Agenda item

Section 24 Notice

Council considered the Section 24 Notice that had been issued to the authority by the external auditors, Grant Thornton.  Members agreed that the Council should accept the Section 24 Notice and the points that the external auditors had raised in this notice, which related to the non-submission of the Council’s 2020-21 accounts.

Reference was made to discussions that had taken place at a meeting of the Audit, Governance and Standards Committee held on 10^th November 2022 in respect of this matter.  During this meeting, Members had been advised that there were three key factors which had contributed to the delays in submitting the accounts:

·             Problems with the implementation of the new Tech1 finance system, particularly the cash receipting part of this system, which had been introduced at the Council in 2021.

·             Signficant staff turnover in the Corporate Financial Services department at the time when the new system was being introduced.

·             The Covid-19 pandemic.

Consideration was given to the hard work that had been undertaken by officers to rectify problems with the Tech1 system, once new staff had been appointed to the Financial Services team.  Members thanked Officers for their hard work and expressed their hopes that the action that had already been taken would enable the Council to return to submitting accounts in a timely manner in future.

Members noted that the external auditors had indicated at the meeting of the Audit, Governance and Standards Committee that the Council might need to pay an additional fee for the audit of the 2020-21 accounts once these were submitted, depending on the amount of work required.  Questions were raised about how much this additional fee was likely to cost the Council.  The Interim Section 151 Officer explained that the additional fee would depend on the level of extra work required from the external auditors to audit the accounts, but it was likely this could be approximately £20,000.

The additional training in respect of the Tech1 finance system that was due to be provided to staff was also discussed.  Members queried the length of time that would be required to deliver this training to staff as well as the financial costs.  The Interim Section 151 Officer explained that there would be a two-day training session held between the completion of the 2020-21 accounts and start of work on the 2021-22 accounts.  This training would be in addition to the general expenditure training which had been provided to staff on an ongoing basis.

Concerns were raised about the delay in submitting the Council’s 2020-21 accounts and Officers were asked to clarify whether the authority’s 2019/20 accounts had been submitted and whether the delays with the 2020-21 accounts would impact on submission of the 2021-22 accounts.  The Interim Section 151 Officer explained that the Council’s 2019-20 accounts had already been submitted.  Councils could only work on one set of accounts at a time, so the 2021-22 accounts had not yet been started.  However, as soon as work on the 2020-21 accounts had been completed, Officers would commence work on the 2021-22 accounts.  The problems with the cash receipting part of the system had been resolved and Officers were on track to submit the 2020-21 accounts by the end of November 2022 and for this reason, there would need to be an extra meeting of the Audit, Governance and Standards Committee in December to consider the statement of accounts.

During consideration of this item, Members noted that the Council had been transparent in terms of reporting on the issues that had been identified by the external auditors in both the Section 24 Notice and the Interim External Auditor’s Annual Report 2020-21.  In addition, Members had discussed the introduction and roll out of the new Tech1 finance system at various meetings, including at meetings of the Budget Scrutiny Working Group.

The impact that the Section 24 Notice had had on staff morale and mental wellbeing was briefly considered.  Members commented that staff welfare needed to be prioritised and with this in mind suggested that a sense of isolation arising from working at home could have a negative impact on some staff.  Concerns were also raised that the Section 24 Notice could encourage more staff to leave the authority.  However, it was also noted that the Council had an agile working policy and this provided flexibility over working arrangements to suit the needs of both the employer and employees.

Interim External Auditor’s Annual Report 2020-21

Members considered the Interim External Auditor’s Annual Report 2020-21.  Reference was made to the recent discussions with respect to this report at a meeting of the Audit, Governance and Standards Committee and Members noted that the external auditors had made recommendations that were designed to improve various processes at the Council.  In particular, the key recommendations in the report focused on the need for transparency in financial monitoring and reporting arrangements.

RESOLVED that

1)          the Section 24 Statutory Recommendation is accepted and that Council endorse the actions included in the management responses which form the rectification process required as per legislation;

2)          the 6 Key Recommendations and 13 Improvement Recommendations within the Interim External Auditor’s Annual Report 2020-21 be agreed; and

3)          it be agreed that the Management Actions contained within the Interim External Auditor’s Annual Report 2020-21 will rectify these issues.