Agenda item

Verbal Update.

The Committee received a verbal update in relation to the Statement of Accounts 2020/21. At the last meeting, the Committee set out that it would like to see the establishment of a working group to look into some of the operational issues that had been raised in the external audit report on the annual Statement of Accounts. Subsequent to that meeting, the Director of Finance met with the previous Chair of the Committee and advised that officers would provide updates to the Committee on this issue instead. The Chief Accountant advised the Committee that:

• The final Audit Letter (for 2019/20) had been circulated to members of the Committee and had been published on the Council’s website. In the letter, the authority received an unmodified audit opinion of the Council’s accounts.
• The three areas of concern raised by the external auditors as part of the audit of the 2019/20 accounts were accounts receivables, valuation of non-current assets and uncleared balances in the suspense account.
• The concerns raised by the external auditors on accounts receivables related to bad debt provision and the fact that the basis/percentages used for this had not be amended in light of Covid. Following the auditors raising this issue, offices fed back that the provisions were adequate, and that the over-provisions made by authority in the past years will mitigate any potential impact COVID might have on accounts receivables. The officers pointed out that as at the said time, no one could have reasonably estimated the impact of COVID. Subsequent to this, Finance officers had been working with services to go through every account receivable in detail to ensure that there was adequate provision in the 2020/21 accounts and that the impact of Covid was accurately captured. There were also some concerns raised by the auditors about the documentation of basis of the provision made. Officers advised that, since the audit report, the basis of provision made have documented in preparation for the audit of the 2020/21 accounts.
• The valuations of non-current assets related to plant, property, and equipment, as well as investment properties. The key areas of concern were:
  • A specific property that had been transferred and still appeared in the books
  • Errors in the valuations of gross internal areas of schools and other buildings.

Officers advised that the readjusting to the new ways of working due to COVID led to the final accounts team not picking up on the disposal of the Laurels that took place just 3 months before the lockdown. This was however, picked up before the audit started and corrected it but auditors still had to report it as it was corrected after the draft account was produced.

On the error relating to gross internal areas, officers advised that these were usually spotted once we receive the data from external valuers. That these are usually corrected by physically visiting and remeasuring. This did not happen in this case due to COVID restrictions. Officers advised that in response to the issues highlighted with valuations, the authority had procured a system which would capture all of the Council’s assets correctly and that an officer had been recruited who would be reviewing all the information/measurements we have and accurately capture all of the internal areas on Auto-CAD.

• The third key area of concern raised by the auditors related to historical balances that had not been cleared from the suspense account. Officers advised that these takes time as one needs some time to understand and trace where they came from and that they were working with individual services to go through each of these in turn. Since audit completion in April, Finance had cleared £467k from a total of around £750k in uncleared balances.  Going forwards, Finance officers would be going through errors in account codes with the services on a month-by-month basis to clear the accounts.

2020/21 SOA

• The government had extended the deadline for the sign-off and publishing of the 2020/21 draft set of accounts to 1st August. Officers advised that they were on target to meet the deadline for finalising and publishing the draft accounts.
• The Audit of the accounts needed to be finished by 30^th September.
• In preparation for the audit, officers were currently undertaking technical reviews of high value transactions to ensure the reporting meets the latest CIPFA guidance, as well as completion checks on the accounts and evaluating transactions carried out after year end.
• Officers advised the Committee that they hoped to have a first draft of the accounts available the following week and that the draft accounts would be published in the week commencing 26^th July. A report on the draft 2020/21 accounts would be brought back to the Committee at its next meeting. (Action: Kaycee Ikegwu).

The Committee noted that the update from officers was difficult to hear at points due to poor audio quality. The Committee asked if officers could circulate a written briefing on the update outside of the meeting. (Action: Kaycee Ikegwu). 

In response to a question, the Chair advised that the reason that a verbal update was provided at this meeting rather than a report was because of the extended deadline for publication of accounts falling after this meeting and that officers would bring a report to the following meeting instead.