – Definition of Audit Opinions, Direction of Travel, Adequacy and Effectiveness Assessments, and Recommendation Priorities

Audit Opinions





risk.


at risk.





The assurance gradings provided above are not comparable with the International Standard on Assurance Engagements (ISAE 3000) issued by the International Audit and Assurance Standards Board and as such the grading of ‘Full Assurance’ does not imply that there are no risks to the stated objectives.

Direction of Travel

The Direction of Travel assessment provides a comparison between the current assurance opinion and that of any previous internal audit for which the scope and objectives of the work were the same.





100




The controls may be adequate but not operating effectively, or they may be partly adequate / inadequate and yet those that are in place may be operating effectively.

In general, partly adequate / inadequate controls can be considered to be of greater significance than when adequate controls are in place but not operating fully effectively, i.e. control gaps are a bigger issue than controls not being fully complied with.



Existing controls are partly adequate to manage the risks in this area Operation of existing controls is partly effective







101



We take responsibility to the London Borough of Haringey for this report which is prepared on the basis of the limitations set out below.

The responsibility for designing and maintaining a sound system of internal control and the prevention and detection of fraud and other irregularities rests with management, with internal audit providing a service to management to enable them to achieve this objective. Specifically, we assess the adequacy and effectiveness of the system of internal control arrangements implemented by management and perform sample testing on those controls in the period under review with a view to providing an opinion on the extent to which risks in this area are managed.

We plan our work in order to ensure that we have a reasonable expectation of detecting significant control weaknesses. However, our procedures alone should not be relied upon to identify all strengths and weaknesses in internal controls, nor relied upon to identify any circumstances of fraud or irregularity. Even sound systems of internal control can only provide reasonable and not absolute assurance and may not be proof against collusive fraud. The matters raised in this report are only those which came to our attention during the course of our work and are not necessarily a comprehensive statement of all the weaknesses that exist or all improvements that might be made. Recommendations for improvements should be assessed by you for their full impact before they are implemented. The performance of our work is not and should not be taken as a substitute for management’s responsibilities for the application of sound management practices.

Mazars LLP

London

February 2019

This report is confidential and must not be disclosed to any third party or reproduced in whole or in part without our prior written consent. To the fullest extent permitted by law Mazars LLP accepts no responsibility and disclaims all liability to any third party who purports to use or reply for any reason whatsoever on the Report, its contents, conclusions, any extract, reinterpretation amendment and/or modification by any third party is entirely at their own risk.


Registered office: Tower Bridge House, St Katharine’s Way, London E1W 1DD, United Kingdom. Registered in England and Wales No 4585162.

Mazars LLP is the UK firm of Mazars, an international advisory and accountancy group. Mazars LLP is registered by the Institute of Chartered Accountants in England and Wales to carry out company audit work.

102

Counter-fraud Report

2018/19 – Quarter 3

103

Counter-fraud outcomes 2018/19 – Quarter 3

Tenancy Fraud Investigations

Haringey Council’s Fraud Team works with Homes for Haringey to target and investigate housing and tenancy fraud. The Audit Commission* estimated that each fraudulent tenancy costs councils an estimated £18k in temporary accommodation and other associated costs. Although this figure is considered low if the properties have been sublet for some years, no new national indicators have been produced.

The HfH Tenancy Management Officer’s secondment to the Fraud Team to assist with the tenancy fraud work has been formally extended on a long term basis as a result of the successful outcomes achieved in and previous years; the post will be funded by HfH.

The Fraud Team will continue to work with HfH to develop the most effective use of fraud prevention and detection resources across both organisations to enable a joined up approach to be taken, especially where cases of multiple fraud are identified e.g. tenancy fraud, right to buy fraud and benefit fraud.

* No new national indicators have been developed since the Audit Commission was dissolved in 2015 and the Cabinet Office assumed this function

104


Referrals received and outcomes

Brought forward from 2017/18 110

New referrals in 2018/19 141

Total referrals for investigation 251

Properties recovered 41

No fraud identified 82

Total investigations completed 123

Ongoing Investigations 128*

Tenancy FraudTo Quarters 3 of 2018/19, the numbers of referrals received, investigations completed and properties recovered by the Fraud Team are summarised below:

*Note 1: Of the 128 ongoing investigations; 55 of these cases (42%) are where tenancy fraud has been identified and court proceedings were in progress as at 31 December 2018. The property will be included in the ‘recovered’ data when the keys are returned and the property vacated.

105


Right to Buy (RTB) Investigations

The team currently has approximately 224 ongoing applications under investigation. The team reviews every RTB application to ensure that any property where potential tenancy, benefit or succession fraud is indicated can be investigated further. In the last two quarters, the numbers of tenants applying to purchase their properties under the Right to Buy legislation has reduced as valuations continue to rise. However, the proportion of fraudulent applications remains consistent.

At end of Quarter 3, 84 applications have been withdrawn or refused either following the applicants’ interview with the Fraud Team, further investigations and/or failing to complete money laundering processes.

106


Pro-active counter-fraud projects

During 2018/19, the Fraud Team have continued with a number of pro-active counter-fraud projects. Progress reports on this work will be reported to the Audit & Risk Committee on an ongoing basis; the findings and outcomes are all shared with service managers as the projects are delivered.

In Quarter 3, the Fraud team supported the Income Collection team with household and financial checks prior to eviction. These are cases where a Warrant of Possession has been obtained from the Court for rent arrears and a final, independent, occupancy and monetary assessment is undertaken by the Fraud Team to advise on any change in circumstances which may preclude the eviction proceeding.

In almost all cases the eviction will proceed and the property will be recovered. This project will be monitored by the Fraud Team and included within the body of future Counter Fraud reports to Committee

107


Gas safety – execution of warrant visits

Since July 2016, the Fraud Team accompany warrant officers on all executions of warrant of entry visits where it was suspected that the named tenant was not in occupation.

The Fraud Team aim to interview any occupant and establish the legitimacy of the tenancy, or investigate further if the property is empty, or identified as being potentially sublet or abandoned. The Fraud Team may also identify cases where the tenant is a vulnerable adult, in which case a referral is made to social workers and/or tenancy management. The Gas Safety Team can (and do) make referrals to the Fraud Team if they identify any potential fraud indicators through the normal course of their work.

For 2018/19, the Fraud Team have assisted with 79 Gas Safety warrants of execution and thirteen properties were re-possessed as a result of the Fraud Team’s investigations; these figures are included in the ‘properties recovered figures reported as part of the tenancy fraud table.

108


Financial Values 2018/19

Tenancy Fraud – council stock and temporary accommodation: The Audit Commission valued the recovery of a tenancy, which has previously been fraudulently occupied, at an annual value of £18,000, mainly relating to average Temporary Accommodation (TA) costs. No new national indicators have been produced; therefore although this value is considered low compared to potential TA costs if the property has been identified as sub-let for several years, Audit and Risk Management continue to use this figure of £18k per property for reporting purposes.

In Quarter 3, 41 council stock properties have been recovered through the actions and investigations of the Fraud Team; therefore a total value of £738k can be attributed to the recovery, or cessation, of fraudulent council and temporary accommodation tenancies.

Right to Buy Fraud: Overall, the 84 RTB applications withdrawn or refused represent over £9m in potential RTB discounts; and means the properties are retained for social housing use.

109

I

Minesh Jani - Head of Audit & Risk Management

110

II

111

III

112

IV

113

V

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Homes for Haringey



Title Draft Budget 2018/19

Agenda item 7



Report author Esther Campbell, Financial Controller



1. Introduction

1.1 The purpose of this report is to provide the Committee with an update in respect

of Homes for Haringey’s 2019/20 draft budget and an opportunity to scrutinise

how the budget has been compiled.

2. Background

2.1 Homes for Haringey (HfH) has its own company budgets, for which it receives a

management fee from the Council.

2.2 The management fee for 2018/19 is £43,444m; this includes £4.2m from the

General Fund for Housing Demand.

2.3 There were no required savings for the current financial year (2018/19); there

was an agreement that savings would be identified to meet any essential growth.

2.4 There are no required savings for 2019/20, however as per the current year, HfH

has committed to find savings to cover any internal growth pressures.

2.5 The budget setting process began in October 2018. The Executive team were

presented with a draft budget in December 2018 for review. The draft budget has

since been revised based on further analysis and discussions.

2.6 The budget setting process for the managed budgets (revenue and capital) is led

by the Council.

3. 2019/20 draft budget

Draft Budget

3.1 The 2019/20 draft HfH budgets can be seen in the below table:

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Homes for Haringey


DIRECTORATE 2018/19 BUDGET 2019/20 DRAFT BUDGET VARIANCE

Central Budgets (38,318,682) (39,325,677) (1,006,995)

Corporate Affairs 2,665,241 2,560,978 (104,263)

Managing Director 365,979 378,130 12,151

Housing Demand 3,825,269 3,903,188 77,919

Property Services 19,749,883 20,775,890 1,026,007

Operations 11,712,310 11,847,130 134,820

TOTAL 0 139,639 139,639

3.1.1 There is a deficit of £139,639 in the draft budget. This is due to the additional

activities in the table below, where the expenditure has been included in the draft

budget but funding discussions with the Council are still ongoing:

DIRECTORATE DESCRIPTION £

Property

Services

Increase - Compliance Maintenance &

Safety Programmes - Fire, Health &

Safety - Lightning protection works

150,000

Property

Services

Increase - Compliance Maintenance &

Safety Programmes - Improvement

works - Ventilation maintenance

100,000

Property

Services

Increase - Warden Security System 30,000

Operations Increase - Fire safety roll out

programme - Clear Communal Areas

94,000

Operations Increase - Estate Services - Two

additional Mobile Services Operatives

for new sites (via infill programme)

51,680

Operations Increase - CCTV maintenance costs 50,000

Housing

Demand

Increase - Additional Housing Reviews

officer - Cllr Ibrahim's request

50,190

TOTAL 525,870

3.1.2 The above activities total £525,870; the actual budget deficit is lower due to the

additional savings that have been identified during the budget setting process. We

will revisit the budgets to find additional savings and efficiencies to fund this gap.

