Agenda item

The Senior Finance Manager (Client) introduced his report setting out an amended audited Statement of Accounts together with an updated audit findings report and progress report from Grant Thornton, the External Auditor.

The Senior Finance Manager explained that:

·  The Statement of Accounts was submitted to the meeting of the Committee in July 2020 for approval, but audit work was still ongoing at that time including seeking assurance regarding the pension figures provided by the actuary.  Subsequent audit work had led to further adjustments in respect of the capital figures in the Statement which could be summarised as follows:

The Brunswick Street car park should have been written out of the Property, Plant and Equipment balance following the disposal of the site for housing development.  The net value of the car park was £0.273m.

The car park at the Lockmeadow Complex was now included as a separate asset as part of Property, Plant and Equipment.  It had been previously included within the overall valuation of the Complex.  The car park had been valued at £2.825m and the Balance Sheet figures for 2018/19 had been restated to reflect this, together with some other notes.

·  Due to the ongoing work on the audit, further changes to the Accounts might be required.  The Committee was therefore asked to delegate approval of any further non-material changes to the Director of Finance and Business Improvement in consultation with the Chairman and Vice-Chairman of the Committee.  If any material changes were required, particularly in relation to the pensions issue, it would be necessary to report the Statement of Accounts back to the November meeting of the Committee for re-approval.

Mr Paul Dossett of Grant Thornton, the External Auditor, said that he did not anticipate the pensions figures being an issue.  There were a few other minor matters that needed to be addressed, the principal one being the adjustment relating to the Lockmeadow car park which would have an impact on the Statement of Accounts.  He would not expect any significant material issues to arise at this stage of the audit that would need to be reported to Members.

In response to questions:

Mr Dossett advised the Committee that:

·  In terms of the Kent Pension Fund, all of the audit work was very close to completion.

·  Typographical, grammatical and presentational errors in the External Auditor’s audit findings report identified during the discussion would be corrected in the final version of the report.

The Director of Finance and Business Improvement advised the Committee that:

·  The appropriate level of reserves was a matter of judgement, but in developing a new Medium Term Financial Strategy, consideration would be given to increasing the required minimum level of reserves to £4m.

·  Action was being taken to improve performance in collecting related party disclosure forms.

The Head of Finance advised the Committee that:

·  Typographical errors in the Statement of Accounts identified during the discussion would be corrected in the final version.

·  If there were immaterial rounding errors, it was not the policy to go back and correct them as there could be a knock-on effect elsewhere in the Statement.

·  A comment would be included in the notes to the Statement of Accounts to explain that the increase in the Chief Executive’s salary related to her Returning Officer’s pay rather than a general pay increase.

·  In terms of revenue recognition, the Council was required to account on an accruals basis for both income and expenditure.

·  The figures for Maidstone Property Holdings Limited would have to appear in the Accounts at the point that they became material, but consideration was being given to including them in 2021/22.

·  On the Balance Sheet as at 31 March 2019 and 2020, short term liabilities related to the short term loans taken out following the acquisition of the Lockmeadow Complex when short term rates were very competitive.  The movement in unusable reserves related to a combination of the pensions reserve and asset revaluations.

RESOLVED:

1.  That subject to the typographical, grammatical and presentational errors raised in the discussion being corrected in the final version, the updated audit findings report, attached as Appendix 1 to the External Audit urgent update, be noted and that the representations contained therein be agreed.

2.  That the progress report of the External Auditor, attached as Appendix 2 to the External Audit urgent update, be noted.

3.  That subject to the points raised in the discussion, the amended audited Statement of Accounts 2019/20, attached as Appendix 1 to the report of the Senior Finance Manager (Client), be approved.

4.  That in the event of any further non-material changes being required to the Statement of Accounts, approval be delegated to the Director of Finance and Business Improvement in consultation with the Chairman and Vice-Chairman of the Committee.