Agenda item

To enable Members to consider the Audit Findings Report 2014/15 from Grant Thornton.

(Report to follow)

Mr. Phil Jones, Engagement Lead, Grant Thornton, presented the Audit Findings report.  Mr. Jones highlighted that the Audit was not as advanced as it would have been in previous years and there were a number of areas where work needed to be finalised, as detailed within the report.  The Executive Summary of the report also highlighted the key messages arising from the audit; missing the statutory deadline, material changes within the accounts and the audit being protracted due to difficulties in obtaining working papers.  It was acknowledged that it had been an exceptional year and that there were a number of factors which had contributed to the problems; this included the introduction of a new system and staffing issues.

The problems which had occurred had impacted on the audit findings and necessitated changes being made to the Audit Plan.  Those changes included additional testing undertaken around operating expenses, more detailed analytical review work and changes to the risk assessment around welfare benefits.  Those changes had meant that some procedures had to be repeated and the audit had therefore taken significantly longer than originally planned. 

Members were most concerned about the problems which had arisen and the effect it had on the reputation of the Council and the current financial position.  Mr. Phil Jones assured them that the Council was in fact in a better financial position than the previous year as it had added to its general fund balances and it had been pleasing to see that a three year financial plan had been put in place.  However, those increases in the general fund were not planned when the budget had originally been set and therefore budget setting was something which needed to be addressed in the future.

Mr. Phil Jones informed Members that a recommendation had been made under section 11(3) of the Audit Commission Act 1998, which set out a number of recommendations which the Council need to put in place and covering a number of areas including:

·         Robust arrangements to ensure the production of the 2015/16 financial statements.

·         The development of a comprehensive project plan for preparation of the accounts.

·         Arrangements in place to ensure budget preparation processes were based on sound assumptions.

·         Timely budget monitoring processes

·         In addition to the formal recommendation there were a number of more detailed recommendations set out in an Action Plan.

Following presentation of the report, the Portfolio Holder for Corporate Management responded and acknowledged that, for a variety of reasons, there had been problems in Grant Thornton being able to audit the accounts.  He took the opportunity to thank Officers for the work they had done in assisting Grant Thornton with the audit.  The Portfolio Holder explained that he had already met with Officers to discuss what had happened and to ensure that a lesson learned exercise was carried out and discuss the draft action plan which was already being formulated by the Executive Director, Finance and Resources to ensure improvements were made to make the processes more robust.  The Portfolio Holder explained to Members that he had regular meetings with the Executive Director, Finance and Resources and her team, together with Heads of Service when necessary.   There were a number of financial challenges facing the Council and it was important that savings were made quickly and efficiently.  Heads of Service continued to make good progress through the transformation process, but it was acknowledged that the budgetary process was an area which needed to be improved.

Officers and the Portfolio Holder responded to questions from Members in respect of the following areas:

·         Whether Members had any statutory responsibility to ensure the controls and policies were robust and properly managed.

·         The implications of a Section 11 Recommendation – Mr. Phil Jones explained that the aim of this was to set a timescale for the work within the Section 11recommendation to be completed and to show that the Council was committed to making the necessary changes.

·         There were a number of references to Bromsgrove within the report and Ms. Zoe Thomas, Manager, Grant Thornton, apologised for the error and assured Members that these would be rectified.

·         The key performance indicators and how these were monitored and maintained.

·         Whether there were two separate systems being used in respect of Redditch Borough and Bromsgrove District Councils - Officers provided details of the problems which had occurred with the ledger system upgrade and the transfer of data, in order to bring the two systems together.

·         The number of high priority items within the action plan and the number of unfinished areas with the Value for Money section of the report.

·         The cost to the Council in respect of the additional work which had been carried out by Grant Thornton.

·         The impact of the vacancies within the Finance team and the additional support that had been provided.

RESOLVED that

1)    the Action Plan be placed on the Audit, Governance and Standards Committee’s Work Programme; and

2)    the Audit Findings Report 2014/15 be noted.