Agenda item

The Portfolio Holder for Finance and Enabling presented the Finance Recovery Plan for the Executive Committee’s consideration.

Members were advised that the report set out the processes the Council had been following to rectify a deterioration in its financial position and processes due to the impact of the implementation of a new financial system in February 2021 during the Covid-19 pandemic. This followed on from reports to the Executive Committee in September 2022 and July 2023.  The Audit Governance and Standards Committee was also receiving similar updates at all their meetings.

Since the report to the Executive Committee, the following progress had been achieved:

·       A draft Outturn Report for 2022/23 had been presented to the Executive Committee.

·       The draft 2022/23 Revenue Outturn Estimates had been presented to the Department for Levelling Up, Housing and Communities (DLUHC).

·       The draft 2022/23 Capital Outturn Estimates had been presented to DLUHC.

·       A Quarter 1 Finance and Performance Report 2023/24 had been presented to the Executive Committee.

·       Joint work had continued with the external auditors on providing evidence of control balances at the time of the transfer from the old finance system to TechOne on the 8^th February 2021. The external auditors had validation routines for the 2020/21 financial year and were in the process of reviewing this data.  However, the Council was still due to provide data and an agreement had now been reached with the Council’s previous financial system providers, to deliver this data to the external auditors.

·       The 2021/22 Housing Benefits Audit had been signed off.

·       Financial Awareness Training with Managers had taken place.

·       Budget Management Training for Managers (including use of TechOne) had taken place.

·       Monthly Accounts Payable Training was taking place.

·       The Council had recruited a Head of Management Accountancy on the 20^th September 2023 and two temporary Technical Accountants.

·       The Council had upgraded the TechOne finance system to the latest version in July 2023.

·       The Financial Compliance Report, setting out movement in the financial recovery plan, had been reviewed by the Audit, Governance and Standards Committee in July and September 2023.

There were still significant concerns in relation to closure of the accounts, and their delivery, as there was the potential that the Government would introduce new national timetables.  The Government had set statutory deadlines for the completion of the audit of accounts as follows:

·       Accounts for 2015/16 through to 2019/20 needed to be signed off by 30^th December 2023

·       Accounts for 2020/21 and 2021/22 needed to be signed off by 31^st March 2024

·       Accounts for 2022/23 needed to be signed off by 30^th September 2024

The Council was still on track to clear the suspense backlog by the end of the 2023 calendar year and, with this, would finally be able to complete the 2020/21 and 2021/22 Revenue Outturn (RO) and Capital Outturn (CO) forms and all the VAT returns.

The Quarter 2 monitoring, which was due to be considered by the Executive Committee in December 2023, had for the first time been delivered on the TechOne system following the training that took place in September 2023.

The Council had been going through a Value for Money (VfM) audit.  The accounts would not be verified until the full take from balances had been finalised.  However, the annual VfM audit was on track to be reported to the Audit, Governance and Standards Committee in November 2023.  The Council was anticipating that this would provide a positive analysis of the financial situation at the authority.

Following the presentation of the report, Members discussed the challenges that had been encountered by the Council following the introduction of the TechOne finance system and questions were raised about whether this remained the right system for the Council to use moving forward.  Officers explained that the issues with the system had emerged in relation to implementation.  There were other Councils in the country that used the TechOne finance system successfully, but Redditch Borough and Bromsgrove District Councils had been the first authorities to use the cash receipting module and this had been the cause of many issues.  The training that had been provided to budget managers would potentially result in improvements to budget management at the Council as well as helping to upskill those members of staff.

RESOLVED that

1)          Progress made on the financial recovery be noted including:

a)          Delivery of the Statutory Accounts

b)         Delivery of Statutory Financial Returns

c)          Improvements in the Control Environment

2)          the work still under way to move back to a best practice operation and the associated timetable for completion of this work, as contained in this report, be noted.