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MAIDSTONE BOROUGH COUNCIL

 

AUDIT COMMITTEE

 

28 NOVEMBER 2011

 

REPORT OF HEAD OF FINANCE & CUSTOMER SERVICES

 

Report prepared by Paul Holland

Senior Accountant (Client) 

 

 

1.              AUDIT COMMISSION’S ANNUAL AUDIT LETTER 2010/11

 

1.1           Issue for Decision        

 

1.1.1     To consider the Audit Commission’s Annual Audit Letter covering the

year 2010/11. The letter provides a summary of the findings and the

conclusions which have arisen during the Audit Commission’s audit and inspection programme.

 

1.2           Recommendation of Head of Finance & Customer Services                        

1.2.1     It is recommended that Audit Committee note and comment on the

Audit Commission’s Annual Audit Letter to Maidstone Borough Council

and make any recommendations to Cabinet.                                                                                                                

1.3           Reasons for Recommendation                                                                   

1.3.1     The annual audit letter, attached as Appendix A, provides a summary of the results of the Audit Commission’s inspection activity at the Council during 2010/11. It gives an overview of the following:    

 

·         The audit of accounts;

·         The value for money opinion;

·         A review of current and future challenges

                                                                            

1.3.2     As part of the Letter the Auditor is required to give an opinion on value for money. The value for money conclusion reached by the Auditor is “that the Council has proper arrangements in place to secure economy, efficiency and effectiveness”. The Audit Commission now uses a traffic light system to indicate how effective the arrangements are in their opinion, and Maidstone is ranked as being green.                                                                                                    

1.3.3   The audit letter also communicates any significant issues which the

Council will need to address. The issues detailed in the letter have

been reported to this Committee while considering the audit of the

statement of accounts earlier in the year but are replicated below.

 

1.4           Issues Raised Within the Assessment

 

1.4.1     Overall, the Council is performing well and listed below are a number of the key points from the Letter:  

 

·      An unqualified opinion on the financial statements has been issued;

·      An unqualified value for money conclusion has also been issued;

·      The Council has a history of strong financial management, and the underlying financial position is sound;

·      There is a strong record of achieving efficiency savings and a clear focus on prioritising resources within a sustainable medium term planning framework.

                                                                  

1.4.2    There are, however, two issues that the Commission has asked the Council to consider, and these were reported to the Committee during consideration of the audited Statement of Accounts for 2010/11, earlier in the year:

 

·      The introduction of a specialist asset register system to deal with the more complex capital accounting requirements of International Financial Reporting Standards;

·      The introduction of additional checks within the final accounts closedown process to ensure that the capital accounting entries are correct.

 

1.4.3     Officers are currently working through these recommendations in preparation for the next assessment in 2012.                                                              

1.5          Future Challenges                                                                                              

1.5.1     The Audit Commission acknowledges that the Council has coped well with the immediate pressures of the economic downturn, and is positioned well to deal with ever more constrained resources, but will need to continue to focus on key priorities and strategic risks.                                               

1.5.2    The Letter identifies that the Council is well positioned to ensure it is financially resilient, and that the processes to support the medium term financial strategy are well-established. It also recognises that the Council is reasonably on track to achieve its 2011/12 savings target, and that there is a good track record of working with other partners and identifying and developing opportunities for joint arrangements and shared services.                                                                                                                                                                            

1.6         Conclusions                                                                                                                            

1.6.1   Attached at Appendix A is a copy of the Auditor’s letter which must

be distributed to all Members of the Council. It outlines a positive

picture of the Council’s performance and its match to delivery of

priorities.                                                                                                    

1.6.2   The recommendations of the Auditor’s previous report on the audit of

the statement of accounts for 2010/11 have been considered

previously by this Committee and are to be implemented. There are no additional actions required as a result of this letter and it is recommended that Audit Committee note the letter.                                                

1.7        Alternative Action and why not Recommended                                                               

1.7.1   The Committee, and the Council, could choose not to acknowledge the

comments made by the Audit Commission, but this is an independent

view of how the authority is operating. It offers stakeholders an

opportunity to gain a view of how the Council is performing in a range

of areas including value for money.                                                   

                                                                                               

1.8           Impact on Corporate Objectives                                                                                    

1.8.1     The Council is committed to delivering on its priorities and securing

value for money. This letter is one measure of how successful that

commitment is.            

 

1.9           Risk Management                                                                                               

1.9.1     Risk Management forms a key part of the corporate governance

arrangements that are assessed as part of the annual audit and are

commented on in this letter.

1.10        Other Implications

 

1.10.1                 

1.      Financial	X
2.           Staffing
3.           Legal
4.           Equality Impact Needs Assessment
5.           Environmental/Sustainable Development
6.           Community Safety
7.           Human Rights Act
8.           Procurement
9.           Asset Management

 

1.10.2                 The financial implications are dealt with within Appendix A.                                            

1.11    Relevant Documents                                                                                            

1.11.1           Appendix A – Audit Commission’s Annual Audit Letter 2010/11                            

1.12     Background Documents                                                                                       

1.12.1                 None.        

 

IS THIS A KEY DECISION REPORT? X     Yes                                               No     If yes, when did it first appear in the Forward Plan?   ..     This is a Key Decision because: ..   .       Wards/Parishes affected: ..   ..