Members were presented with the Grant Thornton Annual Audit Letter for the 2018/19 financial year, which summarised the key findings arising from the work carried out at the Council for year ended 31st March, 2019.
Mr. Richard Percival, Engagement Lead, Grant Thornton informed Members that Grant Thornton were required to provide an annual audit letter.
Members’ attention was drawn to page 59 of the main agenda pack, which provided the Executive Summary and details on the work carried out by Grant Thornton. Mr. Percival explained that work on the Council’s Housing Benefit subsidy claim was not yet complete; the deadline date was 30th November 2019, but he was hoping to finalise before the deadline date.
It was reported that unqualified opinions were given for the accounts and Value for Money Judgements. Officers acknowledged that there remained financial pressures for the Council and that these would be considered as part of the Medium Term Financial Plan (MTFP).
Members raised several questions on the Grant Thornton fee for 2018/19, more specifically the additional £8k which related to additional work undertaken. An explanation of the additional work undertaken was detailed on page 65 of the main agenda report.
In response Mr. Percival commented that things had slipped back a bit, with many changes repeated from the previous year; however, the Executive Director, Finance and Resources and the finance team now had a clear grip of what was required for 2019/2020.
The Executive Director, Finance and Resources further stated that a lot of resources had been allocated in order to close the previous year’s accounts. Officers thought they could achieve a better result this year, but the Asset Management spreadsheets proved to be limited and weak. She would reassure Members that new spreadsheets were now in place, which officers would go through with Grant Thorton. The Executive Director, Finance and Resources informed the Committee that having spoken with other treasurers across the County, she had been made aware that they had incurred additional charges in their fees, due to an in increase in audit work.
Mr. Percival further commented that in terms of a broader context it had been a mixed year, with some authorities having stated that they had struggled to maintain momentum with the pressure on resources due to a significant increase in assets. Grant Thornton would continue to work with the Executive Director, Finance and Resources and the finance team to reduce the amount of any possible future additional work.
In response to further questions and reassurance sought from the Committee, the Executive Director, Finance and Resources, stated that resources were now in place and that there was a specific timetable for next year’s accounts. The new finance system would not go live until after the 2019/2020 end year accounts in order to avoid any possible disruption. The new finance system would go live in June / July 2020.
In response to further questions from Members, Mr. Percival stated that the Council was currently in a sound financial position. Grant Thornton would continue to focus on financial stability, whilst being aware of the roll over for this year and the challenges that the Council would continue to face in the future. The Council had reserves for at least three years, he would be less confident if those reserves were low in the future.
The Executive Director, Finance and Resources further commented that the MTFP for the year going forward had to be a balanced budget, with a 4 year plan, maintaining a reserve balance level that Members had approved. There were various uncertainties and Members would have to make some difficult future decisions. It was understood that the New Homes Bonus (NHB) community grant funding would be received in 2020/2021 but it was expected that this would only be for one year without the further 4 years as previously anticipated.
In response to questions with regard to the impact of the future pension strain, Mr. Percival explained that at the Council’s request the actuary had re-run the valuation report with their best estimate of the impact re McCloud. Authorities had had a huge number of significant liabilities on their balance sheets. Members should note that the estimated figure of current pension liability would be susceptible to any changes in rates.
The Executive Director, Finance and Resources, further responded with regards to the pension strain and in doing so explained that the percentage rate as agreed with the actuary would be included in the financial projections for the following 3 years.
RESOLVED?that the Grant Thornton Annual Audit Letter 2018/19, as detailed at Appendix 1 to the report, be noted.