Agenda item

Appendix 1 to follow.

Mr Barber presented the report.

He commented on the Annual Audit Letter, which had been circulated as a late supplement to the agenda. He said that the Letter summarised the key findings of the external auditors in their work on the 2018/19 accounts for the Council and the Avon Pension Fund. Hopefully it would contain no surprises, since a detailed audit findings report had been presented to the 30 July meeting of the Committee. The Annual Audit Letter differed from the findings report in that it was the formal mechanism by which the external auditor communicated with the Council, and it was made available to the public and stakeholders. The external auditors had a twofold responsibility, to the Council and to the Avon Pension Fund. The materiality thresholds set for these two bodies were detailed on page 5 of the letter.

The external auditors had given an unqualified opinion on the Council and Pension Fund accounts on 30 July, and the message for the Committee as the body charged with oversight of governance in the Council was a generally positive one. There were no matters in relation to which the external auditors had had to invoke their additional statutory powers, and an overall positive value-for-money conclusion has been given, subject to two recommendations. Further to the statement at the bottom of page 3 of the Letter, he could now certify that the audit of the Council and Pension Fund based on code requirements was complete, because the Pension Fund annual report had been published and the work on the whole of government accounts had been completed.

Mr Barber noted that the accounts for the Council’s subsidiary, Aequus Developments Ltd (ADL), were not consolidated with the Council’s accounts in 2018/19. However, the projected turnover for this business in 2019/20 is likely to exceed the threshold for group accounts, and the external auditors are discussing with the Council’s Finance Team whether ADL’s accounts should be consolidated in 2019/20.

The Interim Director – Finance drew Members’ attention to the turn round from a Council overspend last year to an underspend this year.

A Member asked whether ADL was responsible for valuing its own properties, or whether its property assets were grouped with other Council-owned properties. Mr Barber replied that ADL had to value its own assets every year for its own accounts. His understanding was that the basis on which ADL valued its assets was slightly different from the Council, though he was not entirely sure, as ADL have separate auditors. In response to a question from the Chair Mr Barber explained that Council property assets have to be valued every five years, but should be valued more frequently if the level of risk of material change in value justified this.  If the accounts of ADL were consolidated with those of the Council, the valuation methods would have to be harmonised. A Member asked what the effect on ADL was of the rescheduling of the building work they were engaged in; that he understood that the purpose of ADL was to construct properties for sale and return the capital receipts to the Council. The Chair, however, said that he thought that the ambition ADL was that, while they might sell some properties, they should have a portfolio of properties for rent in order to generate income for the Council. The Interim Director – Finance explained that the Council received money from ADL in the form of capital receipts from land transfers, from dividends, though these were delayed until Riverside was completed, tax receipts and loan repayments. The Chair suggested that it would be useful to have a report showing how cash flowed between ADL and the Council, as this is a matter of interest to the Committee. This might be something that Resources PDS Panel would also wish to see.

Mr Barker presented the Audit Progress Report and Sector Update. He commented on the certification work for Housing Benefits and the Teachers’ Pensions Claim, for both of which the deadline for completion is 30 November 2019. The external auditors had had long conversations with the Council about the Housing Benefits claims in the past, as some Members would recall. The external auditor had made good progress on Housing Benefits this year, but issues had arisen in relation to the samples selected for testing and the integrity of the workbooks used by the external auditor. He understood that this was not because of any fault of the Council. The issue had been referred to DWP. Because of the problem the Council had written to the DWP asking for an extension of the deadline to 31 December. It was projected that the Teachers’ Pensions claims work would be completed by the 30 November deadline. Reports on these two matters would be made to a future meeting of the Committee.

Mr Barber drew attention to the information on MHCLG’s independent probe into local government audit on agenda page 20 and on the new NAO Code of Barber Audit Practice on agenda page 21. The Chair asked whether it was anticipated that a body resembling the abolished Audit Commission would be created. Mr Barber said that he had no information on this at the present time. A Member suggested that there should be a report to the Committee when the Redmond review was published.

 After the discussion was concluded, the Committee RESOLVED to note the report and appendices.