Agenda item

To present to Members the Grant Thornton Annual Audit Letter which summarises the key findings arising from the work carried out at the Council for the year ended 31st March 2015.

(Report attached)

Mr Percival presented the Annual Audit Letter 2014/15.  This summarised the external auditor’s key findings and recommendations from the work carried out as part of the final accounts for the year ended 31st March 2015.

Grant Thornton had reported their findings arising from the audit of the financial statements in their Audit Findings Report to the 24th September 2015 meeting of the Committee.  However, due to the delay in completion of the audit they issued a revised Audit Findings Report on 16th December 2015 to Officers and the Chair of the Committee.  The key messages arising from the audit were that Grant Thornton had issued:

·       an unqualified opinion on the accounts, albeit after the statutory deadline of 30th September;

·       a qualified Value for Money conclusion; and

·       four recommendations under s11 (3) of the Audit Commission Act 1998.

The s11 recommendations required a formal response from Officers to ensure that the Council was taking appropriate action to address the significant issues identified, details of which were set out in the Officer Action Plan appended to the report.  Mr Percival spoke on the s11 recommendations and the reasons for these.  The recommendations focused on:

·       the need for the Council to put in place robust arrangements for the production of the 2015/16 financial statements;

·       the development of a comprehensive project plan for the preparation of the accounts;

·       the establishment of robust arrangements to ensure that the budget preparation processes were based on sound assumptions to enable an accurate forecast to be made of budget outturn, including realistic assessments of demand factors, service and demographic changes and sound assumptions around turnover and vacancy rates; and

·       the need for timely budget monitoring processes to enable an accurate in-year forecast of likely year-end outturn and any action to be taken to address budget variances.

Members noted the management responses to the recommendations and the separate Officer Action Plan appended to the report.  Mr Percival explained that it was the Committee’s role to ensure that robust arrangements were in place for production of the 2015/16 accounts, and that Grant Thornton expected the Action Plan to be referred to all meetings of the Committee to monitor progress against this.  Given the nature of Mr Percival’s comments the Chair requested a written summary of the comments, which Mr Percival agreed to provide for both the Chair and members of the Executive.

In response to Members’ questions Mr Percival stated that he was happy with the Action Plan drawn up by Officers, however the implementation of this and a clear demonstration that things were progressing with this was key.  Not only was it a question of Officers needing to catch up on the issues highlighted following the 2014/15 audit, but of also needing to move a step ahead in anticipation of the requirement to submit accounts earlier in future years.

Officers responded that this was the first year the accounts had been submitted late and that there had been a number of reasons leading to this.  Officers had spoken with both Grant Thornton and Members on the reasons for this.  All of the deadlines detailed in the Officer Action Plan to date had been met and there had been full and frank discussions with members of the finance team on the problems which had arisen.  There would be a ‘soft close’ of the accounts at the end of February and Suzanne Joberns, Grant Thornton’s new Audit Manager for the Council, would be asked to look at the position from a quarterly perspective.  Professional support had been procured and two qualified accountants would be working on the final accounts.  Officers provided clarification on questions raised by Members and highlighted some of the issues which had led to the accounting problems and the actions taken to address these.  It was also noted that, notwithstanding the issues highlighted, the Council had adequate levels of reserves and had a forward financial plan, which were the key reasons why Grant Thornton had assessed the Council as being financially resilient in the medium-term.

Mr Percival stressed the need for the Council to be on top of budget control and management, and for the issues surrounding this to be addressed.  Regarding regular monitoring of the s11 Action Plan, Officers welcomed a monthly meeting between themselves, Grant Thornton, the Chair and Vice-Chair of the Committee, Mr Jones (Independent Member for Audit and Governance and Lead Risk Member for the Committee) and Councillor Fisher, Portfolio Holder for Corporate Management, which the Committee supported.  In light of this the Committee agreed an addition to the second report recommendation to show that the s11 Action Plan be approved and regularly monitored (by the abovementioned group).

RESOLVED that

1)              the Annual Audit Letter at Appendix 1 to the report be noted; and

2)              the s11 Action Plan at Appendix 2 to the report be approved and regularly monitored.