Meeting documents

Verbal update to be provided by Mr R Ambrose, Director of Finance & Procurement, BCC and Mr I Murray, External Auditor, Grant Thornton

Mr R Ambrose, Director of Finance and Procurement presented a verbal update and highlighted the following:

• The audit for the main accounts was not yet completed; however the updated accounts along with the audit findings report had been received.
• The main accounts were not complete due to asset valuations.   Buckinghamshire County Council (BCC) had adopted the same approach used for previous years, but the requirements of the external auditors had increased which had caused delays in the process. 
• All issues around asset valuations would not affect the bottom line but would affect the balance sheet. 
• The two outstanding issues were highlighted:

o   The valuation from Greatmoor-  The plan to value in 2021 was questioned by Grant Thornton as specialist valuers were required.  An approach had since been agreed and the valuation would be completed.

o   The five year asset revaluation programme- The programme entailed the valuation of 20% of the assets each year meaning that all assets would be valued over a 5 year period.  Grant Thornton had queried the programme due to the increase in value of 20% of the assets.  Discussions took place to resolve the other 80% of assets.  Grant Thornton had made the decision to employ their own valuer to test the assumptions made by BCC’s valuer on the value of 100% of the assets.  At the time of the meeting the valuer had not been employed by Grant Thornton and the values were not received.  Upon receipt of the values the accounts could be closed. 

• Lessons had been learned and internal discussions had taken place on how the overall process could be improved.

The following points were highlighted in response to questions raised by members of the committee:

·         Concerns were expressed that council tax payers would be affected by the delays caused by asset values.  It was clarified that while the frustration was appreciated, assurance that the statements were correct was important.  The issue would have no impact on council tax.

·         Recent external factors had an impact on the process this year.

·         The new criteria required the use of an external reviewer, but a separate external auditor was required to ensure standards were being met.

Mr I Murray, External Auditor, Grant Thornton provided a verbal update and highlighted the following:

• Valuations were not an exact science thereforethis was a main focus for auditors who were required to approach areas with scepticism. 
• The previous expectations of PSAA Ltd were that the majority of audits were required to be rated as 2b and above.  Changes had been made meaning that the majority was now required to be rated as 2a and above, so expectations had increased. This had generated extra work compared with previous years.
• Clients were asked to assess the potential impact of the 80% of portfolio not valuated. 
• Grant Thornton would normally rely on a management expert and examine key assumptions to use for assurances.  However the changes required an internal expert to be used, which had led to the commissioning of an extra piece of work.   

The following points were highlighted and discussed in response to questions raised by members of the committee:

• The Chairman asked if assurance could be given that Grant Thornton had communicated the new requirements to BCC in a timely manner to avoid delays.   In response it was stated that appropriate time had been given. 
• The response from BCC had been slower than other authorities, and a greater level of detail had been requested from officers, which took more time.  Lessons had been learned regarding clarity of communication. 
• Grant Thornton could provide support and communication but could not commission or instruct valuers. 
• The Chairman highlighted that historically BCC officers had taken pride in producing accounts early and to high standards.
• Grant Thornton highlighted that the suggestions made by Mr Ambrose sounded sensible and in line with other organisations. 
• Conversations needed to take place in advance and not within the accounts window.
• Independent valuers could not be jointly commissioned.  It was not unusual for larger councils to employ their own valuers.

• Members asked if assurance could be given that the accounts would be signed off at the next Regulatory and Audit Committee Meeting on 20 January 2020.  It was highlighted that the valuation piece would be completed before the Christmas period, and Grant Thornton would be in a position to sign off accounts at the beginning of 2020. 

RESOLVED:  The Committee NOTED the verbal update.