3.1.3 The Council have agreed to fund the following items, the income for which has been

included as additional management fee (within Central Budgets) and the expenditure

is included in the relevant directorate:

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Homes for Haringey


DIRECTORATE DESCRIPTION £

ALL Reduction - HfH Employers Pension

contribution reduction by 2.1%

(20.7% to 18.6%)

(447,940)

ALL Increase - HfH Annual Pay Award

Increase of 2%

646,838

ALL Increase - HfH Annual Spinal Point

Pay Increases

237,152

Property

Services

Increase - Fire Safety - Health &

Safety - Type 3/4 Fire Risk

Assessment programme

251,000

Property

Services

Increase - Fire Safety - HRS - Fire

Risk Assessment construction works

240,000

Property

Services

Increase - Staff & Community

Investment - HRS - Three

apprenticeship posts to support

corporate parenting pledge

50,000

Operations Increase - Estate Services - Annual

chute cleaning programme

19,770

TOTAL 996,820

3.1.4 The known new areas of activity proposed for next year have been included in the

tables above. We are still, however, pursuing additional growth and insourcing

activities and will update the Board in due course.

3.1.5 A breakdown of the draft budget – at a team level – can be found in Appendix 1.

The final budget will be presented to the Board for approval in March.

Savings

3.2 The total value of savings and additional income generated is £1.17m.

3.2.1 The significant savings and additional income items in the draft budget include:

Reduced insurance premiums (£153k)

Reduced legal costs (£132k)

Increased capitalised works generating income (£113k)

Reduced office expenditure (£95k)

Reduced computer software/maintenance costs (£83k)

Reduced Procurement consultancy services (£80k)

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Homes for Haringey


Growth

3.3 The savings identified in 3.2 have been used to fund internal growth pressures.

3.3.1 The significant growth items – excluding those stated in 3.1.1 and 3.1.3 – include:

Increased disrepair works (£110k)

New Apprentice Levy charge (£90k)

Increased lift contractor costs (£50k)

Increased resident election costs (£30k)

New Staff Conference costs (£25k)

Managed Budgets

3.4 The 2019/20 managed budgets (capital and revenue) have been compiled and

were presented for approval at the Council’s Cabinet meeting on 12 February 2019.

Medium Term Financial Strategy (MTFS)

3.5 The Council is considering whether to perform a review into the activities of HfH; this

will be discussed at their Cabinet meeting in March. The outcome of this review

could result in some or all of the activities of HfH being absorbed into the Council.

3.6 Due to the uncertainty of the review and current discussions around growth and

insourcing opportunities, we have not prepared a 5 year MTFS. We will review the

need to create an MTFS during the course of 2019/20.

3.7 The Council have created a 5 year Housing Revenue Account (HRA) business plan,

which includes the following assumptions for the HfH management fee:

Fee/Year 2019/20 2020/21 2021/22 2022/23 2023/24

HfH fee £42,361m £43,237m £45,061m £47,333m £49,124m

3.7.1 The above amounts do not include the General Fund element of our management

fee, which funds Housing Demand staff and day-to-day costs, however it does

include a £1.879m contribution that the HRA makes towards Housing Demand. This

currently sits outside of the HfH accounts but will be moved to the HfH management

fee from 2019/20 onwards.

4 Considerations

4.1 The initial assumptions built into draft management fee – for pay increases and

pension reductions – will be adjusted once the budget is finalised.

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Homes for Haringey


4.2 The Council has not finalised the Service Level Agreements for 2019/20, however,

the management fee will be adjusted in line with any changes.

4.3 The draft budget has been formulated on the basis that there are no significant

changes to our service delivery in 2019/20.

4.3.1 There is a risk that factors outside of our control, such as changes in the economic

and/or political environment, could place significant pressure on our ability to

contain our costs within these budgets.

4.4 There will be minor budget changes in the final budget presented to Board; these

will be stated in the final report.

5 Recommendation

5.1 The committee is recommended to:

a) Review and comment on the draft budget prior to presentation to the Board

for approval.

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Homes for Haringey


Appendix 1: A comparison of the 2018/19 budget and 2019/20 draft budget

DIRECTORATE / TEAM

2018/19

BUDGET (000s)

YEAR-END

PROJECTION (000s)

2019/20 DRAFT

BUDGET (000s)

Managing Director 366 380 378

Business Development 107 87 108

Managing Directors Office 259 293 271

Corporate Affairs 2,665 2,434 2,561

Business Improvement 481 428 471

Communications Team 267 285 281

Dir of Corp Affairs 136 131 133

Finance Team 259 259 261

Governance Team 286 230 283

Housing Information Team 690 627 640

People Management 286 270 324

Procurement 260 204 167

Central Budgets (38,319) (38,193) (39,326)

Overheads - (LBH Corporate SLAs) 3,968 3,970 3,970

Overheads - (HfH Accommodation + Central costs) 662 624 717

Contingency 5 159 0

GF Mgt fee inc - rev (4,169) (4,169) (4,204)

HRA Mgt Fee Inc -Rev (39,275) (39,275) (40,237)

Overheads - (HfH Insurance) 491 498 338

Operations 11,712 11,772 11,847

Director of Operations 147 233 148

Community & Customer Relations 1,033 935 1,054

Estates & Neighbourhood Services 3,743 3,821 4,055

Tenancy Services 3,994 4,068 4,119

Income Management 2,584 2,515 2,472

Voids Management 211 200 0

Property Services 19,750 19,124 20,775

Asset Management 19 (43) 187

Client Services & Annual Maint 5,474 5,175 5,913

Haringey Repairs Service 14,257 13,992 14,675

Housing Demand 3,825 3,527 3,904

Dir of Hsg Demand (469) (504) (471)

Hearthstone team 250 248 267

Housing Needs Team 1,798 1,599 1,822

Housing Supply Team 946 963 949

Occupancy Management Team 1,186 1,109 1,218

Service Development Team 115 112 118

TOTAL 0 (956) 139

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Homes for Haringey


Report for Audit & Risk Committee

Title Risk Strategy

Agenda item 8

Report for Decision





1. Introduction

1.1 This report presents the committee with an updated Risk Strategy for review and

recommendation to the Board for approval.

1.2 Seven key risk areas are proposed for the focus and attention of the Board.

2. Background

2.1 Homes for Haringey (HfH), like many organisations, operates in a

challenging environment which can impact our ability to achieve our goals

and in extreme cases, our ability to survive as an organisation. One of the

essential functions of the Board is to ensure that an effective risk

management and internal controls assurance framework is in place that

helps to safeguard assets and deliver outcomes for residents.

2.2 The UK Corporate Governance Code states that the Board is responsible

for “determining the nature and extent of the significant risks it is willing to

take in achieving its strategic objectives...and should maintain sound risk

management and internal control systems”.

2.3 The National Housing Federation (NHF) code of governance, to which HfH

has signed up to, states that the Board must establish a formal and

transparent arrangement for considering how the organisation ensures

financial viability, maintains a sound system of internal controls, manages

risk and maintains an appropriate relationship with external auditors.

2.4 The role and responsibility of Board members, therefore, involves:

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Homes for Haringey


a) Setting the direction – this is encapsulated in a risk management strategy or

policy which includes a risk appetite / tolerance statement and embodied by the

tone from the top. The executive has delegated authority for delivering on this

direction and all employees are responsible for behaving according to the risk

culture and policies set by the organisation.

b) Providing challenge on risks and the risk management process – the Board

should provide constructive challenge to the key risks the executive identify (and

the ones they don’t), the effectiveness of the mitigation plans for further action

and the contingency arrangements in case the risks materialise. This includes the

risks presented in the risk register (delegated to the Audit and Risk Committee)

and those presented (explicitly or not) in all significant proposals to the Board for

approval.

c) Gaining assurance – Board members should seek appropriate assurances that

risks are being controlled as effectively as possible. There are different sources of

assurance available and these are set out in the risk strategy.

d) Communicating to stakeholders – the Board’s governance responsibility includes

ensuring appropriate and timely information about the organisation’s financial

position and risk management is communicated to stakeholders such as the

council, residents and the wider community. The main channel for this is the

annual report and financial statements.

3. Risk Management Strategy

3.1 A revised risk management strategy, accompanying this report, is presented for

initial review by the committee prior to presentation to the Board for approval.

The main changes to the strategy are summarised below:

a) Identifying six risk areas for the focus of risk management – corporate

(organisation wide); health and safety; homelessness; housing management;

property and safeguarding.

b) Revisions to the scoring range and criteria for the quantification of

probability and impact, following review by the executive team and the Audit

and Risk Committee

c) The introduction of assurance mapping to determine appropriate sources of

assurance to be sought in the management of risk

d) The identification of seven key risk areas that the Board should focus on

specifically.

3.2 The executive have identified seven risk areas that the Board should focus on.

These are:

i) A failure in our obligations under health and safety to our residents,

employees and the properties we manage

ii) A failure to safeguard vulnerable adults and children

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iii) Poor financial management of HfH budgets and those budgets managed

by HfH on behalf of the Council

iv) Poor workforce performance management and engagement

v) A failure in continuity and ability to deliver services to an acceptable

standard

vi) Acts or omissions by HfH that have a detrimental impact on its reputation

vii) Changes in the social, political, economic and technological

environment making it harder for HfH to fulfil its purpose.

