Agenda item

To consider the draft Auditors ISA 260 report and endorsement of the Annual Governance Statement, the Letter of Representation and the Annual Financial Report.

(TO FOLLOW)

Consideration was given to a report by the Head of Resources (a copy of which is appended in the Minute Book) which sought approval for the publication of the Council’s Annual Governance Statement (AGS), Annual Financial Report (AFR) for 2015/16 and Letter of Representation in accordance with statutory regulations and to be approved and published by the 30th September.

The Head of Resources reported upon the appointment of Ernst and Young as the Council’s new external auditors and introduced Mr N Harris, Executive Director and Mr T Poynton, Audit Manager as their representatives to present the Audit Results Report.

Mr Harris outlined their responsibilities of issuing an opinion and a value for money opinion and informed Members that Ernst and Young had concluded their review and had been satisfied to issue an unqualified opinion and value for money opinion that the Council had proper arrangements in place to achieve value for money. In thanking the Head of Resources and his Officers for their support in the process, Mr Harris reported upon some difficulties they had experienced but had worked through these in a professional way.

In referring to the uncorrected audit differences in Appendix A of the report now submitted, Mr Harris reported that they had not been considered material for adjustment to be made by management but necessary to be brought to the Committee’s attention. Attention was also drawn to the identification of further audit differences as outlined in Appendix B to the report now submitted that necessitated correction by management within the revised financial statement.

The Committee noted a decrease in the materiality from £1.75m to £1.73m that had been reassessed based upon the actual results for the financial year due to lower gross revenue expenditure in 2015/16 than the previous year.

Mr Harris referred to the difficulties encountered during the audit outlined above and following the conclusion of the audit Members noted that it may be necessary for a further fee to be charged to cover these issues resulting in some delay in the completion of the report. With reference to these issues, the Chairman questioned whether Ernst and Young had supplied enough resources, whereby Mr Harris confirmed that the resource level had not been as good as it could have been and this would be taken into account when any additional fees are levied.

In response to a question from Councillor T Hayward on the statement that in 2018 the report had to be completed by the end of July, Mr Harris reported that the 40% level of other audit work undertaken by the end of March would increase to 60% and there would be more work undertaken on internal controls and testing, with more estimation work through principles agreed previously with the local authority.

Arising from a question from Councillor Mrs S Conboy on the Council’s budget and concerns for sustainability, Mr Harris praised the Council’s exercise on Zero Based Budgeting designed to achieve a level of sustainability and stated that the Council had an adequate level of reserves, but had also been looking at other ways of earning income through a prudent and risk based approach.

In response to a question from Councillor R Fuller on clarity of the uncorrected audit difference sum, the Head of Resources reported that the £258k had not been accounted for on the balance sheet and not recorded in the correct place. He assured Members that this situation would not arise again.

In referring to a question from the Chairman on the level of pension fund and change in its valuation, the Head of Resources reported that the valuation is obtained from an actuary but had been revised this year to reflect a change in market conditions such as investments and other liabilities but had been of an adequate level.

With reference to the significant movement in our usable reserves as identified in the Annual Financial Report, the Head of Resources explained the background to the adjustments in the General Fund Balance to General Fund Reserves and the transfer in of £7.6m for the procurement of commercial assets.

In referring to concerns from Members regarding the whether the borrowing of finance had been reviewed, Mr Harris confirmed that this issue would be addressed in the 2016/17 audit. The Head of Resources assured Members that the borrowing had been made on a prudential basis to ensure that the returns would cover the investment made.

Having expressed appreciation to the Officers involved in producing the AGS and AFS and also to the External Auditors for their work this year, the Committee

RESOLVED

(a)  that the External Auditor’s Results Report attached as Appendix A to the report now submitted be received;

(b)  that the Annual Governance Statement attached as Appendix B to the report now submitted be approved and that the Executive Leader and Managing Director be authorised to sign the Statement on behalf of the Council;

(c)  that the Letter of Representation attached as Appendix C to the report now submitted be approved and the Head of Resources be authorised to sign the Letter on behalf of the Council; and

(d)  that the Annual Financial Report attached as Appendix D to the report now submitted be approved and the Chairman of the Committee and Head of Resources be authorised to sign the accounts on behalf of the Council.