Agenda item

The Portfolio Holder for Finance and Enabling presented an update on the Council’s Finance Recovery Plan for Members’ attention.

Members were advised that the purpose of the report was to 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 a report presented to Members on 14^th September 2022 and also the discussions over the external auditor’s Section 24 Statutory Recommendations for the Council that took place at meetings of the Audit, Governance and Standards Committee, Executive Committee and Council in November and December 2022 and 2023.

A similar report had recently been presented to the Audit Governance and Standards Committee.  That Committee had been meeting six times a year since the Section 24 Recommendations were issued and would continue to do so until the issues were resolved. 

It was noted that the external auditor’s Value for Money Reports for 2021/22 and 2022/23 had been presented to both the Audit Governance and Standards Committee and Council before Christmas in 2023.   The Council had also received a follow up Corporate Peer Challenge report, taking into account progress made by the Council in respect of financial recovery, the contents of which had been presented to Council at a meeting held on 29^th January 2024.

The Executive Committee was informed that the most significant change in relation to closure was the advice from Government that all sets of accounts, up to the 2022/23 accounts, would need to be audited by a cut-off date of the 30^th September 2024.  The Council had undertaken the data take on balance reconciliations (a task that had been due to be delivered by the external auditors originally) and had presented this information.  By the date of the Executive Committee meeting, the Council was waiting for feedback from the external auditors in respect of this matter.

Other significant changes since the previous financial recovery update report included the following:

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

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

·       A Quarter 2 Finance and Performance Monitoring Report 2023/24 had been presented to the Executive Committee. This also included an update on Assets in respect of the issue of Reinforced Autoclaved Aerated Concrete (RAAC).

·       The existing eFin system had been upgraded to ensure full reporting was available going forward.

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

·       The Quarter 2 financial monitoring was undertaken on TechOne, not on spreadsheets, which Members were advised was a huge move forward in terms of systems use and increasing the financial awareness of budget managers and their administration staff.

·       Monthly Accounts Payable Training continued to be provided to staff.

·       Interviews had been held for the position of Head of Finance and Customer Services.  Ms Debbie Goodall had been appointed and she was due to commence employment at the Council on the 8^th April 2024. 

·       Further interviews had been held for eight vacant posts in the Financial Services team on the 25^th and 26^th January 2024. There had been 29 applicants for those positions and six had accepted offers to start with the Authority.

Following the presentation of the report, Members discussed the progress that the Council had achieved since 2022.  Questions were raised about the estimated date by which all of the actions proposed in the Section 24 Recommendations would be completed.  Officers confirmed that the Government were requiring all local authorities to submit final accounts up to 2022/23 by 30^th September 2024.  However, Councils were in the process of meeting with representatives of the Government to discuss the feasibility of this deadline.  Nationally, there was a backlog of circa 700 sets of local government accounts that still needed to be audited by external auditors and resource limitations within external audit suggested that it was unlikely these audits would be completed by that deadline.  In addition, the external auditors focused on auditing NHS accounts between April and June each year, further limiting the amount of time available to external auditors to complete these audits.

Reference was made to the potential causes of delays to the Council’s work on completing and submitting the authority’s accounts.  Officers clarified that information had been provided to the external auditors in respect of the reconciliation of data from the old to the new financial system.  Once the external auditors had confirmed that this data had been signed off, Officers could commence work on the following financial year’s set of accounts.

Consideration was given to the recent appointment of a new permanent Head of Finance and Customer Services.  Members welcomed this appointment but expressed disappointment that they had learned about this in the local press, rather than through direct communications with Officers at the Council.  Officers agreed to note this in relation to future senior officer appointments.

Members noted that the report referred to the Council running sessions in respect of the authority’s “risk appetite” and questions were raised about when these sessions would be held and who would attend.  Confirmation was provided that these sessions would be offered to members of the Executive Committee and would take place after the local Borough Council elections in May 2024.

It was noted that the report referred to errors in the Tech1 finance system and Members requested updates on the progress that had been achieved with addressing these.  Officers explained that as soon as the first set of accounts could be provided, it would also be possible to generate error reports.

In concluding the discussions in respect of this item, Members referred to the volume of items listed in the Council’s suspense accounts as treasury transactions and requested clarity on these figures.  Officers advised that the value of the treasury transactions needed to be close to £100,000 per annum.  The Council was close to achieving this for most of the financial years from 2020/21 onwards, although some additional work was required to review the 2021/22 financial year in respect of this matter.  Members were advised that this work on treasury transactions would be undertaken on a manual basis.

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 be noted.