Richard Percival, from Grant Thornton, presented the Audit Findings Report 2016/17 on behalf of the external auditor. Members were reminded that the final clearance of the Council’s accounts would not be determined until the Council meeting on 20th September the external auditors was reserving their audit opinion until this had taken place.
During the presentation of this report the following matters were highlighted for Members’ consideration:
· There had been an improvement year on year in the production of financial statements and in the timeliness of the Council’s process.
· The deadline for local authority accounts would be coming forward in 2018/19 and the external auditors believed that further progress needed to be achieved to enable the Council to meet this new deadline.
· The resources available to the Council to process the accounts would need to be considered, with some staff absences likely to take place in 2018/19. The Executive Director of Finance and Corporate Resources reassured Members that a new Deputy S151 Officer would be starting in November and maternity cover was being arranged for a key post.
· Whilst reviewing the accounts Grant Thornton had identified one asset that was not in the Council’s ownership; following investigation it had been found that this was an isolated incident.
· There had also been an amendment made to the housing benefit subsidy figure included in the accounts of £93k. This was a very small element of the £16m benefit payment
· The requirements for reporting on the Council’s revenue account had changed in 2017/18 and the external auditors had reviewed closely the local authority’s approach to managing this.
· A weakness was highlighted in relation to the submission of the pension returns to County. Whilst this did not impact on the figures in the accounts it was recognised that a process needed to be robust to submit the returns. The Executive Director of Finance and Corporate Resources explained that this related to the payroll system which was being addressed.
· The external auditors would be issuing a qualified value for money (vfm) conclusion. There had been some improvements made by the Council but these were not sufficient to enable Grant Thornton to give an unqualified vfm conclusion.
· Grant Thornton had undertaken work to review key areas that had been identified as risks for the Council in the audit plan.
· A number of recommendations had been made to senior officers, as detailed in the appendix to the plan, and the external auditors were satisfied with the response that they had received to these.
· Members requested that the action plan in the report be provided for the Committee’s consideration at every meeting.
· The external auditors had reviewed the Council’s financial monitoring and budget reports and had found that it was not always clear where the Council’s ability to achieve proposed savings might be at risk. Officers were in the process of addressing this.
· Grant Thornton had also reviewed the robustness of the Medium Term Financial Plan (MTFP) and had found this to be mixed. Members were advised that at Councils with the most robust MTFP the business cases had often been subject to detailed and effective pre-scrutiny.
· The Executive Director of Finance and Corporate Resources advised Members that heads of service had been challenged to review actual expenditure alongside planned expenditure and budgets
Following the presentation the Committee discussed a range of matters in further detail:
· The process for submitting information to the actuary who provided the Council with an annual estimate of the authority’s pension liabilities.
· The process followed by external auditors when reaching a vfm conclusion. Members were advised that the National Audit Office (NAO) proscribed the approach to reaching this conclusion.
· The extent to which the vfm conclusion took into account outcomes and outputs. Members were advised that the focus was more on identifying risks and the auditor’s confidence in the Council’s financial process rather than on assessing outcomes.
· The extent to which proposed savings were achieved according to timescales set by the Council would, however, be taken into account involving some assessment of output.
At the end of these discussions the Committee
RESOLVED that the Audit Findings Report 2016/17 be noted; and
RECOMMENDED that Council approve the draft letter of representation.