Agenda item

The Deputy Chief Executive/Section 151 Officer provided the Financial Compliance Report for Members’ consideration as follows:

·         One of the legislative reporting requirements the Council had not achieved was the delivery of the 2020/21 Statement of Accounts.  As such, the Council was issued with a Section 24 Statement.  The Council’s External Auditors, Grant Thornton considered that there was not sufficient time to conclude the work in advance of the 13 December 2024 backstop deadline. On that basis, their expectation was that they would apply the backstop for the 2020/21, 2021/22 and 2022/23 statement of account years. Given that a number of key audit areas remained outstanding, then their proposed audit reports would be issued as a disclaimer of opinion.

·         Draft 2020/21, 2021/22 had been presented and placed on the Councils Website and the 30 days public consultation period fulfilled.  The draft 2022/23 accounts were published on the Councils website for public consultation on the 22 November 2024 which would only have 14 days of public consultation before the Government Imposed Backstop date of the 13^th December 2024.

·         The report set out the Council’s Letter of Representation as well as setting out how the Council had complied with the key and Improvement requirements set out in the External Auditor’s Annual Reports. 

·         On the 3^rd October 2024, the Council appointed Auditors for 2023/24, onwards Bishop Fleming notified the Council that they were resigning.  The Council, following liaison with Public Sector Audit Appointments Limited (PSAA) for the appointment of alternative Auditors.  It was confirmed by the PSAA that Ernst and Young would become the Council’s External Auditors on the 24^th October 2024.

·         Ernst and Young noted that the challenging part of the onboarding process, and where they had difficulties elsewhere, would be the need to obtain returns from all elected Members. The typical time taken to obtain responses from Members had ranged from 6-12 months, which would not have met the deadline backstop date.

·         The key returns that had not been delivered were the Revenue and Capital Outturn forms for 2021/22 and the VAT returns. Significant work had been undertaken by the Council’s Tax advisors PS Tax in liaison with HMRC for the Council to return to normal VAT reporting.

·         The financial stability and sustainability of the Council was a core underlying theme of the Council’s Risk Management Strategy. The closure of the three years’ accounts and submission of an audit opinion was key to ensuring there was external validation to the Council’s overall financial position.

During the update Members discussed the following:

·         The Chairman wished to express thanks to the Finance Team for the work carried out to the financial accounts.

·         Members queried what returns Bromsgrove District Council (BDC) would expect for the Customs and Excise work for previous years.  – In response it was noted that the expected return would be 40% for BDC and 60% for Redditch Borough Council (RBC), which also included the Housing Revenue Account (HRA) included.

·         Members expressed concerns regarding the onboarding process for the newly appointed external auditors Ernst and Young regarding the need to obtain returns from all elected Members as the typical time taken to obtain responses elsewhere had ranged from 6-12 months. – It was explained that electronic forms were being reviewed as an alternative option to expedite the potential issue. 

·         Members discussed if any monies had been exchanged with the former external auditors Bishop Fleming and if so, could the funds be recovered. -  Members noted that monies would be paid back through the Public Sector Audit Appointments Limited (PSAA).

·         Members requested that Termination Benefits mentioned in the report be explained in more detail. – It was explained that these were due to past retirements funds.

·         Special allowances in the report were also queried.  – Members noted these were attributed to the Chairs of Committees.

RESOLVED that

1)    Following the receipt of the “Disclaimer Opinion” from the External Auditors for the 2020/21 Accounts that these accounts are approved.

2)    Following the receipt of the “Disclaimer Opinion” from the External Auditors for the 2021/22 Accounts that these accounts are approved.

3)    That the Chairman of the Audit, Standards and Governance Committee is delegated authority to approve the 2022/23 Accounts following the completion of the Statutory 30-day Public Consultation.

4)    The External Auditor’s “letter to those charged with governance on the application of the local authority backstop” be noted and outstanding actions followed up in subsequent Audit, Standards and Governance Committee meetings.

5)    The process for inducting the Council’s new External Auditors, Ernst and Young, be noted.

6)    The process and progress to date on the delivery of the 2023/24 accounts be noted.

RECOMMENDED that

Cabinet is recommended to approve the following:

7)    Any areas of concern within this key compliance report for consideration.