Agenda item

To consider and approve the audited Statement of Accounts for 2018-2019.

The Chairman summarised the decision taken by the Committee at its meeting on 25 July 2019 to approve the Statement of Accounts for 2018/2019 subject to no material changes resulting from the outstanding work still to be completed at that time. Further to that decision, at its meeting on 12 September 2019, Mr Paul Thomson, Risk Advisory Partner at Deloitte had informed the Committee that the potential financial impact of the McCloud ruling had been resolved, however a further query with regards to the Council’s accounting reserves had prevented the external auditors from agreeing the final Statement of Accounts.

The Chairman updated the Committee that no material changes had been identified as a result of the additional queries and as such the Committee was being asked to review and approve the audited Statement of Accounts for 2018/2019.

Mr Steve Thompson, Director of Resources reminded Committee Members that Deloitte had been newly appointed as the Council’s external auditors. As such, discussions had taken place regarding the treatment of transactions which had been dealt with in a particular way on a long-standing basis due to the advice provided by the Council’s former external auditors, but which Deloitte now advised should be treated differently. 

Mr Paul Thomson stated that the financial statements had now been agreed, with a number of the required adjustments relating back to the 2017/2018 period. The Committee was informed that Mr Thomson did not anticipate that the same high level of alterations would be necessary in future years as adjustments had since been applied following advice from Deloitte. In addition Deloitte had suggested to Mr Thompson that an annual April workshop with the Council’s financial team would be beneficial to allow for a clear understanding of interpretations for future financial statements.

The Committee questioned whether, due to the length of time taken to complete the audit this year, the proposed workshops would be more beneficial if they occurred earlier in the year. Mr Thomson reiterated that as the issues had largely related to the previous year’s figures and that necessary changes had been implemented to address these, he felt that a workshop at the end of April to review all key actions would be timely.  Mr Thompson highlighted that, in his opinion, the Council’s finance team had not been responsible for any errors in the accounting process, rather that they had been interpreting the data in line with advice provided by the previous external auditors.

Committee Members queried whether there would be a resulting financial impact due to the additional time spent reviewing the accounts by Deloitte. Mr Thompson advised that he would review the invoice from the external auditors and seek advice as appropriate. Further questions were asked by the Committee around the fact that no material changes had been identified as a result of the process. Mr Thomson stated that any sort of overrun was not desirable but that his team had to be satisfied that the accounts had been materially correct before approving them. The Committee asked Mr Thomson if Deloitte had a figure in mind. He said they had an estimated figure but that had not yet been finalised. The Committee assured Deloitte that the itemised bill in respect of the final amount would be closely scrutinised. Committee Members also made the point clear that the expectation would be that every effort should be made to ensure that next year’s accounts be completed within the agreed timeframe.

With regards to the Value for Money (VfM) qualified opinion, the Committee questioned what evidence had been used to form the qualification. Mr Thomson stated that although other evidence had been considered, the qualification was as a sole result of the ‘Inadequate’ Ofsted rating of Children’s Services. Mr Thompson responded that although the narrative to the accounts contained nothing unexpected, he felt that the VfM judgement of Children’s Services was unfair as Ofsted inspectors had not sought information from the finance team during the course of their review. Mr Thomson on behalf of Deloitte commented that was standard wording used in such circumstances.

The Committee agreed: To approve the audited Statement of Accounts for 2018/2019.