The Committee considered the report of Management Team setting out the Audit Commission’s Annual Audit Letter covering the 2009/10 financial year.  It was noted that:-

·  The Annual Audit Letter provided a summary of the results of the Audit Commission’s inspection activity at the Council during 2009/10.  It gave an overview of the audit of accounts and the value for money opinion together with a review of current and future challenges.

·  Overall, it was considered that the Council was performing well.  An unqualified opinion on the financial statements had been issued; an unqualified value for money conclusion had also been issued; the Council was on track to achieve its timetable for the production of IFRS compliant accounts; there was an excellent financial management framework with a good practice budget setting process; there was an excellent system of financial monitoring; there was a robust procurement strategy; there were good data quality policies and systems in place; there was a sound governance framework; there were effective risk management arrangements; and there was a strong track record of effective action to conserve natural resources.  However, there was a small number of issues that the Audit Commission had asked the Council to consider including the quality of working papers for financial statements; closer communication over complex accounting issues; and reconciliation of the estate management system with the asset register.  The Officers were currently working through these issues in preparation for the next assessment in 2011 and these would be incorporated into the Corporate Improvement Plan.

·  Future challenges included identifying and delivering significant savings in the light of the economic downturn and the recent comprehensive spending review.  The Audit Commission would continue to monitor the Council’s financial position and the delivery of savings throughout the 2010/11 audit.

The Committee asked a number of questions of the Officers and the representatives of the Audit Commission relating to, inter alia, the possible link between the deterioration in the standard of working papers for financial statements and the loss of a key member of the Corporate Finance Section during the audit; the type of complex and/or unusual transactions in respect of which it was felt that the accounting implications should be discussed at an early stage with External Audit to enable the accounting treatment to be agreed prior to production of the financial statements; the survey carried out by the Audit Commission during 2010 to assess Councils’ progress on the transition to IFRS and the assessment of the Council’s performance as “Amber”; and the implications of the withdrawal of Ashford Borough Council from the Mid-Kent Improvement Partnership. 

With regard to audit fees for 2010/11, Ms Hill explained that the final position had yet to be confirmed.  The costs associated with the winding up of the Audit Commission would have to be met, and discussions were taking place with the Department for Communities and Local Government.

RESOLVED:  That the Audit Commission’s Annual Audit Letter to Maidstone Borough Council be noted.