Agenda item

The Committee considered the report of the Head of Finance and Resources concerning the findings of the audit of the Statement of Accounts for 2012/13 undertaken by Grant Thornton who had replaced the Audit Commission as the Council’s External Auditor.  In conjunction with this report, the Committee considered the urgent report of the Head of Finance and Resources relating to the Council’s Letter of Representation to the External Auditor as it formed part of the formal approval of the Statement of Accounts for 2012/13.  It was noted that:

·  The audit was substantially complete although the External Auditor was finalising work in a number of areas including obtaining and reviewing revised working papers in respect of Collection Fund debtors and creditors.

·  The audit had identified the need to make a number of adjustments to the un-audited Statement of Accounts.  These related primarily to classification errors and did not impact upon the Council’s net expenditure or revenue balances.  The External Auditor had also agreed several changes to the notes to the Accounts in order to improve the clarity and presentation of the Statement.

·  The External Auditor had made a number of specific recommendations arising from the audit of the Statement of Accounts.  These related to the valuation of property assets and the Officers had agreed to implement them in accordance with the recommended timescale.  There were no specific recommendations in relation to the Value for Money conclusion, and the External Auditor was satisfied that in all significant respects the Council had proper arrangements in place to secure economy, efficiency and effectiveness in the use of its resources.

·  Subject to the satisfactory resolution of the outstanding issues, including the reissue of the Council’s Letter of Representation as a consequence, it was anticipated that the External Auditor would provide an unqualified opinion on the Statement of Accounts by the end of September 2013.

The Committee asked a number of questions of the Officers relating to:

·  The reasons for some significant variances in original estimates and actual expenditure across the portfolios;

·  Accounting practice in relation to intangible assets (for example, software licences);

·  The implications of misclassifications, particularly with regard to the Comprehensive Income and Expenditure Statement year on year;

·  The establishment and maintenance of a level of reserves appropriate for the risks to which the Authority is exposed;

·  The adequacy of the management response to the External Auditor’s recommendations in relation to the valuation of property assets;

·  The inclusion in the Accounts of estimated figures that are based on assumptions made by the Council about the future or that are otherwise uncertain, and the effects if the actual results are materially different from the assumptions and estimates, for example the assumptions to be made in terms of the net liability to pay pensions;

·  The trading deficit in relation to the Lockmeadow Market complex (due in part to occupancy levels);

·  The valuation of Heritage Assets including museum exhibits and statues and sculptures; and

·  The skills and experience available within the Finance Team to meet requirements.

The External Auditor advised the Committee that whilst there had been an improvement in the overall quality of the working papers provided to support the financial statements this year, the number of amendments made to disclosure notes as a result of the audit was high compared to other authorities and needed to be addressed.

The Head of Finance and Resources confirmed that he would ensure that the working papers in relation to the Collection Fund were made available as soon as possible to enable the External Auditor to conclude his opinion.  The recruitment of a Chief Accountant would have an impact during the lead up to the 2013/14 Accounts closedown.

RESOLVED:

(a)  That the Audit Findings Report from the External Auditor, as set out in draft form as Appendix A to the report of the Head of Finance and Resources, be approved and that, in approving the report, the Committee notes the amendments to the Statement of Accounts, agrees the response to the proposed action plan and acknowledges the Council’s Letter of Representation to the External Auditor on the understanding that it will be reissued when the outstanding issues are satisfactorily resolved;

(b)  That subject to the satisfactory resolution of the outstanding issues, the Statement of Accounts, as set out in Appendix B to the report of the Head of Finance and Resources, be approved; and

(c)  That the contents of the External Auditor’s Financial Resilience Report, attached as Appendix C to the report of the Head of Finance and Resources, be noted.