Agenda item

Audited 2019/20 Statement of Accounts and Audit Findings Report

Report of the Director Finance

Minutes:

The Audit and Procurement Committee considered a report of the Director of Finance, which sought approval of the audited 2019/20 Statement of Accounts and Grant Thornton’s Audit Findings report provided alongside the accounting statements.  The Committee was approving these accounts on the Council’s behalf.  This followed an extension to the period of audit by Grant Thornton in line with national regulation.  The original deadline to complete and authorise the Statement of Accounts was 31st July 2020.

 

The Council published its draft statement on 26th June, two months before the statutory deadline.  As a change to previous years and due to the unusual circumstances caused by the COVID-19 pandemic, the decision was taken for the draft accounts to not be considered by the Committee, but instead for the Committee to consider the final audited statement alongside the external auditor’s Audit Findings report in November 2020.

 

At the meeting in November 2020 (Minute 25/20 refers), the Committee gave delegated authority to the Director of Finance, following consultation with the Chair of the Committee, for final changes to the draft accounts.  Subsequent audit work, much of which was not foreseen at the time of the meeting, uncovered a significant number of further audit queries, some of which have resulted in material changes to the accounting statements.  This led to a delay to the 2019/20 accounts being completed, which is unprecedented in recent memory.  The vast majority of this further work has been completed and there is now a strong degree of confidence that the last remaining outstanding items in the Audit Findings report will be completed very shortly, allowing the audited accounts to be signed off and published.

 

In November 2020, a number of factors were outlined for delays to the audit process for 2019/20.  These were:

 

·  Practical issues with undertaking audit work in a ‘virtual’ way;

·  Additional work required of the auditors, including that insisted upon by the Financial Reporting Council in relation to the valuation of Property, Plant and Equipment;

·  Well publicised pressure on the auditing sector which have been outlined in the recent Redmond Review; and

·  Delays elsewhere in the process, for instance in the completion of pension fund accounts and those of the Council’s companies.

 

A number of key issues that have remained outstanding through 2021 relate to Property, Plant and Equipment valuation, whilst the other key areas of audit challenge has been the Council’s accounting arrangements surrounding its Group Accounts, which incorporate the financial statements of the relevant external companies owned by the Councils.  Details of this work was set out in the Addendum to the Audit Findings report accompanying the Audited Statement of Accounts and included the major items that the Committee needed to have brought to its attention and the Council’s response to these. 

 

The Audit Findings report by Grant Thornton, the Council’s external auditors, had been presented to the Committee in November 2020 and an Addendum to that report was now presented to the Committee for consideration.  The Committee noted that, since the November 2020 meeting, several further accounting issues were identified for which material adjustments were required to the Group and Council’s financial statements.  These had resulted in the recognition of:

 

·  An increase in group net assets as at 31st March 2020 or £215.5m (Council £149.4m);

·  An increase in group total comprehensive income for the year ending 31st March 2020 of £91.1m (Council £56.6m);

·  Prior period adjustments to recognise:

o  An increase in group net assets as at 31st March 2019 of £115m (Council £92.8m);

o  An increase in group comprehensive income for the year ending 31st March 2019 of £4.8m (Council £5.3m).

 

These audit adjustments were detailed in Appendix B to the Addendum and recommendations raised with management as a result of the audit work carried out by Grant Thornton were set out in Appendix A.

 

Grant Thornton indicated within the Addendum that their work was substantially complete and there were no matters of which they were aware that would require modification of their audit opinion, or material changes to the financial statements subject to the following outstanding matters:

 

·  Receipt of evidence that Local Plan land asset valuations appropriately reflect significant information available about the condition and cost of remedial works;

·  Confirmation from Grant Thornton’s experts that inclusion in the Local Plan impacts market value of land to the extent determined by management;

·  Confirmation from Grant Thornton’s experts that management’s assessment that the depreciated replacement costs (DRC) basis of valuing Coombe Abbey property is appropriate in the group accounts;

·  Receipt of an amended lease agreement between the Council and UKBIC Limited and evidence that all affected assets are included on the amended lease;

·  Completion of review procedures;

·  Receipt of management representation letter; and

·  Review of the final set of financial statements.

 

Grant Thornton concluded that the other information to be published with the financial statements was consistent with their knowledge of the organisation and the financial statements they had audited.  It was anticipated that the audit report opinion would be unqualified, including an Emphasis of Matter paragraph highlighting PPE, investment properties and Pension Fund investment properties valuation material uncertainty disclosures.

 

RESOLVED that, the Audit and Procurement Committee:

 

1.  Having considered the final 2019/20 Statement of Accounts, approves the Accounts.

 

2.  Accepts the Grant Thornton’s Audit Findings Report provided alongside the accounting statements.

 

3.  Endorse that delegated approval be giving to the Director of Finance, following consultation with the Chair of the Audit and Procurement Committee, to agree any final changes to the Statement.

 

 

 

 

 

 

 

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