Agenda item

Report of the Chief Operating Officer to present the Statement of Accounts for

2016/17 following the completion of the external audit and also to consider the

statutory Annual Report to those charged with Governance from BDO LLP,

which reports on their annual audit of the Council’s statutory accounts, value

for money and other relevant information.

The Committee considered the report on the Statement of Accounts for 2016/17 following the completion of the external audit. Rob Woollatt, Interim Chief Accountant, gave an introductory presentation on understanding the statement of accounts, covering the purpose of the statement of accounts, how they were presented and what they meant. It was noted that from next year the deadline for the completion of the audit would be brought forward to 31st July 2018.

The Committee were advised that all the recommendations from the auditors on the draft accounts had been implemented in the final accounts. However there were further amendments, as specified in the addendum presented at the meeting. These amendments were outlined by the Interim Chief Accountant and it was highlighted that these did not alter the reserves, balances or net expenditure of the Council.

Leigh Lloyd-Thomas, Engagement Lead for the Council’s External Auditors, BDO LLP, presented the findings as set out in their Audit Completion Statement.

Mr Lloyd-Thomas explained that BDO had a responsibility to report errors in aggregate of over £16m according to the concept of materiality in order to give a true and fair opinion but noted that any errors over £0.5m had actually been reported.

BDO gave an overview of all the outstanding matters and the Committee discussed the audit areas of significant risk. One area of particular interest to the Committee was that of land, buildings, dwellings and investment property valuations. There were two material misstatements, one in the current year and one in the prior year, that were identified.

Another audit risk area discussed by the Committee was that of Housing Revenue Account asset componentisation. The question was raised as to why the Council had decided to increase the percentage allocation of the overall value as land and reduce the allocated value to the buildings. The Interim Chief Accountant advised that as the goal was to get the asset values materially correct the judgement of how to split the land and buildings was taken upon advice from the valuers .It was agreed that a copy of the engagement letter from the Council to the valuers would be distributed to the Committee.

Action: Interim Chief Accountant

BDO highlighted the  number of errors contained within the valuation reports received by the Council and advised that this should be addressed. The Interim Chief Finance Officer advised that the contract was due to be re-let during 2017/18.

While discussing the Notes to the Statements the question was raised as to why payments had been made back to the Government Housing Capital Receipts Pool in 2015/16 when they could have been used for Council investment. BDO advised that they were not aware of any other Local Authorities that had done this and the Interim Chief Finance Officer reassured the Committee that he was looking into this to ensure that in future, the use of such receipts by the Council was maximised.

The question was also raised as to why Services were allowed to carry over and retain budget under and over spends. The Interim Chief Finance Officer reassured the Committee that he was reviewing this as well.

RESOLVED

·         The Committee considered the contents of the report and any further oral updates given at the meeting by BDO LLP

·         The Committee approved the Statement of Accounts 2016/17, subject to any final changes required by the conclusion of the audit, being delegated to the Chief Financial Officer in consultation with the Chair.

·         The Committee gave the Chair of the Committee and Chief Finance Officer (S151 Officer) authority to sign the letter of representation to the Auditor as set out in paragraph 6.12 of the report

·         The committee noted the Audit Findings Report of the auditors, BDO LLP, and approved the management responses in the BDO LLP action plan contained within that report.