(Report to follow).
The Engagement Lead, Grant Thornton presented the Grant Thornton Interim Audit Findings Report and in doing so highlighted the following to Members:
· It had been hoped that the final version of the Audit would be presented at the meeting, however there had been a delay and items were still outstanding for the Audit and that this was an interim report. It was confirmed that this meant that there was still further work to be carried before an Audit opinion could be provided. The remaining work had been identified and regular meetings were taking place with relevant officers and extra resource had been provided from both Grant Thornton and the Council in order to satisfactorily complete the Audit as soon as possible. Grant Thornton were pleased with the amount of work and support received from officers who had participated in the Audit.
· The Value for Money conclusion was reported to Members who were advised that the Council was in a good financial position but that it was important to still be cautious in the future. It was noted that there were potential longer-term gaps that needed to be monitored closely and that the use of financial reserves was not sustainable in the long term. Members were advised that the impact of Covid-19 was still unknown, and challenges were still being faced and it was important that savings in priority and non-priority areas were identified for the future. It was proposed that an unqualified Value for Money opinion would be offered for the financial year 2019-2020.
The Chairman invited the Head of Finance and Customer Services to comment on the report and in doing so thanked Grant Thornton for all of their work and additional resources that had been provided.
Some Members were concerned that officers had not been able to provide floor areas in order to provide an accurate valuation for land and buildings. It was clarified that the external valuers that had been procured to carry out work in this area had been exceptional and were undertaking a further project using software to provide floor areas of all Council land and buildings. It was confirmed that this was information that had not been required as part of the Audit in previous years and was part of the increased audit expectations. Members were assured that this work was being prioritised to ensure that the same issues would not be encountered in future years. The Engagement Lead, Grant Thornton advised the Committee that this request for additional information driven by the increased audit expectations could possibly impact the fees charged for the Audit.
The Engagement Lead, Grant Thornton explained to Members that the requirements for Value for Money were set out by the National Audit Office and considered the arrangements that were in place to ensure Value for Money and that individual contracts or Democratic decisions would not need to be specifically considered unless it was a key contract for the Council that perhaps had not delivered what was expected. As part of the Audit, the Medium-Term Financial Plan was considered by Grant Thornton and items within plan were looked at to test the robustness of the information contained within it.
There was detailed discussion regarding the financial systems that were currently in place that provided information for the Audit. It was reported to Members that these systems were archaic, cumbersome and slowed down access of information for reporting. The Head of Finance and Customer Services highlighted that the systems were a risk to the Council due to the large number of manual inputting of information that needed to be carried out. This increased the risks of mistakes being made and potential fraud being carried out. Officers informed the Committee that the implementation of the Enterprise Resource Planning system (ERP) was due to take place in February 2021 and would hopefully eradicate much of the risk linked to the previous manual systems. Members were reassured that the ERP system had been tested and would improve efficiency of the audit process and financial transactions for future years.
It was further questioned whether some of the quality of work carried out by officers needed improvement and whether enough training was being provided to ensure that officers were competent and had the required amount of training to carry out their roles. The Head of Finance and Customer Services acknowledged that some of the information provided to Grant Thornton was not of the quality that was expected or needed. He confirmed that training was being provided on the new ERP system and this would improve the quality of working papers going forward. Members were advised however, that as this was an entirely new system there could be some initial issues that might need to be resolved over the first few months after implementation.
The Chief Executive thanked the Head of Finance and Customer Services and his team for all of the work and progress that had been made. He reported to the Committee that the new Executive Director was due to start working at the Council on 1st March 2021 and one of their key priorities was to ensure that there were firm financial foundations, including skills and capacity, for future audits. It was confirmed that Grant Thornton were happy with the implementation of the new ERP system and confirmed that many organisations already used this or similar systems.
The Chairman thanked the officers and Grant Thornton for all of their work in a challenging environment.
RESOLVED that the Grant Thornton - Interim Audit Findings Report be noted.