Agenda item

To consider the Auditor’s Report and approval 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) to complete the processes for finalising and publishing the Council’s Annual Governance Statement (AGS) and Annual Financial Report (AFR) for 2017/18.

The Committee were referred to the report circulated subsequent to the agenda publication.  It was explained that due to new statutory regulations that Local Authority accounts had to be approved by 31 July rather than the end of September, the Council’s Auditors (EY) had to schedule all clients into a two month period.  EY had commenced work with the Council at the beginning of July and had to complete the necessary work in 3½ weeks what previously would have taken over 5 weeks, which had resulted in a delay to the Committee receiving the report.

It was further explained that the audit was not complete as the auditors had some final queries to resolve to enable them to approve the accounts. The three issues raised as ‘Control Observations’ by the auditors within the Audit Results Report in respect of the AFR related to Accounting records; Timeliness of deliverables; and Reliance on key personnel.

The Committee welcomed Hayley Clark from EY to present the audit results report which summarised the preliminary audit conclusions.  In identifying the salient points of the report to the Committee, it was explained that subject to satisfactory completion of the key outstanding items listed within the executive summary of Annexe A, it was expected that an unqualified opinion on the Council’s financial statements would be issued by EY. Most of the items listed were expected to be imminently completed, but there was a risk to achieve the deadline of 31 July 2018.

One area highlighted as a significant risk within the audit report related to the valuation of investment property.  In response to a question it was explained that the matter related to one of the Council’s investment properties, the Oak Tree Centre, which had been identified as requiring extensive repair and renovation, estimated at £2 million.  EY were working with the Council to gather sufficient evidence to support the calculations for the cost of the capital works and the implications, if any, on the valuation of the property.

For context the Head of Resources informed the Committee that the NHS was the tenant in the Oak Tree Centre.  It was an asset used by the community and the NHS wanted to further develop the Centre.  However, part of the building required remedial work before this could happen which was a potential risk to the valuation of the property. It was confirmed that the risk was not related to any other investment property.

Subsequently the Internal Audit and Risk Manager referred the Committee to Annex B, the Annual Governance Statement and the Head of Resources referred the Committee to Annex C, the Letter of Representation.

It was explained that Annex D, the draft AFR was required by law to be published on the Council’s website, which had been accessible since May 2018.  In particular the Committee were referred to the movement in Reserves Statement on page 27 of the report and the Balance Sheet on page 29 of the Report.

In response to questions it was explained that the Heritage Asset listed on the Balance Sheet referred to the Norman Cross Memorial and it was confirmed that the Net Pensions Liability related to the actual pension fund, which had changed from a final salary pension scheme to one related to average earnings throughout an individual’s’ lifetime.  Whereupon the Committee,

RESOLVED

  i.  to receive the Auditors Results Report attached as Annex A of the submitted report;

  ii.  to approve the Annual Governance Statement attached as Annex B of the submitted report and authorise the Executive Leader and Managing Director to sign the Statement on behalf of the Council;

  iii.  to approve the Letter of Representation attached as Annex C of the submitted report and authorise the Head of Resources (as Section 151 Officer) to sign it on behalf of the Council; and

  iv.  to give delegated powers to the Head of Resources (as Section 151 Officer) in consultation with the Chairman of the Committee to authorise and sign the Annual Financial Report attached as Annex D of the submitted report on behalf of the Council subject to the Auditors confirming an unqualified opinion on the AFR 2017/18.