3.3 There are specific risks identified in the risk register that underpin these risk

areas and the full risk register will continue to be the focus of the Audit and Risk

Committee.

3.4 Future reports to the Board will set out the issues in each of these areas and how

risks are being managed and controlled, for Board review and consideration of

any further action or assurances to be sought.

4. Recommendation

4.1 The Audit & Risk Committee is recommended to:

a) review the revised Risk Management Strategy and recommend it to the

Board for approval

b) agree the key risk areas that should be the focus of the Board.

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Risk Management Strategy

January 2019

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Policy Statement

1. At Homes for Haringey (HfH) we recognise that every aspect of our work

involves some risk – decision taking, service delivery, managing public

money, and making the most of opportunities to improve housing and

related services. We need to manage these risks well and not expose

people, public money or the homes we manage to unnecessary and

unacceptable levels of risk.

Definition

2. Risk is the threat that an event or action will adversely affect an

organisation’s reputation and / or ability to achieve its objectives and to

successfully execute its strategies.

3. Risk management is the systematic application of principles, approach

and processes to the identification, assessment and management of

risks.” By managing our risk process effectively we will be in a better

position to safeguard against potential threats and exploit potential

opportunities to improve services and provide better value for money.

4. Our risk management objectives are to:

a) embed good risk management into the culture of the organisation

and by doing so improve decision making, performance and the

effectiveness of delivering our objectives;

b) minimise the likelihood of harm to our service users and

employees, loss, and misuse or damage to our assets and

resources;

c) apply an appropriate methodology for the identification,

quantification and management of risks across the organisation;

d) set out a framework of controls assurance for our stakeholders;

and

e) ensure management and the Board receive regular reports and

have an informed view of the most critical threats to our business

and the degree to which those threats are being controlled

effectively.

5. To achieve these objectives we will:

a) maintain a robust and consistent risk management approach that

will:

- identify and effectively manage different types of risk –

strategic, operational and project;

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- focus on those key risks that, because of their likelihood and

impact, make them priorities;

b) ensure accountabilities, roles and responsibilities for managing risks

are clearly defined and communicated;

c) consider risk as an integral part of business planning, service

delivery, key decision making processes, and project and

partnership governance;

d) communicate risk information effectively through a clear reporting

framework; and

e) increase understanding and expertise in risk management through

targeted training and the sharing of good practice.

Homes for Haringey’s Risk Appetite

6. Risk appetite refers to HfH’s attitude towards risk taking. Risk

management should not only focus upon risk avoidance, but should also

focus on identification and management of an acceptable level of risk.

HfH’s aim is to proactively identify, understand and manage the risks

inherent in services and associated plans, policies and strategies, so as

to support responsible, informed risk taking and, as a consequence, aim

to improve value for money.

7. We acknowledge that the nature of the environment we work in, the

people we exist to serve, the condition of the assets we manage and

the public money used to fund our services presents numerous risks and

challenges. Notwithstanding this, we will generally adopt a risk averse

attitude and not take risks unless they are properly considered and

evaluated.

8. Our risk appetite helps to inform our decision-making. As a general

principle, HfH will seek to eliminate or control all those risks which:

a) have a high potential for adverse incidents to occur;

b) would have a substantial adverse financial impact;

c) would cause loss of public confidence in HfH, and consequently

the Council, and/or its partner organisations;

d) may prevent HfH from meeting its obligations under the

Management Agreement with the Council; or

e) may stop HfH from assisting the Council to carry out its statutory

functions.

9. The Risk Management Strategy will be reviewed at least every three

years, or sooner if required, taking into account any changes in the

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operating environment that necessitate a change in approach to the

way we identify, evaluate and manage risks.

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Risk Management Strategy

Introduction

10. HfH has a Risk Management Framework (RMF) that helps it to achieve its

risk management objectives. The purpose of the RMF is to ensure that risks

arising from HfH’s business are properly identified, evaluated, managed

and monitored in line with our risk appetite. This helps to assist the

achievement of our strategic goals and protect our assets.

11. The RMF comprises:

a) This policy and strategy document

b) Governance structures for risk reporting and monitoring

c) Risk procedures and processes for maintaining a risk register

d) Internal controls assurance processes

e) Individual and collective roles and responsibilities for risk

management.

Risk Register

12. HfH records and manages risks via a risk register that sets out risks across

different areas of the business that HfH considers would prevent

achievement of its purpose and objectives. These are:

a) Corporate (organisation wide) risks

b) Health and safety related risk

c) Homelessness related risks

d) Housing management related risks

e) Property related risks

f) Safeguarding risks

Key Risk Themes

13. From an assessment of all the risks identified by HfH in its risk register, we

believe there are seven high level key strategic risk areas that should be

the focus of the Board. These are:

i) A failure in our obligations under health and safety to our

residents, employees and the properties we manage

ii) A failure to safeguard vulnerable adults and children

iii) Poor financial management of HfH budgets and those budgets

managed by HfH on behalf of the Council

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iv) Poor workforce performance, management and engagement

v) A failure in continuity and ability to deliver services to an

acceptable standard

vi) Acts or omissions by HfH that have a detrimental impact its

reputation

vii) Changes in the social, political, economic and technological

environment making it harder for HfH to fulfil its purpose

14. Board discussion and decision making will take into account these risk

areas and the Board will regularly review the effectiveness with which risks

in these areas are being managed, seeking appropriate assurances as

required.

15. The full risk register will be reviewed by the Audit and Risk Committee on a

quarterly basis.

Risk Management Approach

16. Our approach to risk management is one where:

a) the Board, management and staff are clear about what risk

management is intended to achieve;

b) significant risks are being identified and managed effectively;

c) tailored training and guidance on risk management is easily

accessible and provided when needed by the Board, Audit and

Risk Committee and staff;

d) a consistent approach is followed across the organisation using a

common ‘risk language’; and

e) it is seen as an integral part of good corporate governance.

17. Our hierarchy of risks is set out in the diagram below.

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Constituents of good risk management

18. Our approach to risk management is an integral part of good

governance at HfH. As part of this process we will maintain a shared

awareness and understanding of:

a) the nature and extent of the risks we face;

b) the extent and categories of risks regarded as acceptable;

c) the likelihood and potential impacts of the risks materialising; and

d) our ability to reduce the incidence and impact on HfH of risks that

do materialise.

19. We will ensure that:

a) there is regular and ongoing monitoring and reporting of risk

including early warning mechanisms;

b) an appropriate assessment is made of the cost of operating

particular controls relative to the benefit obtained in managing the

related risk;

c) we conduct, at least annually, a review of the effectiveness of the

system of internal control in place; and

d) we report publicly on the results of the review, and explain the

action we take to address any significant concerns that we have

identified.

Strategic high level risk areas

Functional risks

Project risks and working risk assessments e.g. premises, fire,

safeguarding etc

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This process will be ongoing, embedded in the culture of HfH and ideally

have the potential to re-orient HfH around performance improvement. It is

not about eliminating risk but about understanding risk and managing it

more effectively.

Risk Management Process

20. Our risk management process follows four stages – identification,

quantification, management and assurance.

Identification

21. HfH’s objectives, against which risks will be identified, will be detailed in

existing documents including:

a) The Management Agreement

b) HfH’s constitution – it’s Articles

c) The Business Plan and Annual Plan

d) HfH Strategies

e) Delivery Plan projects

22. In order to stay focussed on the most important risks that have the

potential to adversely impact achievement of objectives, the risk register

will be limited to between 30 to 40 risks at most. This should help to keep

risk management manageable and effective.

Quantification

23. The risk management process requires that each risk is assessed twice

based on inherent (gross) risk and then residual (net) risk taking into

account the effectiveness of any controls in place to manage a risk.

24. Quantification is the product of probability and impact and is based on

the following criteria and categories for probability and impact.

Probability Criteria

Score Category Description

1 Almost certain

not to happen

It would be surprising if this happened. There

would have to be a combination of unlikely

events for it to happen. 0% - 10% chance of

occurrence or once every 25 years.

2 Unlikely Not anticipated. We won't worry about it

happening. 11% to 39% chance of occurrence

or once every 15 years.

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3 Possible Just as likely to happen as not. We don't

expect it to happen, but there is a chance.

40% to 60% chance of occurence or once

every 5 years.

4 Likely It will happen this financial year if control

measures are not adequate and regularly

monitored. 61% to 79% chance of occurrence

or once every 3 years.

5 Almost certain It will happen this financial year or during the

term of the current business plan. 80% to 100%

chance of occurrence or once a year or more

frequently.

Impact Criteria

Score Category Description

1 Insignificant Can be dealt with locally internally. No

escalation required. No media attention and

no, or manageable, stakeholder or client

interest.

2 Minor Can be dealt with at directorate level.

Stakeholder or client would take note.

3 Moderate Recovery from the event requires cooperation

across directorates. It may generate Council

and / or media attention.

4 Major An event that requires a major realignment of

how the service is delivered. Significant event

that has a long recovery period. Large scale

financial mismanagement.

5 Catastrophic A major disaster from which there is little or no

recovery. Significant damage to business

credibility or integrity. Complete loss of ability

to deliver a critical programme. Loss of life on a

large scale.

Management

25. The effective management of risks takes place through having or

developing strong controls that greatly reduce the probability and / or

impact of a risk occurring. The strength of a set of controls, in this way, is

determined by the extent of the difference between the level of inherent

and residual risk.

