Meeting documents

To be presented by Mr Ambrose, Director of Finance and Assets and Grant Thornton, Auditors.

·         Statement of Accounts for the year ended 31 March 2017 – BCC and Pension Fund

·         Letter of Representation – BCC

·         Letter of Representation – Pension Fund

·         Draft Audit Findings Report 2016-17 - BCC (provided by Grant Thornton)

·         Draft Audit Findings Report 2016-17 - Pension Fund (provided by Grant Thornton)

Mr Ambrose, Director of Finance and Assets, introduced the Audit of Accounts item and thanked Grant Thornton for their work.

The report set out the following recommendation

• That the Committee considers its response to the matters raised by Grant Thornton in their Audit Findings Report 2016-17 and agrees that the Statement of Accounts for Buckinghamshire County Council and Pension Fund for the financial year ended 31 March 2017 can be signed by the Chairman of this Committee.
• That the Committee approves the Letters of Representation on behalf of the Council and Pension Fund and agrees that they can be signed by the Chairman of this Committee.
• That the Committee agrees the response to the proposed action plan within the Audit Findings Reports for the Council and Pension Fund.

Mr Ambrose highlighted the following points:

• The final audit was almost complete and all substantive items had been picked up
• The accounts had been updated following a few amendments
• Following presentation of the draft accounts, four adjustments had been made, three related to asset valuations and one was a late adjustment relating to the Teachers’ Pension Fund liabilities which should not have been included.  These had now been removed from the accounts and there was no overall impact on the General Fund balance
• Overall the Council had underspent by £6m, with an increase of £7m of the general reserves;  which are now £24.5m
• There was a recommended delay in the Value for Money (VfM) conclusion to take into account the outcome of the Ofsted review.  The conclusion would now come to the Committee in September.  It was confirmed that the delay in the VfM conclusion had no impact on the overall accounts and Grant Thornton agreed with this approach

Mrs R Martinig, BCC Accountant, gave a more in depth overview of the adjustments made to the accounts as agreed with Grant Thornton as follows:

• The asset value of Beechview School being adjusted as  it had not been identified as converting to Academy status during 2016- 17
• An asset within Note 15 Property, Plant and Equipment was revalued upwards in error, which resulted in an error of £2.054m. This correction had reduced the Revaluation increases recognised in the Revaluation reserves line
• The categorisation of the Energy from Waste (EfW) site from ‘Other Land and Buildings’ to ‘Vehicles, Plant and Equipment’
• Information that was sent to the Actuary to calculate the assets and liabilities in relation to the Local Government Pension Scheme included unfunded benefits in the Teachers Scheme. This was in error.

Mrs Martinig confirmed that the Actuary had provided new figures which were reflected in the final accounts and a separate briefing note on this and the other adjustments had been circulated to Members of the Committee

Mr P Grady, Director at Grant Thornton presented the audit finding of the Buckinghamshire County Council Accounts and highlighted the following points:

• The relationship between Grant Thornton and the County Council remained strong and constructive The audit was mostly complete, procedures were being finalised in a number of areas  as set out in the report
• It was confirmed that the statutory deadlines would be brought forward next year, it was noted the County Council  were already in a good position to achieve these deadlines in comparison with a number of other authorities
• The audit findings against other risks were also highlighted including valuation of property, plant and equipment, and the reasonableness of discount rates assumptions
• There were no issues to report in payroll or income and expenditure
• It was noted Grant Thornton were happy with judgements and assumptions made
• Mr Grady drew the Committees attention to the agreed adjustments made

Mr Grady confirmed that the overall quality of financial management and internal controls remained strong and that the accounts closed early, ahead of many other Local Authorities.  Mr Grady agreed to share an updated version of the report to Committee Members and an opinion and updated version would be provided after September.

ACTION: Mr Grady

The Committee discussed the following points:

• Concerns around the delayed VfM conclusion.  Mr Grady confirmed that resource had gone into Children’s Services and improvements were still being driven forward; but that the VfM conclusion was not based on what the County Council had spent but around the arrangements in place to ensure the money was being spent wisely.  Given the time, if required the County Council would be able to review this year
• The Committee highlighted the internal controls relating to a problem with SAP, as highlighted in previous years.  Mr Grady confirmed that there had been some improvement in this area with the issues being minor in nature and no risk to the statement of accounts.  The Committee asked that an update on the progress highlighting what had been done to address the issues be bought back to the Committee in September

ACTION: Mr Ambrose

• The Committee discussed the asset valuations and the significance this had on the material operation of the County Councils business.  It was confirmed that the number quoted was not close to the threshold of being of material consideration
• The Committee discussed the discount rate assumptions used and whether Grant Thornton could quantify the difference.  Mr Grady confirmed that it was a subject of judgement and did not  have a material impact and confirmed they were happy with the 2.7% applied

Ms J Edwards, Pensions and Investments Manager updated the Committee on the Statement of Accounts for the Pension Fund.

Ms Edwards highlighted the following changes as a result of the audit:

·       Within the Accounting Policies a section had been added regarding the accounting standards issued, but not adopted

·       Level 1, Level 2 and Level 3 investments had been adjusted

·       Other than those changes the accounts were as presented at the May Committee meeting

The Committee raised and discussed the following points:

• It was queried whether transfer values in other pension funds came with a liability or were they fully funded at the time of the transfer.  Ms Edwards confirmed that they would come in as a fully funded amount
• The Committee discussed the management expenses and why these were now higher than 2015/16.  Mrs Edwards agreed to circulate a breakdown of the difference to the Committee

ACTION: Ms Edwards

Mr T Slaughter of Grant Thornton presented the summary of the Audit Finding to the Committee.  He confirmed that the adjustments made were minor and the draft accounts that came before the Committee were a robust and accurate set of accounts as in the previous year.

Mr Slaughter highlighted one area in the report identifying a control issue regarding the reconciliation of scheme contributions.  The reconciliation was found not to be as well maintained as in in previous years due to staff turnover.  It had taken longer to complete the audit due to this, but was now complete.    The posts had since been filled and good progress was being made.  The Committee asked for a timetable for end of month reconciliation to be circulated.

ACTION: Ms Edwards

The pressure of the workload was also discussed and it was suggested that Ms Edwards work with HR to ensure workloads were manageable and to determine how resources could be flexed in the future at busier times

ACTION: Ms Edwards

RESOLVED: The Committee approved the recommendations

The Chairman thanked colleagues from the Council and Grant Thornton for the work that had been carried out.