Agenda item

Peter Barber (Grant Thornton Engagement Lead) introduced the report.  He stated that the Council Audit had been presented at the last meeting in November 2020 when the audit was 90% complete. He re-iterated that 2020 had been really challenging due to Covid and working remotely.  BANES was more challenging due to its large asset base, property plans and equipment.  It was the first time that group accounts had been produced for ADL.  With the need for more information from the BANES finance team he thanked the team for their help.

Following a question from Councillor Blackburn it was highlighted that the commercial estate had not changed.  Peter Barber stated that the reduced materiality affected the sample sizes and there was a big impact on the valuation of assets, resulting in more audit procedures and more work for staff.

The Chair stated it was disappointing to be told previously that there was a very short time to audit completion, yet it was still not complete.  Peter Barber answered that they knew the more difficult areas but this work had raised more questions and subsidiary valuers had been used not just the main valuers.  By Christmas staff had accrued leave which needed to be taken which incurred delay.

Sophie Morgan-Bower (Grant Thornton) reported on the updated audit findings:

·  Significant risks were land and building valuations due to BANES large property base, financial challenges due to lost income, fees/charges, valuation of investment property, the pension fund (the largest liability) and the group accounts which had been concluded but was a new area for the Council and Grant Thornton.

·  There were no material errors.

·  Action Plan – suggested an additional review by officers, raising minor recommendations and identifying a schools adjustment.

·  Disclosure – the financial instruments were put in now.

Questions followed:

·  In response to a question from Councillor Furse in respect of the medium-term strategy to reach £10 million savings, it was confirmed that there was government funding to offset the lost income, though there was a lack of clarity about this.  An incremental approach was needed to address the gap as it was recognised it could not come from service cuts.  Central government was being lobbied to use reserves as the Council was more susceptible to loss of income due to its large property base.

·  John Barker (Independent Member) raised the issue of lessons for the future to address the delay in completion of the audit and the possibility of relaxing the timescale this year. It was noted by Peter Barber that the current deadline for the next audit cycle was end of September 2021, this was compounded by the ‘value for money’ criteria which involved more work.

Peter Barber outlined the Value for Money (VFM) conclusion and stated there was a new VFM approach for 2021 with new criteria.  He added that governance was well controlled with clear structures.  They would make a detailed commentary and identify best practice.  The annual report at the same time as the opinion, would be an added pressure.  They would be recruiting more performance specialists to look at fees and impact.

Questions followed:

·  Councillor Elliot raised the issue of the skill sets needed and the difference in assessments.  Peter Barber stated there would be a 20% increase in workload 70% BANES and 30% VFM.  Not all audits would be completed on time and more than 200 council audits had not yet been signed off.  He agreed every council was different but there were similarities and benchmarking.

·  John Barker queried local discretion around VFM and said addressing climate change would be a major item in the next few years so how could the criteria be maintained. Peter Barber stated that each council had a clear operating structure and priorities.  Once priorities were set, costings and financial consequences would follow with wider aspirations in the strategy.  The NAO (National Audit Office) Code provided a breakdown of the areas of audit focus.

·  Councillor Blackburn stated group accounts meant a huge impact on workload and different types of valuations and Aequus had been created and he queried the costs of that type of property arrangement.  He referred to a call-in about the potential sale of assets below valuation. Andy Rothery confirmed there was £600,000 refunded to the Council and they were on track.  The cost was met by the income from developments.

·  Councillor Furse questioned the role of Corporate Policy Development and Scrutiny Panel and Audit Committee.  It was important that roles were understood and the issue to be scrutinised was checked against the governance structure.

On a motion from Councillor Furse, seconded by Councillor Elliott it was

RESOLVED that

1)  The Chair write to the Section 151 Officer to clarify the role of Corporate Audit Committee and the Corporate Policy Development and Scrutiny Panel in the general governance of Aequus companies;

2)  approval of the Councils accounts for 2019/20 be re-confirmed following receipt of the revised Audit Findings Report from the External Auditor; and

3)  comments on the revised arrangements for the review of the Council’s VFM arrangements be noted.