26. Controls may be:

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a) “business as usual” in which case they will be monitored via the

usual performance management framework and Board scorecard

measures;

b) part of the business plan and governance framework in which case

they will be monitored via internal audit, resident scrutiny, Board /

Audit and Risk Committee / Cabinet reporting or other means of

self-assessment; or

c) monitored through the business plan delivery plan programmes

managed by the Corporate Leadership Team and reported to the

Executive Team and the Board.

27. The Board may instruct officers to implement specific action plans or

improvement projects to mitigate the impact of critical and temporary

risks e.g. around Welfare Reforms or unforeseen and temporary financial

challenges. The monitoring of these projects will be established on a case

by case basis according to the level of risk and the timeframes involved.

Assurance

28. The leadership of HfH has an important duty to ensure risks are being

managed effectively and to seek appropriate assurances on this. HfH will

follow the “three lines of defence” approach to internal controls

assurance. For each risk we will identify the most appropriate sources of

assurance required to demonstrate that the risk is being managed as

effectively as possible.

29. Examples of the types of sources of assurance for each ‘line of defence’

are set out below.

30. 1st line – operational management. Day to day management of risks and

application of controls.

a) Policies and procedures

b) Job roles and responsibilities

c) Training and development

d) Customer feedback

e) Business systems

31. 2nd line – corporate oversight. Systems and processes to enable risk and

compliance to be managed in 1st line. Regular monitoring conducted to

judge effectiveness.

a) Risk management framework

b) Compliance functions

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c) Performance management and KPIs

d) Data quality assurance

e) Budgetary control and financial management

f) Business improvement programme management

g) Business plan and associated delivery plan

h) Supporting strategies

i) Governance structures and processes

j) Management self-assessment

32. 3rd line – external assurance. Independent challenge.

a) Internal audit

b) External audit

c) Resident scrutiny

d) External accreditations

e) External other, e.g. consultancy, legal

Roles and Responsibilities

33. In order to ensure risk management is effective in HfH, all Board members

and officers should have a good level of understanding of this strategy

and regard risk management as an integral part of their responsibilities.

34. The Board

Approves the risk management framework, sets the direction, provides

constructive challenge, seeks assurance and communicates to

stakeholders.

35. The Audit and Risk Committee

Provides assurance to the Board on the effectiveness of the system of

internal controls. It agrees the programme of internal audits and any other

investigations and seeks assurance on the effectiveness of controls from

the most appropriate sources. It reviews the risk register at each meeting

through a process of active engagement. It challenges the cost of

mitigation against the potential impact; acts as a ‘critical friend’ to the

executive; helps establish a positive tone and culture of risk management.

36. The Executive

Embed risk management throughout the organisation and implement

Board approved policy / strategy. They set a positive tone and culture

from the top and ensure information provided to the Board / Committee

has sufficient detail to enable debate and informed decision-making.

They ensure key strategic, project and business risks are owned, correctly

evaluated and appropriately controlled; contingency plans are in place

and periodically tested. They provide annual assurance to the Audit and

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Risk Committee on the effectiveness of internal controls within their

directorates.

37. Managers and Employees

Behave and adhere to the policies and culture set by the organisation.

They identify, assess, manage and report risks and have opportunities to

report up the hierarchy new / emerging risks. They participate in risk

workshops and attend training and awareness sessions as required.

Embedding Risk Management

38. For risk management to be effective and a meaningful management

tool, it needs to be an integral part of key management processes and

day-to-day working. As such, risks and the monitoring of associated

actions should be considered as part of a number of HfH’s significant

business processes. HfH is committed to the effective delivery of its

business objectives and social purpose. Developing a culture across the

organisation where risk management is part of every ones thoughts in

carrying out their daily work is the best way to ensure delivery. An

important aim for HfH is, therefore, to embed risk management into the

organisation’s psyche so that it becomes part of how we do things every

day.

39. In order to achieve this:

a) Risk needs to be addressed at the point at which decisions are

being taken and resources allocated. When the Board is asked to

make key decisions they should be advised of the risks associated

with the recommendations under consideration

b) Risk assessment should be used in any options appraisal, and whilst

it may not guarantee success it will provide vital evidence,

assurance, and transparency.

c) Risk management will be incorporated into the strategic planning

process through the maintenance of a Risk Register that helps to

inform key risk areas for Board attention.

d) Risk shall be considered within the cycles of financial planning and

resource allocation and feature in both budget submissions and

budget monitoring arrangements

e) Risk management techniques will also be embedded into major

projects or new business opportunities and include clear monitoring

and reporting mechanisms.

f) All new key procurement arrangements shall have an assessment of

risk at the development stage to ensure all reasonable measures

are put in place.

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g) Risk management techniques will be used to inform and or support

any value for money decisions made in relation to the delivery of

the Value for Money Strategy.

h) the annual internal audit plan will reflect emerging and current

significant areas of high risk, and information taken from the risk

register will inform individual audit reviews.

Culture

40. HfH will be open in its approach to managing risks and will seek to avoid a

blame culture. Lessons from events that lead to loss or reputational

damage will be shared as well as lessons from things that go well.

Discussion on risk in any context will be conducted in an open and honest

manner.

Training and Awareness

41. Having developed a robust approach and established clear roles and

responsibilities and reporting lines, it is important to provide Board

members and officers with the knowledge and skills necessary to enable

them to manage risk effectively.

42. A range of training methods are used to meet the needs of the

organisation and include:

a) corporate risk management training, as required;

b) e-learning;

c) linked training with other management processes e.g. procurement;

d) ad hoc training for new managers or project managers who are

expected to take responsibility for risk management;

e) training sessions for specific teams at management request; and

f) sector risk profiles and other relevant intelligence and information.

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Homes for Haringey



Title Risk Register

Agenda item 9






1. Introduction

1.1 This report presents a revised risk register for quarter 4, January – March 2019,

for committee review and comment.

2. Risk Documents

2.1 Appendix 1 – Key risk areas of high level focus as set out in the draft Risk

Strategy.

2.2 Appendix 2 – Combined summary of all risks in descending order of net

severity.

2.3 Appendix 3 – Graphical illustration of where risks sit on a chart plotting impact

and likelihood and grading them from high to low.

2.4 Appendix 4 – The full risk register for the six risk areas identified in the draft risk

strategy:

i) Corporate (organisation wide)

ii) Homelessness

iii) Housing management

iv) Property and maintenance

v) Health and safety

vi) Safeguarding

3. Quarter 4 (January - March) Risk Review

3.1 The risk register identifies 33 risks in total. These have been reviewed by the

executive following initial discussions with the committee at its last meeting.

There has been some rationalisation (previously 36), regrouping and the

application of revised scoring criteria to try and more accurately reflect the

severity from impact.

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3.2 The main change is the introduction of key strategic risk themes. These are

intended to highlight broad areas for high level discussion and for which the

Board should have an awareness of potential and emerging risks that could

impact HfH given its current internal and external operating environment.

4. Committee Review

4.1 The Committee is recommended to review the risk register and:

a) Identify if it feels there are other risks that should be included on the register

b) Identify if it feels additional controls should be put in place for any particular

risk(s)

c) Identify if it feels any particular sources of assurance should be sought for

confirmation that a risk is being managed effectively

d) Broadly consider the positioning of risks (net severity) in relation to each

other.

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Key for Risk Register

Score Probability Description Likelihood

1 Almost certain not to

happen

It would be surprising if this happened. There would have to be a combination of unlikely events for it to happen.

Chance of occurrence is once every 25 years.

0% - 10%

2 Unlikely Not anticipated. We won't worry about it happening. Chance of occurrence is once every 15 years. 11% - 39%

3 Possible Just as likely to happen as not. We don't expect it to happen, but there is a chance. Chance of occurrence is once evry

5 years.

40% - 60%

4 Likely It will happen this financial year if control measures are not adequate and regularly monitored. Chance of occurrence

is once every 3 years.

61% - 79%

5 Almost certain It will happen this financial year or during the term of the current business plan. Chance of occurrence is once a year

or more frequently.

80% - 100%

Score Impact

1 Insignificant

2 Minor

3 Moderate

4 Major

5 Catestrophic

Control Ratings

n A strong control and effective at managing the risk in question

n An adequate control but could be strengthened

n The control requires strengthening. It cannot be relied on solely to effectively manage the risk in question

n A weak control, ineffective and cannot be relied on to effectively manage the risk in question

No movement in risk severity Gross: Initial assessment before taking into account any controls

Increase in risk severity Net: Assessment after taking into account controls in place

Reduction in risk severity

An event that requires a major realignment of how the service is delivered. Significant event that has a long recovery period. Large

scale financial mismanagement.

A major disaster from which there is little or no recovery. Significant damage to business credibility or integrity. Complete loss of

ability to deliver a critical programme. Loss of life on a large scale.

Risk Likelihood

Risk ImpactDescription

Can be dealt with locally internally. No escalation required. No media attention and no, or manageable, stakeholder or client

interest.

Can be dealt with at directorate level. Stakeholder or client would take note.

Recovery from the event requires cooperation across directorates. It may generate Council and / or media attention.

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Appendix 1 - Homes for Haringey Risk Register Q4 2018/19 - Key Strategic Risk Themes

Ref Description Associated Risks Overall Severity Control Rating Sources of Assurance

K1 A failure in our obligations under health and safety to

our residents, employees and the properties we

manage.

HS1, HS2, HS3 Low - Medium Adequate but

could be

improved

Internal audit, risk assessments,

KPIs, external verification

K2 A failure to safeguard vulnerable adults and children. SG1 Low Adequate but

could be

improved

Internal audit, management

assurance, independent SAR

K3 Poor financial management of company budgets and

those managed on behalf of the Council.

