Agenda item

To inform the Committee of the result of the external audit of the council’s 2023/24 Statement of Accounts, to receive the external auditor’s Audit Findings Report and to approve the council’s letter of representation from the Council’s s151 Officer (Deputy Chief Executive & Executive Director of Resources).

Note: Report to follow.

Speakers:

Nikki O’Connor, Strategic Finance Business Partner (Corporate)

Janet Dawson, Partner, EY

Key points raised in the discussion:

1.    The Strategic Finance Business Partner (Corporate) noted that since the draft accounts were presented to the Committee in July 2024, her team had been working closely with EY to finalise the accounts. No significant or material changes were anticipated, EY anticipated that it would issue an unqualified opinion, residual matters to be delegated to the Section 151 Officer in consultation with the Chairman to sign off the accounts once completed.

2.    The Partner (EY) noted that the work was almost complete, clearance of final queries on transaction level testing remained, the queries on PPE and investment property valuations were complete, the specialists were reviewing the updated valuation of the Eco Park and no concerns had been raised, and final review processes and clearance internally were to be completed.

3.    Regarding the key findings, the Partner (EY) highlighted that:

·         In terms of the risk of material misstatement, for most of those areas of focus there were no further issues to raise with the Committee.

·         On pensions, there was an adjustment of £14.99 million in the valuation of one investment and the Council’s share was £6.75 million; the Council did not propose to make that adjustment.

·         Significant additional work had been undertaken on Private Finance Initiative (PFI). The waste PFI and Eco Park was reviewed and specialists were needed, the Council had renegotiated the contract and amendments were required. Work had concluded on the street lighting PFI and the Council was recommended to update its model in line with the current service capital and interest costs, more work needed to be done on the charges and liability. Work on the care home PFI had concluded and there were no other issues.

·         Some capital expenditure had been bulked together on the fixed asset register, EY had spoken to officers to tighten up that accounting approach, there was no material misstatement.

·         The data migration work to the new system had impacted the progress of the audit in terms of understanding the data mapping and breaking down data, that created significant additional work; the approach had adapted and there was sufficient assurance.

·         There were several prior period adjustments.

·         A recommendation was made to keep a view on the actual valuation of the Council’s investments in subsidiaries and making sure those were kept up to date and reflected market conditions and their future performance. 

·         EY had a constructive relationship with the Finance team, both understood what needed to be done to help the Council improve.

4.    The Chairman asked when the outstanding queries would be completed. The Partner (EY) explained that the team was working through finalising the files in line with quality standards over the next fortnight, she anticipated that sign off of the final accounts would likely happen in February and clarified that EY was confident that those final queries should not have any further material impact.

5.    The Chairman asked what the Council’s response was to EY’s recommendations. The Strategic Finance Business Partner (Corporate) explained that officers had discussed each of the recommendations, some had been resolved and others were in the process of being resolved.

6.    A Committee member asked what EY’s conclusions were on the land and building valuation. The Partner (EY) explained that she outlined that in her presentation around the final queries regarding PPE and investment property, there were no further elements to report.

7.    A Committee member asked whether all EY’s recommendations would be implemented and how those would be tracked. The Strategic Finance Business Partner (Corporate) noted that the Council had being discussing those recommendations and sought to implement all of those. Some of those recommendations had a larger impact on the accounts than others so would be prioritised. She noted the timing and how close we are to the end of the 2024/25 financial year. In light of this, the Finance team would do its best to implement the recommendations in advance of the next audit, but some may take a little longer to resolve. She added that she could bring an update on the plan and dates for achieving EY’s recommendations, alongside the External Audit Plan for the Statement of Accounts 2024/25.

8.    The Vice-Chairman queried what the cost was of the additional work. The Strategic Finance Business Partner (Corporate) noted that a significant amount of additional work had been undertaken, the fees were quantified in the report and were in line with the figures presented as ranges in last year’s plan.

RESOLVED:

1.    Noted the contents of the Audit Results Report (ARR), Annex A.

2.    Approved the 2023/24 Statement of Accounts, Annex B, for publication on the council’s website, subject to any additional required changes.

3.    Noted the Pension Fund Audit Results Report, Annex C.

4.    Approved the Executive Director of Resources’ letter of representation, Annex D.

5.    Approved the group letter of representation and Pension Fund letter of representation, Annex E.

6.    The Audit and Governance Committee delegated any residual matters relating the audit of the accounts, the Group accounts and/or the pension fund accounts to the Section 151 Officer.

Actions/further information to be provided:

1.    A2/25 - The Strategic Finance Business Partner (Corporate) will bring an update on the plan and dates for achieving EY’s recommendations, alongside the External Audit Plan for the Statement of Accounts 2024/25.