Agenda item

The Head of Finance and Customer Services introduced the report and noted that in view of there being several new Members on the Committee, the Council’s Budget and Policy Framework Procedure Rules, Financial Procedure Rules and Finance Protocols had been included in the agenda papers for tonight’s meeting.

It was reported that the Council had submitted most of the key legislative returns to the Government, with the exception of the capital outturn return which was due to be submitted the next day (26 July) and the capital receipt where technical issues had been encountered which were being rectified before submission takes place. With respect of other returns, the Council was up to date.

An update was provided on the submission of prior years’ Statements of Accounts. Members were reminded that 2020-21 Accounts were presented to Audit Committee in May for comment and were now open for public scrutiny. It was anticipated that 2021-22 Accounts draft would be produced by the end of August 2024 with the 2022-23 Accounts following in short order. It was highlighted that it was unlikely that these accounts would now be audited by the Council’s current auditors, Grant Thornton, and the Council was awaiting guidance from National Audit Office and the Government on the new processes. It was expected that 2023-24 would be audited by the Council’s new auditors, Bishop Fleming.

It was highlighted in terms of the accounts closure process that the Council was closing 3 years in parallel and concurrently. The accounts for 2021-22 and future years to make them easier to complete and read. In terms of reconciliations, a team of 5 was now working on these over all the open financial years. Balanced transactions were currently being posted into the ledger Bank Reconciliations had been reconciled although the correcting journals had not been actioned.

The Council was in the process of delivering VAT returns from HMRC for years 2022-23, 2023-24 and 2024-25. It was noted that due to previous cash receipting issues the Council had not previously been able to complete detailed VAT returns for 2020-21 and 2021-22. The Council had resolved its cash receipting issue; however, it remained in conversation with HMRC over claiming back VAT returns for those years as it was owed significant amounts of money (circa £7 million) for those years, however, the Council needed to submit claims by September in order to claim back the money.

In terms of Value for Money reports, it was noted that External Auditors delivered their joint Value for Money Opinions for 2021-22 and 2022-23 in November 2023. The Section 24 Recommendation (Section 24 Notice) was still in place and extended for Accounts years 2021-22 and 2022-23

In response to a Member question, it was clarified that as a result of the latest Public Sector Audit Appointments (PSAA) auditor appointments process, the Council was changing its external auditor from 2023-24 accounts year. It was explained that the Council was part of the PSAA structure, and the auditor appointment decisions were undertaken at that level. It was added that currently there was an uncertainty about how the audits of 2021-22 and 2022-23 accounts would be undertaken after the Council had submitted the drafts for audit. This issue was related to the wider problems across the audit sector with the ‘backlog’ of unaudited local authority accounts.

During discussion, a question was raised about the issue with cash receipting, and it was agreed as an action that a copy of the review undertaken on the issue by Members at Bromsgrove District Council would be circulated to new Members of this Committee.

The Portfolio Holder for Finance was invited to speak and he concurred with the Committee in thanking the whole finance team for their efforts in rectifying the issues and the backlog in the accounts.

In relation to the resolution, it was agreed that it should read that progress had been noted on the audit process across financial years 2020-21, 2021-22 and 2022-23 rather than just 2020-21 as stated in the report.

RESOLVED that

progress on the 2020-21, 2021-22, and 2022-23 Audit process be noted.