CO2, CO3, CO8, PM1, PM3, PM5 Low - Medium Adequate but

could be

improved

Internal audit, management

assurance

K4 Poor workforce performance, management and

engagement

CO2, CO4, CO5, CO6, CO8, CO9, PM5, HS1, SG1 Medium Requires

strengthening

Internal audit, staff survey,

employee forum, KPIs

K5 A failure in continuity and ability to deliver services to an

acceptable standard.

HD2, HD3, HD8, HM1, HM3, PM2, PM4, PM6 Medium Requires

strengthening

Performance management

framework, resident scrutiny,

management assurance

K6 Acts or omissions by HfH that impact its reputation CO1, CO3, CO5, CO9, CO10, HD7, HM1, HM3,

PM3, PM5, HS1, HS2, HS3, SG1

Medium Adequate but

could be

improved

Resident scrutiny, internal

audit, KPIs

K7 Changes in the social, political, economic and

technological environment making it harder for HfH to

fulfil its purpose.

CO10, CO11 Medium - High Requires

strengthening

LBH, management assurance

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Appendix 2 - Homes for Haringey Risk Register Q4 2018/19 - All Risks Descending Order of Net Severity

Ref Description Risk Lead Gross

Prob.

Gross

Impact

Gross

Severity

Control

Rating

Net Prob. Net

Impact

Net

Severity

Move-

ment

CO11 Changes in the social, political, economic and

technological environment making it harder for HfH to

fulfil its purpose.

Managing

Director

5 4 20 4 4 16

CO1 Low levels of satisfaction across different tenures

resulting in a failure to achieve a key Council objective

and Management Agreement requirement.

Managing

Director

5 3 15 4 3 12

CO3 Adverse impact of Universal Credit resulting in

increased rent arrears, poor tenancy sustainment and

liklihood of increasing homelessness

Executive

Director of

Operations

5 3 15 4 3 12

CO4 Poor people management skills resulting in average

performance, low productivity, unnecessary costs and

poor talent development.

Head of HR 5 3 15 4 3 12

CO6 Poor ability to recruit to, or retain, staff in key

positions due to uncompetitive salary levels or current

recruitment processes impacting on the ability to

function and deliver services.

Head of HR 5 3 15 4 3 12

HM1 Weak income management resulting in substantially

unrecoverable debt in both rent and service charge.

Head of Income

Management

5 4 20 4 3 12

CO10 A Council review of the ALMO leading to a decision to

bring the service in house resulting in interim

uncertainty for the ALMO and potential adverse

impact on services to residents.

Managing

Director

4 4 16 3 3 9

HD2 Insufficent funds to maintain frontline resources once

New Burdens funding is depleted

Head of Housing

Needs

3 4 12 3 3 9

HD1 Excessive reliance on Temporary Accommodation

resulting in substantial financial pressure on LBH and

harm to HfH reputation

Executive

Director of

Housing Demand

4 4 16 3 3 9

HD3 Loss of the use of Council stock as TA which has been

utilised within regeneration areas and handback of

shortlife lodges resulting in reliance in more expensive

TA types.

Head of Housing

Supply

3 4 12 3 3 9

HD4 Inability to source accommodation within pan London

rates which may result in the use of more expensive

TA and shared B&B accommodation

Head of Housing

Supply

3 4 12 3 3 9

CO7 Poor performing services under SLA from the Council

impacting HfH's ability to function effectively and

demonstrate value for money

Managing

Director

4 3 12 3 3 9

CO9 Serious breach of data protection resulting in sanction

from the ICO and possible reputational damage.

Director of

Corporate Affairs

4 4 16 3 3 9

HD5 Low levels of confidence in DPS ( ADAM) payments

result in landlords/agents no longer supplying HfH

with new TA

Head of Housing

Supply

3 4 12 3 3 9

HM3 Untidy / poorly maintained estates impacting

lettability and creating a negative perception of

council housing.

Head of Estate

Services

5 4 20 3 3 9

PM3 Delays / lengthy timescale / lack of clarity for

determining capital works programmes (1-30 year)

impacting ability to mobilise resources and deliver,

resulting in poorer standard assets.

Head of Asset

Management

4 3 12 3 3 9

HM2 Customer fraud (e.g. Illegal subletting) leading to loss

of revenue / assets and reputational damage.

Head of Tenancy

Services

5 3 15 4 2 8

PM2 Insufficient budget provision to meet property

compliance related responsibilities.

Deputy Managing

Director

4 4 16 2 4 8

HD6 Interuption of AST supply during implementation of

Capital Letters and risk of competition resulting in not

meeting core AST target

Head of Housing

Supply

3 4 12 2 3 6

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Prob.

Gross

Impact

Gross

Severity

Control

Rating

Net Prob. Net

Impact

Net

Severity

Move-

ment

HD8 Lower levels of Council Lets resulting in households

staying in TA longer and inability to meet quota

obligations, including as a direct consequence of

Council priorities (eg BWF)

Head of

Occupancy

Management

4 3 12 3 2 6

CO2 Failure to manage budgets effectively impacting the

ability for timely planning for the use of a projected

underspend or mitigation of a projected overspend.

Financial

Controller

5 3 15 3 2 6

CO5 Failure of staff to follow policies, procedures and

business terms and conditions resulting in serious

injury, reputational damage, external challenge or

financial irregularity.

Director of

Corporate Affairs

4 3 12 3 2 6

CO8 Poor procurement practices resulting in more costly

engagement of supply chain, possible breach of

regulations, external challenge and potential fines.

Head of

Procurement

4 3 12 3 2 6

HD7 Failure to demonstrate compliance with HRAct in

2018/19 Audit

Head of Housing

Needs

2 3 6 2 3 6

PM1 Claims against HfH from contractors resulting in

financial loss / contract overspend.

Deputy Managing

Director

4 3 12 3 2 6

PM4 Contractor insolvency impacting ability to repair and

maintain homes and possible financial loss.

Head of HRS 3 3 9 3 2 6

PM5 Poor sub-contractor management resulting in a

fraudulent activity, loss of assets and reputational

damage.

Head of HRS 4 3 12 2 3 6

HS2 Serious injury or death of a resident / member of

public as a result of breach of duty by HfH to fulfil its

obligations

Executive

Director of

Operations

3 3 9 2 3 6

SG1 Failure to manage our safeguarding responsibilities

leading to service failure and reputational damage

Executive

Director of

Operations

4 3 12 2 2 4

PM7 Progressive collapse of the tower blocks at

Broadwater Farm in the unlikely event of a gas

explosion

Director of BWF 2 5 10 1 4 4

PM6 Interim arrangements adversely impacting housing

management and planned maintenance needs of the

stock to be transferred to the Haringey Development

Vehicle

Managing

Director

4 3 12 1 3 3

HS1 Serious injury or death of an employee as a result of

breach of duty by HfH as an employer

Head of Health,

Safety &

Compliance

2 3 6 1 3 3

HS3 Serious injury or death as a result of breach of

obligations by HfH to manage properties

Head of Health,

Safety &

Compliance

2 4 8 1 3 3

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Appendix 3 - Homes for Haringey Risk Map Q4 2018/19

5 Catestrophic High

4 Major PM7 PM2 CO11 Medium - High

3 Moderate PM6, HS1, HS3 HD7, PM5, HS2, HD6

CO7, CO9, HD5, HM3,

PM3, HD1, HD3, HD4,

HD2, CO10

CO1, CO3, CO4, CO6,

HM1Medium

2 Minor SG1CO2, CO5, CO8, PM1,

PM4, HD8HM2 Low - Medium

1 Insignificant Low

1 Almost certain not to

happen 0-10%

2 Unlikely 10-40% 3 Possible 40-60% 4 Likely 60-80% 5 Almost certain 80-

100%

Imp

act

Likelihood

143

Appendix 4 - Homes for Haringey Risk Register Q4 2018/19 - Corporate (Organisation Wide) Risks


Prob.

Gross

Impact

Gross

Severity

Description of Controls Control

Rating

Net Prob. Net

Impact

Net

Severity

Move-

ment

Comments/ Actions to Improve

Controls

CO1 Low levels of satisfaction across different tenures

resulting in a failure to achieve a key Council objective

and Management Agreement requirement.

Managing

Director

5 3 15 Dedicated task and finish group 4 3 12

Resident Scrutiny Panel

Learning from customer and councillor

feedback

Regular satisfaction surveys

External assessment (HQN) and

improvement programme in place

Customer care training for all staff Relevant programme to be

sourced and introduced across

HfHCO2 Failure to manage budgets effectively impacting the

ability for timely planning for the use of a projected

underspend or mitigation of a projected overspend.

Financial

Controller

5 3 15 Board and ELT monitoring and

oversight.

3 2 6

Budget holders ability to manage and

project budgets effectively.

LBH financial service under SLA.

CO3 Adverse impact of Universal Credit resulting in

increased rent arrears, poor tenancy sustainment and

liklihood of increasing homelessness

Executive

Director of

Operations

5 3 15 Outreach at JCP offices and proactive

support service to help people out of

benefit dependancy.

4 3 12

UC preparedness - LL and tenant packs

for ASTs and amended conversations.

UC preparedness - amended pre

tenancy training and learning from

impact studies

Multi agency appraoch, cross HfH UC

group and Evictions Panel in place.

use of IT systems and staff resources

to idenitfy any trends

CO4 Poor people management skills resulting in average

performance, low productivity, unnecessary costs and

poor talent development.

