Agenda item

The Deputy Chief Executive and Section 151 Officer presented the Finance Recovery report for the consideration of Members.

It was explained that this report was presented to Members on a regular basis, following the issuing of the Section 24 Notice in November 2023. A version of this report was also considered at the Audit, Standards and Governance Committee meetings throughout the municipal year. 

The report included any Key Deliverables, Treasury Indicators and updates on the VAT returns.

Members were informed that the Statement of Accounts for the financial years 2020 – 2021, 2021 – 2022, 2022 – 2023 had been completed and Disclaimer Opinions received and approved. The draft accounts for financial year 2023 – 2024 were out for consultation with some public consultation comments being received, which was positive. It was reported that there were potential difficulties likely to arise in terms of the Disclaimer Options that had been issued to Councils nationally and the effect these would have on external audits in the future. It was felt that there was a disconnect between the understanding of Disclaimer Opinions between Central Government and auditors and whether time should be spent on ‘old’ accounts. It was suggested that as long as the opening balances, amount of reserves and grant funding were known this was hopefully sufficient to provide accurate accounts in future years. Furthermore, there was a level of assurance around these balances in that returns were checked and submitted on a yearly basis.

Ernst & Young had been confirmed as the Council’s External Auditors. The Deputy Chief Executive and Section 151 Officer thanked Members for their speedy return of the disclosure information that had been provided to the auditors. This was usually a process that might take six to eight months. However, the Council had completed their disclosure information within four months. Due diligence was currently being undertaken by Ernst & Young including looking at Council press releases. It was thought that this process would be completed within four weeks from the time of the meeting. Members were interested to learn that this was part of the due diligence process, and it highlighted the necessity and importance to continue to make decisions in a robust manner following complete analysis.

The Key Deliverables included within the report were as follows:

1. The Accounting Policies report was now considered at each Audit, Standards and Governance Committee.
2. The TechOne system had been upgraded to version 24B in February 2025
3. The approval of the Medium-Term Financial Plan 2025 – 2026 to 2027 – 2028 on 19^th February 2025
4. The consultation on the Medium-Term Financial Plan 2025 – 2026 to 2027 – 2028
5. Changes implemented to the Procurement processes
6. Updated Prudential Indicators had been completed.

It was reported that Central Government had announced that capital receipts could be used to fund redundancies as part of the Local Government Reorganisation. Information in respect of this would be circulated to Members following the meeting.

Members queried what the allocation would be from Central Government in order to carry out the Local Government Reorganisation. It was reported that information had been received that £6.7million had been allocated across Worcestershire for this purpose. At the time of the meeting, it was unknown as to how these funds would be distributed and whether this would be equally or be dependent on the size and complexity of the Council.

Although the Local Government Reorganisation was inevitably at the forefront of Members’ and Officers’ minds it was imperative that ‘business as usual’ continued within the Council and that services still needed to be delivered. As highlighted earlier in the meeting there were processes underway in terms of data and other areas in order to leverage improvements during and following the Local Government Reorganisation. Several models of Local Government could be considered as part of the reorganisation. There had been recent examples of Local Government Reorganisation such as at Peterborough City Council and Cambridgeshire County Council. The Deputy Chief Executive and Section 151 Officer undertook to provide Members with the public documentation available in respect of this matter following the meeting.

It was noted that there would be pressures in terms of pensions, and this would need to be considered in detail as part of the reorganisation process.

Although the Local Government Reorganisation was due to be implemented by April 2028, it was thought that the process would take significantly longer to embed and consolidate following vesting day.

Following consideration of the report, Members thanked and stated that the Deputy Chief Executive and Section 151 Officer had breathed ‘fresh air’ into the Finance Recovery reports. It was noted that they would be included in a Forward Plan currently being developed in the future to ensure transparency.

RESOLVED that the following be NOTED

1)       Progress made on the financial recovery including:

a)       Delivery of the Statutory Accounts

b)       Delivery of Statutory Financial Returns

c)       Improvements in the Control Environment

2)       The work still under way to move back to a best practice operation and the associated timetable for completion of this work, as contained in this report.