Agenda item

Beth Bowers (Grant Thornton External Auditors) presented the three reports in turn, starting with the External Audit Update report.  She reported on progress with the external audit and stated that most of the planned work would be completed this week.  By the November Corporate Audit Committee all the work would be complete and the final report would be submitted to that committee.  There were currently no major findings and the sector update included some publications relevant to BANES or the sector as a whole.  David Johnson (Grant Thornton) had sent apologies as he had a clash of Committees. 

During questions the following points arose:

·  Councillor David Biddleston queried the position of other Council audit sign-offs and it was explained that for a few years there was slow progress as a result of the pandemic and national issues including sector wide improvements.  BANES was broadly in a positive position having signed off on 2022-2023 and the sign-off for 2023-2024 planned for November 2024.

·  Councillor Toby Simon commented that Grant Thornton had done a good job locally for BANES and the West of England, whose audit would be signed-off next Monday.

Beth Bowers reported on the Audit Findings for the Avon Pension Fund stating progress was similar to that of the Council.  The main area they were still looking for assurance on is linked to very complex investments.  Any delay related to third party investment fund managers and not the BANES Pension team as they waited for a few bits of evidence to be provided.  Once the investment work was finalised the IAS19 assurance letters would be provided to the Avon Pension Fund admitted bodies.

George Amos (Grant Thornton) referred to the headlines on page 90 and completion of testing on the journal entries, the management override of control was completed, level 2 and 3 assurances were progressing, increasing the number of people who could approve bank reconciliations, a list of users to perform tests on in Aggresso, no improvement required on theaccounting statement and that the Avon Pension Fund accounts had been subject to  a technical review.

During questions the following points arose:

·  The significant breach in respect of the pension RPI increase (Councillor Toby Simon).  This was noted in the annual report and was not material and there was no impact on the Grant Thornton opinion.  BANES management had taken this seriously.  The Director of Financial Services, Assurance and Pensions explained that there had been complex issues relating to controls and software and specialists had been brought in.  Repeated testing had been undertaken and they were within the expected figures.  There had been some difference in opinion between the Council and External Auditors but Grant Thornton were satisfied and it was a reasonable position to be in.  Councillor Toby Simon stated that the issue had also been reported to the Pension Committee.  It was confirmed that there was a variety of characteristics with different employer backgrounds being affected by the issue (John Barker).

Beth Bowers (Grant Thornton) reported on the Annual Audit Report which was interim as the audit of the accounts had not yet been finalised.  The report focussed on the Value For Money (VFM judgement were the audit work had been completed for 2023/24. She highlighted the executive summary which identified key recommendations and areas of weakness/focus.  There was also a useful summary and follow up on previous recommendations.  The Dedicated Schools Grant (DSG) High Needs deficit was highlighted as a significant weakness.

During questions the following points arose:

·  The reason for the DSG issue was overspending in order to meet the statutory duties for children with EHCP (Education Health Care Plans) in expensive out of area placements.  A report would be submitted to Council on the DSG action plan and the financial risk to the Council.

·  The Executive Director of Resources explained that there was a revised plan for the management of SEND (special educational needs and disabilities) and a cumulation of the deficit.  Basically, grant funding had not kept up with the cost of placements.  This was a national issue to finance the deficit in the funding of placements which the DfE (Department for Education) had not recognised.

·  The Director of Financial Services confirmed this affected 30 – 40 Councils.

·  It was important that the Council met its obligations but this problem would continue to grow (Councillor David Biddleston).

·  It was suggested that the Director of Education be invited to present the Committee with an updated position on the issue, addressing the financial risk and plans but noted that the Director of Financial Services was already in discussions on the issue and the Executive Director of Resources stated that the timing of the update would need to be aligned with the result of the ongoing discussions with the DfE.

·  To note the improved relationships with WECA (West of England Combined Authority).  Councillor Toby Simon reported that WECA now had a full set of statutory officers and there was a commitment to rebuild with an Improvement Board to get the authority back on track.  He said it was likely that North Somerset Council would join WECA.

·  Beth Bowers (Grant Thornton) agreed there had been lots of change and noted that best practice could be strengthened.

·  The Director of Financial Services explained that a new contract management framework would be introduced to improve and identify better value, with a need to prioritise resources.  This would enable us to implement an action plan. It should be noted that the process would take several years to do successfully and gain good value for money as this involved a lot of services and many third parties.

·  Councillor David Biddleston stated that as Chair he (and the Vice-Chair) should meet with the External Auditors to meet the CIPFA best practice requirements.  Beth Bowers (Grant Thornton External Auditors) responded that she would arrange this.

It was proposed by Councillor David Biddleston and seconded by Councillor Toby Simon that

RESOLVED that

1)  the Audit Update Report, Audit Findings Report for the Avon Pension Fund and Annual Audit Report be noted; and

2)  the Director of Education be invited to present the Committee with an updated position on the issue of the DSG, addressing the financial risk with an action plan but noting the points made by the Director of Financial Services and the Executive Director of Resources, in respect of ongoing discussions and timing of this.