Head of HR 5 3 15 Management training and

development

4 3 12 Management development

programmes to be implemented

for identified managers

Competency and performance

management frameworks

More rigorous and robust

frameworks to be implemented

HR Strategy

Accreditation Value of IIP Gold accreditation to

be reviewed

144


Prob.

Gross

Impact

Gross

Severity


Rating

Net Prob. Net

Impact

Net

Severity

Move-

ment


Controls

CO5 Failure of staff to follow policies, procedures and

business terms and conditions resulting in serious

injury, reputational damage, external challenge or

financial irregularity.

Director of

Corporate Affairs

4 3 12 Up to date and robust policies and

procedures

3 2 6 Programme of policy and

procedure reviews in place and

being monitored

Competent persons available to advise

and guide HfH

Quality management systems Accreditations in high risk areas

being sought to minimise impact

from risk occuring

CO6 Poor ability to recruit to, or retain, staff in key

positions due to uncompetitive salary levels or

current recruitment processes impacting on the

ability to function and deliver services.

Head of HR 5 3 15 Market review of key positions 4 3 12 Benchmarking review of key

positions to be carried out in Q4

2018/19

Competitve benefits and wider terms

and conditions of employment

Efficient and effective recruitment and

advisory service

Insourcing to be explored and

new procurement framework for

suppliers of agency workers

HfH culture and appeal as an employer

of choice

CO7 Poor performing services under SLA from the Council

impacting HfH's ability to function effectively and

demonstrate value for money

Managing

Director

4 3 12 Service Level Agreements in place 3 3 9 SLAs to be updated and signed

off for 2019/20

Management Agreement with

provisions to address SLA performance

concerns

Influence with Council to shape and

change services and charges

CO8 Poor procurement practices resulting in more costly

engagement of supply chain, possible breach of

regulations, external challenge and potential fines.

Head of

Procurement

4 3 12 Contract Regulations 3 2 6

Corporate Procurement support

Culture of competitive selection and

VfM

ELT and CLT oversight of procurement

compliance

Forward plan and delivery of all

large contracts and non

compliant spend to be monitored

regularly by senior management

CO9 Serious breach of data protection resulting in sanction

from the ICO and possible reputational damage.

Director of

Corporate Affairs

4 4 16 Mandatory data protection awareness

training for all staff

3 3 9

Data protection policy, procedures and

tools.

145


Prob.

Gross

Impact

Gross

Severity


Rating

Net Prob. Net

Impact

Net

Severity

Move-

ment


Controls

IT systems and controls Use of bespoke systems,

checking processes and use of

SharePoint to be improved

CO10 A Council review of the ALMO leading to a decision to

bring the service in house resulting in interim

uncertainty for the ALMO and potential adverse

impact on services to residents.

Managing

Director

4 4 16 HfH Board Chair and MD relations with

Council senior leadership

3 3 9

Council nominees on HfH Board

Strong tenant support for HfH

CO11 Changes in the social, political, economic and

technological environment making it harder for HfH

to fulfil its purpose.

Managing

Director

5 4 20 NFA lobbying to influence government

policy

4 4 16

HfH trusted partner by Haringey

Council

Councillor stakeholder management

HfH reserves to counter funding

pressures

Skilled IT team at HfH

SLA / Contractual arrangements with

LBH

146

Appendix 4 - Homes for Haringey Risk Register Q4 2018/19 - Homelessness Related Risks


Prob.

Gross

Impact

Gross

Severity


Rating

Net Prob. Net

Impact

Net

Severity

Move-

ment


Controls

HD1 Excessive reliance on Temporary Accommodation

resulting in substantial financial pressure on LBH and

harm to HfH reputation

Executive

Director of

Housing Demand

4 4 16 Temporary accommodation reduction

action plan and working group

3 3 9 Plan progress is monitored and

will be reviewed.

FHSG projects Close monitoring of progress and

adjustments made accordingly -

wider consultation of possible

FSHG schemes which could

positively impact

Setting aside of FHSG to cover

overspend.

Confirmation with the Council on

the status of the £2M FHSG that

has been set aside.

HD2 Insufficent funds to maintain frontline resources once

New Burdens funding is depleted

Head of Housing

Needs

3 4 12 monitoring of demand by quarter to

demonstrate need

3 3 9 Further controls (evidence based

business case)to be developed

Flagged as future call on FHSG funding

at P5.

LBH is sympathetic to additional

funding. Paper to P5 in Jan '19

HD3 Loss of the use of Council stock as TA which has been

utilised within regeneration areas and handback of

shortlife lodges resulting in reliance in more expensive

TA types.

Head of Housing

Supply

3 4 12 Work with the council to ensure that

opportunities are created within the

CBS

3 3 9 Need to establish the correct

channels to ensure we can realise

the full benefits possible

Prioritisation of TA residents for the

available new build.

On-going discussion with Regen

Team

HD4 Inability to source accommodation within pan London

rates which may result in the use of more expensive

TA and shared B&B accommodation

Head of Housing

Supply

3 4 12 Work with the Council to deliver

schemes that are within the Council's

control (CHS, PR&M, Real Lettings,

modular housing) for use as TA as part

of a wider TA strategy

3 3 9 market factors and politcal

appetite will determine

eeffectiveness

Membership of Capital Letters and

access to £39m funding. LBH

agreement to be a founding member

of this scheme commencing June '19

Continue to develop TA supplier

relationships and secure pan London

properties availble in planning for

demand and management of TA

portfolio

HD5 Low levels of confidence in DPS ( ADAM) payments

result in landlords/agents no longer supplying HfH

with new TA

Head of Housing

Supply

3 4 12 Audit and clean up excecise 3 3 9 ongoing

Payment adjustments only

implemented after notfication

147


Prob.

Gross

Impact

Gross

Severity


Rating

Net Prob. Net

Impact

Net

Severity

Move-

ment


Controls

Ongoing monitoring and scrunity of

processess and transactions

Ensuring that practices are

embedded and partners have

acted on notifications to

minimise need for future

recalculations - may need further

controls based on monitoring

outcome

Working alongisde WREN boroughs to

influence system developments.

HD6 Interuption of AST supply during implementation of

Capital Letters and risk of competition resulting in not

meeting core AST target

Head of Housing

Supply

3 4 12 Robust nominations agreement 2 3 6 once arrangeemnts are clearer

can implement the controls

Alignment of landlord approach/ offer

Promotion of find your own (BF/LR)

Consider widening the agreed

catchment areas if political

HD7 Failure to demonstrate compliance with HRAct in

2018/19 Audit

Head of Housing

Needs

2 3 6 Clear scoping of Audit 2 3 6 no adjustment to risk as although

robust measures in place no

baseline available

Production of suite of procedures

Training records maintained

Case file audits completed by

managers

HD8 Lower levels of Council Lets resulting in households

staying in TA longer and inability to meet quota

obligations, including as a direct consequence of

Council priorities (eg BWF)

Head of

Occupancy

Management

4 3 12 facilitation of autobidding and direct

offers

3 2 6

work with council to secure

nominations to the CBS stock

work with council to renegotiate noms

agreement

dependent on council timescales

operational mitigation to ensure

sufficient properties from those

available are utilised to meet quota

obligations

148

Appendix 4 - Homes for Haringey Risk Register Q4 2018/19 - Housing Management Related Risks


Prob.

Gross

Impact

Gross

Severity


Rating

Net Prob. Net

Impact

Net

Severity

Move-

ment


Controls

HM1 Weak income management resulting in substantially

unrecoverable debt in both rent and service charge.

Head of Income

Management

5 4 20 Change in leadership and culture in

the income management team

4 3 12

New working practices with a greater

performance focus

Board and ELT performance focus

Debt recovery and management

options for FTA

Commissioning a debt recovery

agency & offering impartial debt

advice

IT tools and systems that aid proactive

income management

HM2 Customer fraud (e.g. Illegal subletting) leading to loss

of revenue / assets and reputational damage.

Head of Tenancy

Services

5 3 15 Systems and processes to perform

checks including mobile working

devices

4 2 8 Increase resources to visit more

properties per year.

Legal SLA

Close working with Fraud Team and

other parties as appropriate

HM3 Untidy / poorly maintained estates impacting

lettability and creating a negative perception of

council housing.

Head of Estate

Services

5 4 20 Estate inspection processes including

HouseMark pilots, impromptu site

visits by heads of service and directors.

3 3 9

New service contract with Veolia

Use of mobile technology to share and

act on information and

implementation of email with

caretaker for improved

communication with site based staff.

Robust measures of performance

149

Appendix 4 - Homes for Haringey Risk Register Q4 2018/19 - Property and Maintenance Related Risks


Prob.

Gross

Impact

Gross

Severity


Rating

Net Prob. Net

Impact

Net

Severity

Move-

ment


Controls

PM1 Claims against HfH from contractors resulting in

financial loss / contract overspend.

Deputy Managing

Director

4 3 12 Robust contract management

practices

3 2 6 Improving contract management

across the organisation through

training, development and

reviewing mentoring

opportunities.Involving contract

managers in procurement

activity

Good contract management capability,

systems and processes

Contract contingencies

Good clienting profiling

Post Contract negotiation and

management

PM2 Insufficient budget provision to meet property

compliance related responsibilities.

Deputy Managing

Director

4 4 16 Compliance programme in place 2 4 8

Adequate, skilled and competent staff Restructure underway to ensure

the right skills and competencies

exist in th e team

Negotiation / re-prioritisation of

budget provision by LBH / HfH

PM3 Delays / lengthy timescale / lack of clarity for

determining capital works programmes (1-30 year)

impacting ability to mobilise resources and deliver,

resulting in poorer standard assets.

