Agenda item

The Committee received an update on the 2020/21 and 2021/22 Statement of Accounts. Mr Mark Stocks, Audit Partner and Ms Sheena Phillips, Audit Manager, from Grant Thornton, External Auditors were in attendance for this item. Mr David Skinner, Section 151 Officer introduced the item. A late paper was tabled at the meeting and published online on the day of the meeting.

Key points raised during discussion included:

·   Due to the technical and detailed nature of the tabled paper, the Committee agreed that it would be useful to have a briefing arranged at a later date to go through the report in detail and have the terminology fully explained by the Section 151 Officer and Audit Partner.

ACTION: Mr D Skinner, Ms M Gibb and Mr L Ashton to arrange briefing session for the Committee at a suitable time and date.

·   Considerable progress on the accounts had been made since the previous Committee meeting in November, and the finance team were thanked for their efficiency and efforts in addressing queries raised by the External Auditor.

·   The Committee was advised that the audit of the pension fund accounts for 2020/21 and 2021/22 was in progress and near completion with sign off anticipated in February/March. There was further work required around level 3 investments, however there was no significant issue foreseen in respect of concluding the audits, which should result in an unmodified opinion. Neither of the pension fund accounts could be signed by the external auditors until the Council Financial Statements were approved and signed off as they were a consolidated set of accounts.

·   In terms of the 2020/21 accounts, there were a number of complicated transactions in respect of which the external auditor and the finance team were working together to address. The finance team  had developed a methodology to address the queries raised, however it was highlighted to the Committee that this would be a longer process than previously anticipated. The external auditor had been concerned that a modified opinion may be required, however believed that using the proposed methodology would mean that reaching an unqualified opinion was possible, albeit it would require a great deal of work from both sides.

·   The Committee voiced its concern around the ongoing delays and sought assurances on the way forward. There was concern that at each Committee meeting, a further delay was advised of. Resourcing was recognised as a key issue with over-reliance on individuals who had left during the unitary transition.

·   It was highlighted that there were a number of areas in the accounts, on which the external auditor was comfortable with, however the significant concern related to certain balances which had been presented for audit, which had been difficult to understand and audit as necessary. The external auditors and officers believed it was worth the additional work to try and reach an unqualified opinion, and there was commitment from both sides to resource the work appropriately, although it was noted that the external audit costs were already significant.

·   The Committee were re-assured that the legacy Councils accounts had been appropriately audited and signed off, however it was the large task of consolidating those statements in to a single set of opening balances where errors had been identified.

·   The Council was not alone in experiencing delays with accounts sign off and as of the end of November 2022, only 50% of Councils had cleared their 2020/21 accounts. The complexities that arose from Covid and the associated additional transactions and volume of work that arose from Covid combined with the creation of a new unitary authority had significantly impacted the accounts preparation.

·   The housing benefit audit for 2020/21 was near completion at which point it would be reported to the Department for Work and Pensions (DWP). It was noted that at the time the housing benefit claims were pulled together there was a reliance on IT systems of predecessor councils, certain IT records had been lost in transition which would require reporting to DWP and between the external auditors and the Council any additional testing required would be discussed. At the conclusion of the 2020/21 housing benefit audit, the work on 2021/22 would begin and it was estimated that this would be completed by the end of March.

·   In relation to resourcing, the Committee had concerns that this had been an issue for some considerable time, and it was understood that the finance team had additional significant work to undertake in addition to the audit. The restructure of the finance team had reached a conclusion, and a chief accountant had been appointed who brought with her experience and expertise. The Council was looking to approach firms, to bring in a mini team to create further capacity. Providing resourcing on a sustainable basis was recognised as being key and the Council’s Management Team was committed to ensuring the right resources were in place. Grant Thornton had a large team who were also committed to the process, although there would need to be a limit on the level of time that could be committed should the accounts presented not improve. The impact on officer wellbeing was also highlighted as requiring consideration as the work required on the accounts would be a difficult process and officers would still have other significant work to undertake.

·   A Member suggested that if this process was to take any longer than advised of at this meeting, evaluating the pros and cons of a qualified opinion should be considered by the Committee.

·   The Committee agreed that at the point the 2020/21 accounts could be signed, a comprehensive report on lessons learnt should be considered by the committee to ensure the reasons for the delay were scrutinised and that repetition could be avoided.

ACTION: Mr Skinner to present a comprehensive report on lessons learned to to the Committee at the appropriate time, following the sign off of the 2020/21 accounts.

·   Mr Stocks explained that there would be a point reached in the coming months where if issues were not resolvable, a method of modification would be considered. It was explained that it was a serious situation and on the assumption that the 2020/21 accounts would be signed off by Christmas 2023, then it would be, in the best case scenario, Christmas 2024 by the time the Council accounts were back on track.

·   In terms of the national infrastructure accounting issue previously raised, it was noted that for the short term, Government had issued a statutory instrument and CIPFA had issued guidance to local authorities and accounting bodies. This would be in place for the next 3 to 4 years at which point an alternative way for accounting infrastructure would be in place, which could create additional pressure for officers.

RESOLVED:

1.    That the 2020/21 and 2021/22 Statement of Accounts updates be noted.

2.    That a briefing session on the report tabled at the meeting be held with the Committee prior to its next meeting.

3.    That a lessons learned report be produced at the conclusion of the 2020/21 Statement of Accounts and is to be considered by the Committee.