Agenda item

Ellie Dunnet, Chief Accountant, introduced a report setting out the audited Statement of Accounts for 2013/14, including the External Auditor’s Audit Findings Report, in accordance with the requirements of the Accounts and Audit Regulations 2011.

The Chief Accountant advised the Committee that following the publication of the agenda, minor alterations had been made to the audited Statement of Accounts.  These related to the Movement in Reserves Statement, the Comprehensive Income and Expenditure Statement and Note 5 to the Accounts (Adjustments between Accounting Basis and Funding Basis under Regulations).

The Chairman said that he had agreed to take the amended version of the audited Statement of Accounts as an urgent item as the Accounts needed to be considered in their entirety at this meeting of the Committee.

It was noted that:

·  The audit was substantially complete and a small number of amendments had been made as a result, but none of these had affected the Council’s General Fund Balance as at 31 March 2014.  Changes had also been made to improve the presentation and clarity of the Statement of Accounts.

·  The Audit Findings Report identified two control deficiencies arising from the audit of the financial statements.  These related to access controls over the Academy system and improvements to the process for the reconciliation of this system to the main financial ledger.  The External Auditor’s recommendations relating to these matters had been accepted by the Officers and the actions would be implemented as agreed.

·  Two further recommendations had been made in respect of the Value for Money conclusion.  These recommendations related to the Council’s approach to financial planning and the setting of minimum levels of reserves.  They had been accepted by the Officers and would be addressed as part of the consideration of the Medium Term Financial Strategy by Overview and Scrutiny and the Cabinet .

·  Overall the report concluded that the Council had proper arrangements in place to secure economy, efficiency and effectiveness in the use of its resources.  The External Auditor intended to issue an unqualified opinion on the 2013/14 Statement of Accounts and an unqualified Value for Money Conclusion.  There were a small number of outstanding issues to be addressed, but it was not anticipated that these would have any impact on the Statement of Accounts or the proposed audit opinion.

Reference was also made in the report to the minor reduction in the overall fee payable to Grant Thornton arising from a change in requirements for grant claim certification and to the Letter of Representation written by the Council to the External Auditor for the purpose of expressing an opinion as to whether the financial statements gave a true and fair view in accordance with International Financial Reporting Standards.

In response to questions by Members, the Officers explained that:

·  The Council had approximately £5m in general reserves, which was low compared to some other local authorities, but in excess of 20% of the Council’s net revenue spend.  The decision could be made to increase the level of reserves, but it would be difficult to do so at present given the need to make budgetary savings. The External Auditor had made a recommendation that the Council should review the level of useable reserves, and this would be raised with the Strategic Leadership and Corporate Services Overview and Scrutiny Budget Working Group and with the Cabinet as part of its consideration of the Medium Term Financial Strategy.  The External Auditor would be looking for the Council to justify its policy in relation to reserves whilst having regard to the financial pressures local authorities are under and the Council’s ability to change the level of balances significantly.

·  The reason for the amber rating in relation to two accounting areas (Revenue Recognition Policies and Estimates) was that an accounting policy had been omitted for two revenue streams.  This had now been rectified and included in the amended accounts.

RESOLVED:

1.  That the External Auditor’s Audit Findings Report, 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 draft Statement of Accounts and agrees the response to the recommendations contained in the Action Plan.

2.  That with the proviso that there are a few outstanding issues to be finalised, and this might result in some minor changes, the Statement of Accounts for 2013/14, as set out in amended Appendix B to the report of the Head of Finance and Resources, be approved.

3.   That the Council’s Letter of Representation to the External Auditor, attached as Appendix C to the report of the Head of Finance and Resources, be approved.

4.  That the overall reduction in the audit fee payable to Grant Thornton be noted.