Head of Asset

Management

4 3 12 Regular meetings with LBH to identify

and agree budgets

3 3 9

Stock investment plan and asset

management strategy

Asset Management plan not

signed of by the Council

PM4 Contractor insolvency impacting ability to repair and

maintain homes and possible financial loss.

Head of HRS 3 3 9 Regular contractor review meetings 3 2 6

Use of retention and performance

bonds

Will be implemented under new

procurtement arrangements

Insurance

Use of localised subcontractors

through Dynamic Procurement

systems

D&B financial reviews

Spreading the procurement of

contracts accross more suppliers

Will be implemented under new

procurtement arrangements

150


Prob.

Gross

Impact

Gross

Severity


Rating

Net Prob. Net

Impact

Net

Severity

Move-

ment


Controls

PM5 Poor sub-contractor management resulting in a

fraudulent activity, loss of assets and reputational

damage.

Head of HRS 4 3 12 Contract management processes and

procedures in place

2 3 6 Contractor management

processes being reviewed and

additional staffing through

restructure

Modern Slavery Training

Separation of duties

Policies, procedures and systems Updating policies and procedures

Staff training and development

Internal audit function

PM6 Interim arrangements adversely impacting housing

management and planned maintenance needs of the

stock to be transferred to the Haringey Development

Vehicle

Managing

Director

4 3 12 Ongoing discussion with HDV Board

and LBH

1 3 3

PM7 Progressive collapse of the tower blocks at

Broadwater Farm in the unlikely event of a gas

explosion

Director of BWF 2 5 10 Replacement of all gas cookers with

electric cookers

1 4 4

Installation of gas disruptor valves

Installation of localised temporary

communal heating system and

removal of gas supply from the blocks

Still on programme

Implementation of a long term

permanent solution for the provision

of heating and hot water

24 hour concierge in place on blocks

where identified to fail the lower (17

k/n) test

Home visits to affected properties

where identified to fail lower (17 k/n)

test

Implementation of strengthening

solutions where required

Rehousing Tangmere residents Rehousing underway with team

in place to move residents as

quickly as possible

151

Appendix 4 - Homes for Haringey Risk Register Q4 2018/19 - Health and Safety Related Risks


Prob.

Gross

Impact

Gross

Severity


Rating

Net Prob. Net

Impact

Net

Severity

Move-

ment


Controls

HS1 Serious injury or death of an employee as a result of

breach of duty by HfH as an employer

Head of Health,

Safety &

Compliance

2 3 6 Legal register setting out all H&S

related obligations and mechanisms to

deliver compliance

1 3 3

Health and Safety policy

Safety Systems in place including

supporting Policies and Procedures

which are regularly reviewed/updated

Job roles and person specifications

setting out health and safety related

responsibilities

Full range of competent employees in

the health and safety team

Difficulties to recruit to specialist

roles due to market pressures

and less competetive

salaries/benefits

H&S training matrix in place setting

out skill requirements

Health and Safety training programme Lack of visability of records and

approach. Working with L&D to

formalise H&S training policy and

how records will be

kept/monitored.

Suite of periodically reviewed risk

assessments in place.

Site Safety Inspections carried out by

team leaders/managers and H&S

monthly across main services (HRS &

Estate Services)

Safety First Talks carried out by team

leaders/managers monthly (ES & HRS)

Monitoring Framework - Staff facing

Compliance KPIs which are reported

quarterly to ELT/Audit Committee

Internal audit programme in place,

supported by external audits e.g.

British Safety Council

152


Prob.

Gross

Impact

Gross

Severity


Rating

Net Prob. Net

Impact

Net

Severity

Move-

ment


Controls

HS2 Serious injury or death of a resident / member of

public as a result of breach of duty by HfH to fulfil its

obligations

Executive

Director of

Operations

3 3 9 Estate Services Inspection programme

in communal areas including fire,

repairs and tenancy enforcement

issues.

Roll out of the programme still in early

stages for converted street properties.

2 3 6 Processes are in place to manage

the enforcement of identified

risks and cases are now being

managed effectively between

teams. Progress has been made

in completing enforcement

actions and there is effective

monitoring of outstanding

actions. Suited keys retrofitted to

enable access to properties.

Fire Risk Assessment programme -

annual programme for properties over

6 stories and sheltered accomodation

properties

Fire Risk Assessment programme - 3

yearly programme for properties

below 6 stories

5 yearly Fire risk assessment

programme in place

Frequency of the FRA to be

reviewed

Type 3 and 4 fire risk assessments Ongoing difficulties to recruit

competent staff.

List of vulnerable residents that may

create a additional fire risk.

This has been compiled in

conjunction with Adult Social

Services and passed to the fire

brigade. It is critical to keep the

data up-to-date.

Tenancy enforcement Compliance and fire safety task

force group

Regular inspections carried out by

scheme managers in sheltered

accommodation and hostels

Clear communal policy Policy in place and the roll out is

staggered for the next 18 months

(completion by July 2020) to

cover the whole property

portfolio.

HS3 Serious injury or death as a result of breach of

obligations by HfH to manage properties

Head of Health,

Safety &

Compliance

2 4 8 Property Compliance project/task

group

1 3 3 We are still not able to report on

a number of M&E KPIs due to

data not being available. There

are a number of areas around

data (including missing historic

data pre HfH) and measuring

performance that need to be

reconciled

M&E team employing competent staff

to oversee gas, lifts, electrical safety

and legionella

153


Prob.

Gross

Impact

Gross

Severity


Rating

Net Prob. Net

Impact

Net

Severity

Move-

ment


Controls

Fire policy

Asbestos policy

Lift policy

Adaptation policy Insurance and servicing regime in

place for equipment HfH are

responsible for. Some risks

around equipment council are

responsible for which is being

identified separately and notified

to LBH.

Electrical policy Programme in place on domestic

and communal electrical checks.

Work required to update policy

and embed work programmes as

Business as Usual within HfH

compliance framework

Water hygiene (legionella) policy

Monitoring Framework - Property

Compliance Key Performance

Indicators which are reported

quarterly to ELT/Audit and Risk

Committee

There are a number of areas

around data (including missing

historic data pre HfH) and

measuring performance that

need to be reconciled

154

Appendix 4 - Homes for Haringey Risk Register Q4 2018/19 - Safeguarding Risks


Prob.

Gross

Impact

Gross

Severity


Rating

Net Prob. Net

Impact

Net

Severity

Move-

ment


Controls

SG1 Failure to manage our safeguarding responsibilities

leading to service failure and reputational damage

Executive

Director of

Operations

4 3 12 Safeguarding policies and procedures

including inter-agency pathways

2 2 4 Clearance of action logs on

SharePoint and improve visibility

for monitoring

Mandatory safeguarding training Working to get near 100%

completion of e-learning and

face to face training

Better profiling leading to strong

vulnerability checks

Working with Income

Management on this element;

update expected in Q3 review

Up to date good quality Support Plans

in place

Audit carried out and actions

being implemented.

Regular audits from statutory

safeguarding boards

155

Homes for Haringey


Report for: Audit and Risk Committee

Title: Proposed write-offs

Agenda item: 10

Report for: Decision

Classification: Public

Report author: Carl Doogan, Head of Income Management (interim)

Contact email: [email protected]

Contact telephone: 020 8489 5816

1. Introduction

The purpose of this report is to provide the Finance, Audit and Risk Committee with

an outline of proposed write-off to then recommend the proposal to the Council for

final approval.

2. Background

2.1 At the Finance, Audit & Risk Committee in October 2018, £2,635,990 of

General Needs & Supported Housing (GN&SH) former debt was approved

for write-off by the Committee and subsequently submitted to David Morris,

the Council’s Corporate Debt Manager, for final approval.

2.2 No debt was written off for Leasehold Services in the 2017/18 financial year

and this is the first request to do so within 2018/19.

2.3 Further write-offs need to be submitted to the Finance, Audit & Risk

Committee and the Council in February 2019. The lists of accounts we are

proposing to write off will be printed off and made available at the Committee

meeting.

3. Overview of write-offs

3.1 Below is an overview of the proposed write-offs separated by Temporary

Accommodation, GN&SH, and Leaseholder General Fund, Housing Revenue

Account, and Leaseholder. For each group we have banded the amounts by

number of years since the account ceased.

