Agenda item

Report of the External Auditor, Grant Thornton (to follow).

Further to Minute 20/17, the Committee considered a report of the external auditor, Grant Thornton, on the Audit Findings for the City Council for the year ending 31st March, 2017.  Mark Stocks and Simon Turner, of Grant Thornton, attended the meeting to present their report.

The report highlighted the key issues affecting the results of the Council and the preparation of the group and financial statements for year ended 31^st March 2017.  It was also used to report the audit findings to management and those charged with governance in accordance with the requirements of the International Standards on Auditing (UK and Ireland) 260 and the Local Audit and Accountability Act 2014.

Under then National Audit Office Code of Audit Practice, the external auditors were required to report whether, in their opinion, the Council’s financial statements gave a true and fair view of the financial position of the Council and it’s income and expenditure for the year and whether they had been properly prepared in accordance with the CIPFA Code of Practice on Local Authority Accounting.  They were also required to consider other information published together with the audited financial statement, including the Annual Governance Statement and Narrative Report, whether it was consistent with the financial statements, apparently materially incorrect based on, or materially inconsistent with the auditors knowledge of the group acquired in the course of performing the audit, or otherwise misleading.  Based on the review, the auditors were satisfied that they were consistent with the audited financial statements and met the requirements set out in the CIPFA/SOLACE guidance and that the disclosures included in the Narrative Report were in line with the requirements of the CIPFA Code of Practice.

In addition, the auditors were required to carry out sufficient work to satisfy themselves on whether the Council had made proper arrangements to secure economy, efficiency and effectiveness in its use of resources (the value for money (VFM) conclusion).  Based on the review, the auditors indicated that they were satisfied that, in all significant respects, the Council had proper arrangements in place to secure economy, efficiency and effectiveness in its use of resources.

The Committee were advised that the audit was substantially complete, although procedures were being finalised in respect of obtaining and reviewing the management letter of representation; updating post balance sheet events review, to the date of signing the opinion; and the whole of Government Accounts.

Attention was drawn to two adjustments affecting the Council's reported financial position and details of these were recorded in section two of the report.  The draft financial statements for the year ended 31 March 2017 recorded total comprehensive income and expenditure of £60,942k; the audited financial statements show total comprehensive income and expenditure of £57,746k. These changes had no impact on the Council’s General Fund balance. The auditors also recommended a number of adjustments to improve the presentation of the financial statements.  The Council produced its draft financial statements by the end of May, which enabled the audit to start at the beginning of June as planned.  The Council produced draft accounts to a good standard and with an overall high level of compliance with disclosure requirements. The audit identified some misclassification errors and disclosure omissions in the draft financial statements.  The more significant of these errors and omissions are detailed in the 'Misclassifications and disclosure changes' section of the report.  These errors and omissions, which did not have any impact on the Council's overall financial position, had since been corrected.

The report indicated that the auditors anticipated providing an unqualified audit opinion in respect of the financial statements.

The Committee noted that, in addition to responsibilities under the Code, the auditors were required to certify the Council's Housing Benefit subsidy claim on behalf of the Department for Work and Pensions.  At present work on this claim was in progress and not due to be finalised until 30^th November 2017.  A report on the outcome of this certification work would be submitted to the Committee on 19th February 2018.

Attention was drawn to testing on the Council's financial IT systems, which had identified four control issues, these being:-

·  Lack of information security policies and procedures for Agresso, ResourceLink and Active Directory;

·  Proactive reviews of logical access within Agresso, ResourcesLink and Active Directory;

·  Long period for password expiry;

·  Generic accounts with administrative privileges on ResourceLink application.

Actions in response to these issues, along with a number of other recommendations were set out in an action plan attached as an appendix to the report and these had already been agreed with the Director of Finance and Corporate Services and the finance team.

The Committee were updated about the position in respect of leases and they noted that changes would be incorporated in the next annual report.

RESOLVED that the Audit and Procurement Committee note the audit findings, as presented by the Council’s External Auditors.