Meeting documents
Cabinet
Wednesday, 4th February, 2004
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Bath & North East Somerset Council |
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MEETING: |
Council Executive |
PAPER |
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DATE: |
4th February 2004 |
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TITLE: |
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WARD: |
All |
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AN OPEN PUBLIC ITEM |
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List of attachments to this report: Pricewaterhouse Coopers : Audit Letter 2003 Executive Summary |
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1 THE ISSUE
1.1 The Council's auditors (Pricewaterhouse Coopers) have produced their first annual audit letter, which summarises for Members the important matters relating to the 2002/03 financial year.
2 RECOMMENDATION
2.1 The Council Executive is asked to note the issues raised by the auditor and recommend the proposed action plan to Council.
3 FINANCIAL IMPLICATIONS
3.1 None
4 THE REPORT
4.1 The auditor's annual letter summarises the significant issues raised during their audit and comments on the Council's activities.
4.2 The auditors have completed their audit work and issued an unqualified opinion on the Council's 2002/03 Accounts.
4.3 The auditor summarises the Council's performance :
"The past year has largely been one of success for the Authority. The Authority achieved a rating of `good' in the Audit Commission's Corporate Performance Assessment in December 2002. The Social Services department also increased its rating from a one to a two start authority...."
4.4
Their analysis of published performance indicators identifies the Council "continues to be a high performing authority". During 2001/02, 38% of our national BVPI indicators were in the best performing quartile with 52% in the middle two quartiles. The auditors found that performance on 59% of the indicators had improved over time.
4.5 The auditor comments that the Council has an ambitious capital programme and has also entered into a number of service re-engineering projects to generate efficiencies and improve service delivery. The auditor notes the substantial time commitment for management, and recommends - "it will be important during this ongoing period of significant change and increased risk to keep management capacity under review and ensure underlying controls are maintained..."
4.6 The auditors also raise the following matters as key messages, and the table below shows the proposed actions :
Key Issue & Auditor Recommendations Comment
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Financial Health & Standing The authority experienced continued financial pressures in 2002/3, yet it has maintained a reasonable level of reserves and working balances. The authority has recently estimated its minimum level of General Fund reserves at £5.1 million. In our view this represents sound and prudent financial management and is in accordance with best practice. However the level of balances and reserves should be kept under review. The authority operated a number of trading operations which incurred a trading loss, the most significant deficits being incurred by Leisure and Catering. Whilst the Leisure unit has been externalised, opportunities for cost reductions should be considered and the financial performance of trading units should be closely monitored. |
Jean Hinks The financial pressures facing the Council continue to be monitored and reported on. The auditor's affirming our approach to assessing the adequacy of reserves is welcomed. The Local Government Act 2003 will require me to report to Members on the level of reserves, and this will be included with the budget papers. Outsourcing the Leisure service has reduced the risk to the Council's finances. The performance of other trading units will be kept under close review. |
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Capital Expenditure & the Prudential Code The authority under performed in achieving its capital programme, and there was a slippage of £3.8 million (12%) in 2002/3. The Prudential Code will change the emphasis of capital finance to self regulation, and it is important that controls are in place to monitor capital spending. |
Jean Hinks The slippage on capital schemes reflects the magnitude and complexity of our capital programme. Officers are mindful of the effects of the Code, and are improving on monitoring and management procedures. |
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New Financial Management System The first stage of a new financial system (FMS) was implemented on 1 July 2003. The auditors reviewed the project controls and found some weaknesses, and the Council acted quickly to address the immediate issues. The auditors will keep developments of FMS under review. |
Jean Hinks The first phase of the new FMS was successfully implemented. The auditors recommendations are noted and built into the project plans for the next stages of the FMS roll out. |
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Accounts Processes The auditors assessed the extent to which the Council's accounts comply not only with statutory requirements, but also with best practice for local government. The Accounts required some adjustment in relation to disclosures and the bases for bad debt provisions. Areas where there is scope for improvement have been agreed with the Resources Director. The auditor's identified differences between the FMS and records for schools' bank reconciliations, NNDR system and the Council Tax system. These are not considered material to the Accounts. |
Jean Hinks It is recognised that the disclosure and presentation of the Accounts should be improved, to achieve best practice. A project is underway to review and enhance accounting policies and practices. This will include more discipline in ensuring regular and robust reconciliations between financial systems. |
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Performance Indicators The audit identified some weaknesses in the quality of performance information, and a large number of minor amendments were made to the indicators (PI's) contained in the BVPP. However the Council continues to be a `high performing authority'. |
Peter Rowntree The Corporate Performance Unit has contacted the relevant managers to ensure the accuracy of PI's is increased. This is being backed up by Internal Audit reviewing processes for calculating PI's deemed to be `high risk' |
5 MONITORING
5.1 It is important that the whole Council, who are charged under legislation with responsibility for Corporate Governance of the Authority, is aware of both the content of the Auditors management letter, and the recommended actions resulting from those issues.
5.2 The auditor's management letter is reported to the Executive to ensure they are aware of the issues identified by the auditors and supporting and monitoring the action being taken by Council officers in response. Progress on the action plan will be reported to the Executive later in the year.
6 CONSULTATION
6.1 None - as the report is on past issues, many of which are already reported publicly.
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Contact person |
Peter Tovey - Corporate Accounting Manager (01225 477382) |
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Background papers |
PWC : Audit Letter 2003 |