Agenda item

(Director of Resources) To consider the attached report (FPM-014-2015/16).

The Director of Resources presented a report regarding the key issues arising from the annual Governance Report for 2014/15. The International Standard on Auditing 260 required the External Auditor to report to those charged with governance on certain matters before giving an opinion on the Statutory Statement of Accounts.  The External Auditor had indicated that their audit of the Council’s Statutory Statement of Accounts for 2014/15 would be presented to the Audit and Governance Committee on 21 September 2015.

The report highlighted the significant findings of the audit of the financial statements of the Council for the year ending 31 March 2015, and the Director of Resources advised the Cabinet Committee of the following key findings arising from the audit:

(a)          A material misstatement relating to incorrect data input into the Asset Management System, which the balance on the Revaluation Reserve was overstated by £6,554,747 and the balance on the Capital Adjustment Account understated by the same account;

(b)          There was one unadjusted audit difference which increased the draft surplus on the provision of services in the comprehensive income and expenditure account by £88,000 to £15.863 million (from£15.775);

(c)          Subject to satisfactory completion of the outstanding work, it was anticipated that an unqualified true and fair opinion would be issued on the financial statement for the year;

(d)          No significant deficiencies in internal controls had been identified;

(e)          The Annual Governance statement was not misleading or inconsistent with other information and complied  with the ‘Delivering Good Governance in Local Government criteria;

(f)           The Whole of Government Accounts (WGA) element was below the threshold for a full assurance review and no further work was required other than to submit the section on the WGA Assurance Statement to the WGA audit team with the total values for assets, liabilities, income and expenditure; and

(g)          The auditors were satisfied in all significant respects that the Council had put in place proper arrangements to secure economy, efficiency and effectiveness in the Council’s use of resources, and proposed to issue an unqualified value for money conclusion.

The Director of Resources advised that valuations of the Council’s leisure centres, which had been performed by the Council’s internal valuer, had been significantly higher than expected and the working papers that supported the valuation had not been located. Therefore the auditors had requested that the Council revisited the valuations and include supported working papers. The Council’s Estates and Valuation team had provided an indicative opinion on the value of the assets but were unable to provide a formal valuation because of a lack of experience valuing this type of asset. The valuation had been received and reduced from approximately £27 million to £12.5 million, although this would not effect the level of Council Tax or make any changes to the Medium Term Finance Strategy and accounts should be signed off shortly.

Resolved:

(1)          That the External Auditor’s Annual Governance Report be noted.

Reasons for Proposed Decisions:

To ensure that Members were informed of any significant issues arising from the audit of the Statutory Statement of Accounts.

Other Options considered and Rejected:

The report was for noting, no specific actions were proposed.