Agenda item

Suresh Patel introduced External Audit’s Results report for 2016/17 by explaining that work was still ongoing. The Council had provided its statement of accounts at the end of July and so did not meet the end of June deadline. This had delayed the start of the audit and so External Audit were not yet in a position to issue an unqualified audit opinion on the Statement of Accounts.

Staff shortages

The Executive Director explained that due to circumstances outside the Council’s control accountancy had been left short-staffed and this had resulted in work being carried out later than hoped. He commended the work of the Interim Principal Accountant for the work she had completed, with very little handover. Previously the Council had relied on manual systems and it was hoped that the new Financial Management System and permanent recruitment could help to resolve this, although the Head of Finance warned that the introduction of the new Financial Management System was proving to be a time-consuming project.

The Chairman suggested that the Council should consider employing at least one extra member of staff in accountancy to meet the new deadline for the 2017/18 accounts.

Value of Council’s dwellings

It was noted that the External Auditors were challenging the Council and its valuer regarding the stated value of the Council’s dwellings, as the overall valuation had decreased from last year, which appeared unlikely in light of the overall market trend. The Executive Director explained that it was probable that the District Valuer had over-estimated the valuation of the Council’s dwellings for 2015/16 and this was only coming to light now, with the use of a different assessor. The Executive Director expressed his disappointment in the fact that the External Auditors had not challenged the valuation figures for the Council’s dwellings when they were first reported in February 2017. External audit commented that typically the value of council dwelling was not a risk area and as such was not an area of audit focus in the early part of the year.

Timescales

External Audit also highlighted that the Council had yet to complete all of the group accounts within the statements and the cash flow. Suresh Patel explained that External Audit would need to carry out sufficient work to be satisfied that the Council’s accounts, and in particular the valuation of its dwelling, was materially correct and this would require at least a week to resolve and conclude their report.

Members of the Committee expressed concern at the fact that this was the second year in a row that the Council had been unable to have the accounts signed off by the end of September and next year the deadline was being brought forward to the end of July.

The Chairman stated that the Committee would monitor the situation and formulate a plan for ensuring that next year’s accounts were closed within the new deadline set by the Government. To that end the Committee agreed to hold a meeting in January 2018 to review the procedure for agreeing next year’s accounts. It was hoped that the new Financial Management System would be in place by then.

Balance sheet

It was noted that the value of council dwellings related to the value of assets in the group accounts and did not affect the general fund balance for 2016/17. The Balance Sheet had been audited and the Council’s overall financial position was as expected. The Committee understood that the accounts were fundamentally sound.

Summary of differences

Tony Poynton brought the Committee’s attention to page 20 of the report, which listed the misstatements in the financial statements or disclosures identified during the audit which Management have agreed to correct. In response to questioning, he explained that there were a larger number of misstatements than he would have expected.

South Cambs Ltd

In response to questioning Tony Poynton explained that the South Cambs Ltd financial figures were included in the Balance Sheet, but had been excluded from the notes. The Executive Director explained that the implications of changing interest rates on South Cambs Ltd had been included in the Business Plan considered by Cabinet in February.

The Committee NOTED the report.