Agenda item

Report of the Head of Finance

The External Auditor presented the report to Members, drawing their attention to the headline messages which were summarised in the report.  He advised that he proposed to issue an unqualified opinion on the accounts, however having said that, there were a number of adjustments proposed as set out in the appendix.  He added that it was important to note that none of the adjustments impacted upon the outturn position, nor were they indicative of systematic failures; they were simply errors in producing the accounts, and were purely presentational or technical.  He advised that three of the adjustments required were due to simple classification errors.  The remaining adjustment was because the Council had over-depreciated its assets.  He explained that this was a technical adjustment and did not affect the outturn position, however due to the complex nature of this issue, a number of adjustments would be required throughout the accounts.

Councillor D De Lacy sought clarification on the depreciation issue, as surely this must impact upon the bottom line.

The External Auditor advised that an adjustment was made to balance the cost of depreciation, as there should be no impact upon the Council Tax as a result of this issue.  He advised that future forecasting was on a net basis leaving aside the issue of depreciation.

Councillor D De Lacy sought clarification on how the Council had managed to over-depreciate its assets.

The Head of Finance advised that depreciation was shown in the accounts for the purposes of benchmarking, and there was a formula to work this out.  So whilst there was no effect on the bottom line, this could potentially affect individual services as it could have an impact upon the total cost of providing that service.  He added that the error had occurred a number of years ago, and this had now been identified and adjustments made in respect of the previous years.

The Financial Team Manager advised that the cause of the error was an incorrect formula in a spreadsheet which was discovered during the audit.  He added that as this was a non-cash item, there was no effect overall, and was recorded to show the cost of a service for benchmarking purposes.

The External Auditor advised that risks had been highlighted in the audit plan, and the outcome of this was outlined in the report.  He added that action taken by officers relating to the revaluation of the Local Government Pension Service had mitigated the risks and there were no issues to draw to Members’ attention.  In respect of the business rate retention scheme, he advised that there was a lack of clear guidance to assist officers with implementing this policy which had led to complexities, however the position was correct.  He added that there was an unidentified item in the accounts and there was some work to be done by officers to identify this.  He stated that this was not a material item and did not impact upon their opinion of the accounts.  He commented that the accounts had been completed to a high standard and the working papers were adequate, however there were some opportunities to improve these to increase efficiency. 

The External Auditor advised that he was also required to consider the Annual Governance Statement, and he was satisfied that it complied with the guidance and was consistent with the Council’s other published information.  In respect of value for money, he concluded that the arrangements were appropriate and there were no issues to highlight.  He advised that the recommendations from prior years had also been addressed.

The External Auditor thanked the Finance Team for their co-operation as it had not been a straightforward year.  He added that their support had been greatly appreciated and they had responded to queries quickly.

It was moved by Councillor N Smith, seconded by Councillor A Bridges and

RESOLVED THAT:

a)         The contents of the external auditor’s report attached at Appendix A be noted.

b)         The letter of representation attached at Appendix B be approved.

c)         The external auditor’s one recommendation and management comments set out in Appendix 1 to their report be noted.