Agenda item

Report from the Director of Finance attached

Audit Completion Report from Mazars attached

2021 -22 Audited Statement of Accounts attached

2022 -23 Audited Statement of Accounts attached

2022 -23 Annual Governance Statement attached

2021 -23 Value for Money Report attached

Audit Strategy and Completion Report attached

Ahead of the update from Karen Murray, Neil Kissock presented a report which outlined the background relating to the Statement of Accounts 2021/22 and 2022/23 and legislated statutory backstop dates of 13^th December 2024 and the relevant documents that needed to be published:

·         The Statement of Accounts together with the Audit Opinion and any certificate

·         The Annual Governance Statement

·         The Narrative Statement (the Council includes these within the Statement of Accounts)

Neil Kissock referred to the Statutory Recommendation relating to the 2021/22 accounts to be issued by the External Auditor and advised that the Council would issue its response and Action Plan and that a special meeting would be arranged early in the New Year for the response and Action Plan to be considered.

Karen Murray in presenting the Audit Completion Report referred to the less than exemplary preparation of reports historically, changes of personnel and lack of corporate memory at the Council, and advised that in terms of 2021/22, Forvis Mazars had been unable to complete the audit as originally planned, in advance of the backstop date of 13^th December. As previously reported, the external auditors needed information relating to the potential presence of Reinforced Autoclaved Aerated Concrete (RAAC) in Council buildings, which the Council had been unable to provide all the information required ahead of the deadline, and without this information, the value of Property, Plant and Equipment could not be confirmed as correctly reflected in the financial statements. This matter was considered pervasive to the financial statements and assurance was unable to obtained required and as such Forvis Mazars intended to disclaim its audit report.

In summary, the audit work had identified a number of significant weaknesses in the Council’s arrangements for ensuring financial sustainability, governance and for improving the economy, efficiency and effectiveness of services, highlighting particularly the Council’s failure to:

·         Properly understand its financial position during 2021/22 and to continue to rely on the use of reserves to support the provision of services

·         Manage risks, including with respect to the existence of RAAC in the Council’s estate

·         Improve internal controls so that weaknesses were identified and reported to management by Internal and External audit and other regulators are addressed promptly

·         Prepare materially accurate financial statements; and

·         Secure action to improve services to children

Therefore, under Paragraph 2 of Schedule 7 of the Local Audit and Accountability Act 2014, it was recommended that the Council should, as a matter of urgency, develop a single Council-wide improvement plan to reflect the transformation and culture change needed across all Council departments to deliver the range, level and quality of services that is financially sustainable. Appropriate management and member oversight is required to ensure the improvement plan is delivering changes that are embedded in the organisation.

The recommendations would be sent to the Secretary of State for Housing, Communities and Local Government on 12^th December 2024,  with the Council required to consider the recommendation at a meeting held before the end of the period of one month beginning with the day on which the recommendations were sent to them. At that meeting, the Council needed to decide what action, if any, to take in response to the recommendations. The Council was also required to publicise the meeting and, subsequently, the decision taken at the meeting.

In terms of 2022/2023, as there was insufficient time to complete the audit work and obtain required evidence, a disclaimer of opinion on the Council’s financial statements would be issued.

Members discussed the reports, in particular the background and position relating to RAAC, and the poor reflection of the Council in both Audit Opinion reports.

Members also discussed the Value for Money report submitted, which mirrored the findings in the Audit Opinion reports for 2021/2022 and 2022/2023.

The Committee discussed the process for the Council’s response to the Statutory Recommendations, with the Chair confirming that the response to them and Action Plan  would be considered by a Special Meeting of the Audit Committee on 9^th January 2025.

Ahead of approval of the recommendations in the report, the Chair and Neil Kissock advised of an additional recommendation as follows:

2.11 Note the Value for Money report submitted by the External Auditors relating to the 2021/2022 Statement of Accounts and the 2022/2023 Statement of Accounts.

It was agreed:

That the Audit Committee:

2.1      Note the 2021/22 Management Representation Letter.

2.2      Note the 2021/22 External Audit Opinion.

2.3      Approve the 2021/22 Statement of Accounts and Annual Governance Statement.

2.4      Delegate authority to the Director of Finance (S151 Officer), to sign the 2021/22 Management Representation Letter.

2.5      Delegate authority to the Chair of the Audit Committee and Director of Finance (S151 Officer) to sign-off the 2021/22 Statement of Accounts and Leader and Chief Executive to sign-off the 2021/22 Annual Governance Statement.

2.6      Note the 2022/23 Management Representation Letter.

2.7      Note the 2022/23 External Audit Opinion.

2.8      Approve the 2022/23 Statement of Accounts and Annual Governance Statement.

2.9      Delegate authority to the Director of Finance (S151 Officer), to sign the 2022/23 Management Representation Letter.

2.10   Delegate authority to the Chair of the Audit Committee and Director of Finance (S151 Officer) to sign-off the 2022/23 Statement of Accounts and Leader and Chief Executive to sign-off the 2022/23 Annual Governance Statement.

2.11      Note the Value for Money report submitted by the External Auditors relating to

            the 2021/22 Statement of Accounts and 2022/2023 Statement of Accounts