Agenda item

External Auditor's Value for Money Report on Coventry Council - Company Governance 2020-21

Report of the External Auditor, Grant Thornton


The Audit and Procurement Committee received a report of the External Auditor (Grant Thornton) setting out their Value for Money audit on Coventry Council Company Governance.


Under Section 20(1)(c) of the Local Audit and Accountability Act 2014, the External Auditor are required to satisfy themselves that the Council has made proper arrangements for securing economy, efficiency and effectiveness in the use of resources.  The Code of Audit Practice issued by the National Audit Office required the External Auditor to report their commentary relating to proper arrangements to the Council.


The Council holds a portfolio of wholly owned and joint venture companies.  The portfolio of commercial entities includes companies delivering services to the Council as well as strategic holdings in hospitality and economic regeneration.  These include two wholly owned entities: Coombe Abbey Hotel Limited (CAPL) and Tom White Waste Limited (TWW); two joint ventures: The Coventry and Solihull Waste Disposal Company Limited (CWSDC) and Sherbourne Recycling Limited (SRL); and a strategic interest in a special purpose vehicle, the UK Battery Industrialisation Centre Ltd (UK BIC).  A third joint venture, Friargate JV Project Limited (FJV) was included but not addressed in detail within the report submitted.


The Council is currently implementing a unified legal and governance approach to these organisations.  Prior to this, the Council operated a decentralised legal and governance structure, with each entity having its own governance proceures.  It was noted that there was officer involvement in the board of all wholly owned subsidiaries and jointly owned entities, with elected members siting on shareholder panels of all entities included within the report submitted with the exception of UKBIC and Friargate.


In response to external events at other councils, the Council is now implementing changes into its ownership and governance structure over these organisations.  These changes were outlined in the Coventry City Council report entitled “Restructuring Coventry City Council Subsidiaries” which was submitted to Cabinet and approved on 7th September 2021.  The Council’s wholly owned companies are grouped together under a single parent company Coventry Municipal Holdings Limited (CMH / HoldCo), which was incorporated on 26th October 2021.


The revised governance structure established a new centralised sub-committee of Cabinet designed to oversee the Council’s wholly owned and joint venture subsidiaries; the Coventry City Council Shareholder Committee, which sits alongside the Council’s Scrutiny Boards and Audit and Procurement Committee.  The CAPL and TWW will be renamed Member Advisory Panels.  The Shareholder Panel for Coventry North Regeneration (CNR) will be dissolved.  The External Auditor considered that the revised structure is appropriate and would enable the Council to have an appropriate oversite of its companies and investments.


The report set out the External Auditors consideration and opinion on a number of areas, including:


·  Overview of Coventry Council Group

·  Scope and work undertaken

·  Summary conclusions on Council governance of subsidiary companies

·  Summary conclusions on company governance by subsidiary companies

·  Current legal structure of Coventry Council Group

·  Current governance of Coventry Council Group

·  Proposed legal and governance structure of Coventry Council Group

·  Accounting for Group Companies

·  Operational Governance – Coombe Abbey Hotel Limited and Subsidiaries

·  Operational Governance – CSWDC

·  Operational Governance – Tom White Waste Limited and Subsidiaries

·  Operational Governance – Sherbourne Recycling Limited

·  Operational Governance – UK BIC

·  Operational Governance – Friargate JV Project Limited


The External Auditor had identified a number of opportunities for further improvements within the areas of oversight; business planning; skills; accounting; and companies – performance and governance, all of which were set out in the report submitted.


RESOLVED that, the Audit and Procurement Committee receive the report of the External Auditor.

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