3.2 Income Recovery – Temporary Accommodation (General Fund)

General Fund (TA)_

Value

Number of Individual

accounts

Statute barred £643,971.46 717

156


Homes for Haringey


Court Cost accounts (includes

warrant and legal fees tenant is

liable to pay) £10,400.21 52

Total £654,371.67 769

In the table below, the 717 statute barred cases are grouped by age and value:

General Fund

(TA)

Age band of

accounts

Number of

accounts in

each band

Total value per

age band

Statute barred 6-8 years 147 £136,621.75

8-10 years 287 £224,590.06

> 10 years 283 £282,759.65

3.3 Income Recovery – GN&SH (Housing Revenue Account)

Housing Revenue Account Value No. of individual

accounts

Court Cost accounts (includes warrant

and legal fees tenant is liable to pay)

259 £55,480.57

Accounts identified by Former Tenant

Arrears Officer

19 £6,381.09

Exceptional circumstance case 1 £60,765.63

Total 279 £122,627.28

The table below shows the 19 accounts broken down by age and value:

HRA –

accounts

identified by

Former

Tenant Officer

Value Total No. of

Individual

Accounts

Age band of

accounts

No. of

accounts

in each

band

Total value

per age

band

Statute barred £3,564.15 8 6-8 years 8 £3,564.15

No trace £141.78 1 6-8 years 1 £141.78

Uneconomical

to pursue £644.17 6 Less than 6 years 5 £644.03

6-8 years 1 £0.14

Deceased no

estate £2,030.99 4 Less than 6 years 4 £2,030.99

Overall total £6,381.09

3.4 Leasehold Services

157

Homes for Haringey


Reason

Value No. of Individual

Accounts

Statute Barred £52,348.90 33

Uneconomic to pursue £41,111.05 29

£93,459.95 62

The table below shows the accounts banding by age and value:

Reason Value Total No.

of

Individual

Accounts

Age band of

accounts

No. of

accounts

in each

band

Total value

per age

band

Statute barred £52,348.90 33 Less than 6 years 0 0

6 - 8 Years 7 £14,864.63

8 - 10 Years 2 £1,808.01

>10 Years 24 £35,676.26

Sub total 33 £52,348.90

Uneconomical

to purse £41,111.05 29 Less than 6 years 17 £13,298.87

6 - 8 Years 1 £114.48

8 - 10 Years 2 £19,828.22

>10 Years 9 £7,869.48

Sub total 29 £41,111.05

£93,459.95

4. Reason for Write off Proposals

Below is an explanation as to why these accounts have been proposed for write off:

4.1 Proposed write offs (Income Recovery - General Fund)

4.1.1 A list of Temporary Accommodation (TA) accounts was previously submitted

to the Executive Team (the vast majority of which was statute barred). The

Head of Income Management was asked to carry out a further analysis to

establish what recovery action had taken place on these accounts; this has

now been carried out. We looked at whether the statement sent to all

households in TA in August 2018 would have re-started the statute barred

limit or whether any transactions had taken place during the 6 years.

However, we were only able to exclude a dozen accounts. As such we are

proposing to write off 717 accounts with debt totalling £643,971.46.

158

Homes for Haringey


4.1.2 Warrant and legal fees owed by the tenant are kept separate from the Rent

account under a sub-account titled Court Costs. It has been established that

the Court Cost linked sub-accounts were not included with the former linked

TA rent accounts previously written off. This relates to 52 accounts with debt

totalling £10,400.21. We are therefore proposing that these Court Cost sub-

accounts are written off.

4.2 Proposed write offs (Income Recovery - Housing Revenue Account)

4.2.1 Again, the linked Court Costs sub-accounts were not included with the former

GN&SH Rent accounts that have previously been written off. This relates to

259 GN&SH accounts with arrears totalling £55,480.57. We are therefore

proposing that these court costs are written off.

4.2.2 Since the last write off list was sent to the Finance, Audit & Risk Committee, a

further 19 accounts have been identified by our Former Tenant Arrears

Officer for write off with debt totalling £6,381.09.

4.2.3 We are also submitting a request to write off £60,765.63 related to a former

GN account under exceptional circumstances. A more detailed note is

attached with this report (Appendix A). However, in summary this was a

protracted legal case whereby the Council’s Legal Team and the family’s

solicitor agreed terms. The terms agreed included the waiving of the arrears

that had built up.

4.3 Proposed write-offs (Leaseholder Services)

4.3.1 Regarding the 33 statute barred accounts identified for write-off, we are

confident our stated recovery procedures were followed for each of these

debts. However, at this point in time we have to be realistic and recognise

these debts are now not recoverable, either by HFH or an external agency.

For Leasehold management, we have had robust recovery procedures in

place since 2013 and in terms of age, all the balances pre date this

timeframe. Moreover, we have a policy of early action in place, meaning

potential barriers to collection are identified much earlier within the process.

4.3.2 Regarding the 29 ‘uneconomical to recover’ accounts, we are confident we

have followed and exhausted our recovery procedures for each of these debts

and have also considered additional actions such as hiring external collection

agencies, however, this action has been deemed to either be uneconomic or

159

Homes for Haringey


having little chance of success. Therefore to maintain good practice and

avoid further time and cost (officer/legal and court) we recommend that the

balance be considered for write off.

4.3.3 There will be instances where, following court action we reach a settlement

to minimise further cost and time to both residents and the council.

4.3.4 To continue to minimise write offs relating to Leaseholder accounts, we have

dedicated officers for each billing type to ensure more thorough coverage.

When it is former leasehold debt which is personal to the previous leaseholder

we are unable to recover any debt related to the property. Whilst securing

debt by way of legal charge is part of our approach being able to do so is

dependent on us having a money judgement. Without this, we cannot apply

for the debt to be secured to the property. Since the restructure in 2013 a

much more robust procedure has been in place resulting in early action on

debt to prevent the need for write-off. Note that most of the write-off submitted

pre-dates 2013.

5 Consideration

5.1 Impact on bad debt provision

5.1.1 The council have assessed the impact the above write offs (including the

£2.6m previously approved by Audit & Risk) would have on the bad debt

provision.

5.1.2 When the £2.6m GN&SH write-offs previously approved is incorporated the

council forecast an increase in the bad debt provision required at the end of

the year by £1,038k. This is higher than the budget available and will result

in an overspend of £306k (£260k for Dwellings and £46k for Hostels). There

is no change in the overspend if the decision is taken to write off the additional

£122,627 (outlined in section 3.3 of this report).

5.1.3 When the TA debt write-off of £654k is incorporated the council forecast an

increase in the bad debt provision required by £899k. This is £19k higher

than the budget of £880k.

5.2 Estimated forecast of future write-offs in 2019/2020

5.2.1 We have analysed the age of the former debt and have been able to identify

the number and value of accounts that may reach the 6 year statute barred

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Homes for Haringey


at Quarter 1 and Quarter 2 in 2019/20. This is assuming that no recovery

action takes place.

5.2.2 By the end of Q1 2019/20 (if no recovery action took place) there would be

a further 54 GN&SH accounts totalling £157,194 and 65 TA accounts

totalling £104,708 which would be older than 6 years old and qualify to be

statute-barred.

5.2.3 By the end of Q2 2019/20 (if no recovery action took place) there would be

a further 36 GN&SH accounts totalling £84,124 and 70 TA accounts

totalling £120,090 would be older than 6 years and qualify to be statute-

barred. These figures are for where the tenants do not have a rent account

ending afterwards and also include subaccount balances – all of which will

become 6 years old in Q1 and Q2 next year.

5.3 It must be noted that this estimated forecast is prudent as it does not include

any recovery action on these accounts. We make every effort to recover the

debt, but it must be noted that the age of the debt will make it more difficult

to recover.

5.4 In our last report, we provided an update on preventative actions to reduce

write-offs over time. We now have two of three Former Tenant Arrears

Officers in post who specifically deal with non-linked debt; we are currently

recruiting the third person. Former Tenant Arrears Officers prioritise those

accounts recently made former and those about to reach the 6-year statute

barred limit. In addition they are dealing with accounts on a case-by-case

basis; are utilising a newly procured search engine to trace former tenants;

and if unsuccessful referring accounts to the external collection agency (CCS).

This will ensure write-offs are limited as much as possible.

6 Recommendation

6.1 The Committee is recommended to:

i) Consider the write off proposal

ii) Approve recommendation to the Council for the proposed write offs

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Appendix A

WRITE OFF: Former Account: Exceptional circumstances case

Cease Date 27/02/17 Amount for Write Off £60,765.63

Balance on Account £60,765.63

Case Summary:

This was a protracted legal case whereby the Council’s Legal Team and the family’s solicitor

agreed terms. The terms agreed included the waiving of the arrears that had built up.

Background

A 5 bedroom property was let to the tenant on 18 August 1980. However, after a spell in hospital,

the property was not adequate for the tenant’s needs so respite care was given in a nursing home.

The tenant went into the nursing home in 2006.

The Occupational Therapist recommended a move to an alternative property which met her needs

(which included wheelchair access). The tenant wanted her relatives to remain with her at the

primary home in order to provide care. However, this was not possible as the tenant could not

return to the un-adapted property and so eviction proceeding proceeded.

In May 2010 the court decided that enforcement should not be suspended until the tenant moved

to 3 bedroom adapted accommodation. The tenant and relatives were told to pay current rent and

£10.00 per week towards the arrears. However, the last payment was made in November 2010.

HfH made four acceptable offers of alternative accommodation but all were refused.

HfH sought legal advice as the tenant’s solicitors were challenging the Council’s right to seek

possession. In taking Legal’s advice, a fresh Notice to Seek Possession was served in October

2013. In December 2013, the court lifted the enforcement suspension. It was not until April 2014

that the tenant filed a defence sighting discrimination on ground of reasonable adjustments and

then made a counter-claim for £25k-£50k damages. HfH contested these allegations.

In July 2015 the court hearing took place and directed the parties to undertake mediation. In

February 2016 the mediation took place; however, was not successful. In April 2016, there was a

round table meeting of the services, the outcome of which was to offer the tenant alternative

accommodation, and if not accepted, to go back to court. Legal made this formal offer in May

2016. In September 2016 the tenant’s solicitor wrote to Legal indicating agreement if the Council

waive the arrears and the tenant went back on to the waiting list for other schemes. In October

Legal accepted the terms and in January the keys to the property were handed back. At this point

the outstanding arrears were £52k. It was not until February 2017 that the court then approved a

consent order giving HfH possession of the property. The tenancy was terminated at the end of

February. By this point the arrears had increased to £60k.

This case was not submitted for write off previously as there was no agreed process for such

exceptional cases between the Council and Homes for Haringey. Last year’s audit report

highlighted the need for a clear process for such cases to ensure consistency. This case helped

shape the principles and process, which is now fully implemented. In addition, considering the

number of years this case covers, the team wanted to review everything to make sure that

everything was explored and substantiated.

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