Agenda item

This paper provides the Audit & Governance Committee with a report on Grant Thornton’s progress in delivering their responsibilities as the Council’s external auditors.  The paper also includes a summary of emerging national issues and developments.

Declarations of interest:

None.

Witnesses:

Andy Mack, Engagement Lead – Grant Thornton

Kathryn Sharp, Senior Manager – Grant Thornton

Jonathan Evans, Principal Accountant – Financial Accounting

Sheila Little, Director of Finance

Key points raised during the discussion:

1.    The Engagement Lead introduced the update report.  The headlines regarding the audit approach were outlined on pages 47 and 48 of the report pack.

2.    Members expressed concern about the accounting for schools issue.  The Senior Manager agreed that there continued to be a lively debate on this issue.  The current position is that all Foundation schools will be shown in the balance sheet and that Voluntary Aided and Voluntary Controlled Schools would be determined on a case by case basis, dependent on the right of any other authority to those assets.  The Principal Accountant – Financial Accounting informed the committee that for the previous year’s accounts, all Foundation Schools and Voluntary Aided Schools were off the balance sheet while all Voluntary Controlled Schools were on the balance sheet.  Property is in discussion with the valuation office on Foundation Schools.  An estimated value would have to be included in the accounts this year, with a full valuation conducted for next year.  A review was also underway on who owns property at Voluntary Aided and Voluntary Controlled schools.  A high level estimated valuation would again be included in this year’s accounts with a full valuation conducted for next year.  Members queried if there was a clear pathway for where schools which had been removed from the council’s balance sheet would go.  The Senior Manager explained that the situation was not that clear cut and that the schools may not appear in another set of accounts.  However, overall the position would see more schools come onto the council’s balance sheet than be taken off.  Members were concerned with the suggestion that an asset may not be listed on any accounts as this would introduce a lack of clarity to issues such as ownership and insurance.  The Director of Finance agreed to look into the process and legal issues which follow schools being removed from the council’s accounts (Recommendations Tracker ref: A3/15).  The committee went on to consider the situation whereby a number of schools are off the council’s balance sheet but their playing fields are on the balance sheet.

3.    The Chairman queried what the year-end was for SE Business Services Ltd.  The Senior Manager clarified that it is the same as for the Council.  However, the Audit Findings Report for the 2013/14 financial year had been delayed to the April 2015 meeting of the committee as the Directors had wanted to see it first.

4.    The Chairman queried how Grant Thornton was looking at the Better Care Fund in Surrey.  The Engagement Lead stated that auditing the Better Care Fund arrangements in Surrey was high on Grant Thornton’s agenda.  Training sessions would be arranged for the Council and the Clinical Commissioning Groups (CCGs) on the accounting arrangements.

Tim Evans joined the meeting at 11.05am.

5.    The Director of Finance informed the committee that the finance governance framework had been agreed as part of the Surrey Local Plan.  The Local Plan had also been agreed by the Department of Health.  Section 75 agreements were being developed for each CCG.  The CCGs were appointing a single solicitor to work with the County Council’s solicitor on the Section 75 agreements.  Discussions were being held with the Chief Finance Officers for the CCGs to establish a consensus on financial reporting.  All were happy for the County Council to host the Fund and work was being undertaken to establish what the resource implications are.

6.    Grant Thornton have accepted self-certification of the CCG accounts for 2013/14 and 2014/15.  It is unclear at present what the accounting arrangements for 2015/16 would be.

7.    The Engagement Lead agreed with the committee that the risks identified were unlikely to apply in local government because of the checks and balances in place.  The audit findings report would identify the risk and likely rebut the risk.

8.    A Member asked how the findings of the national report ‘2020 Vision’ were being addressed within Surrey County Council.  The Director of Finance remarked that, as Section 151 officer, she sat on the Society of County Treasurers.  She also has regular one to ones with Chief Finance Officers within the Department of Communities and Local Government.  She sought to enlighten government about the complexity of local government funding through these routes. 

Actions/Further information to be provided:

      i.        The Director of Finance to look into the process and legal issues which follow schools being removed from the council’s accounts and report back.

RESOLVED:

That the Committee NOTES the report.

Committee next steps:

To receive detailed audit plans for the Council and Surrey Pension Fund in April 2015.