Decision Maker: Joint Audit and Standards Committee
Decision status: Information Only
Is Key decision?: No
Is subject to call in?: No
To Approve the final audited Statement of Accounts and the joint external auditor's report for 2018/19
17.1 The Assistant Director – Corporate Resources, introduced paper JAC/19/9 by giving some background information as to why the report was late coming to committee.
17.2 It was stated that under the current regulations the expectations were that local authorities prepare and publish their draft accounts by 31st May (which is a statutory deadline) and that they are signed off by the external auditor by 31st July (this is not a statutory deadline).
17.3 The Assistant Director – Corporate Resources explained that in April 2019 the Audit Manager and the Audit Lead departed Ernst and Young which affected the scheduled audit team. It was then publicly acknowledged by Ernst and Young that they were experiencing resourcing issues and they announced that 18 local authority audits across the country would need to be deferred until the end of July which included Babergh and Mid Suffolk. An alternative date of August was discussed however, due to ongoing resourcing issues the Ernst and Young audit team were unable to begin until October 2019.
17.4 It was reported that the audit works were not fully complete at the time of the meeting and rather than delay any further, the recommendations in report JAC/19/9 included a delegation to be given to the Assistant Director – Corporate Resources in consultation with the joint chairs of this committee to sign off any final amendments to the accounts.
17.5 The Assistant Director – Corporate Resources stated that discussions had already taken place with Ernst and Young regarding the timing of the 2019/20 audits and that it had been agreed that delivery of a quality audit was more important that achieving a 31st July sign-off.
17.6 The Senior Financial Services Officer tabled papers that detailed a number of amendments that had been made to the statement of accounts since the paper had been published and explained that there were similar issues within both sets of accounts.
17.7 The representative from Ernst and Young apologised for the unacceptable position of the audit being late and reported that 40% of local authorities did not receive audits on time due to problems recruiting across the sector and that several large companies currently being investigated had impacted their workload.
17.8 The representative from Ernst and Young also reported that a realistic deadline for the 2019/2020 audit delivery would be September and that Ernst and Young had increased their headcount but were dealing with a backlog of works. The status of the audit was detailed on page 23 of the report and that Ernst and Young were aiming for an end of February completion date.
17.9 Councillor McCraw stated that it was difficult to relate to the changes made to the report because of the issue with page numbers.
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17.10 The Corporate Manager – Finance and Commissioning and Procurement acknowledged the problems with the page numbers and informed the meeting that they would be rectified and re- circulated.
17.11 Councillor Barrett asked if there were any detrimental effects on professional fees as a consequence of the audits being completed later.
17.12 The representative from Ernst and Young replied that there would be no additional costs unless any significant issues were found during the audit.
17.13 The Assistant Director – Corporate Resources stated that the fees were for delivery of a quality audit and that timings were not relevant.
17.14 Councillor McCraw stated that the late timings of the audit were not putting the Council’s at greater risk, which Katherine Steel, Assistant Director – Corporate Resources agreed.
Councillor Amorowson joined the meeting at 10.00am.
17.15 Councillor McLaren enquired what would be a greater risk, under or overestimating the value of land and buildings.
17.16 The representative from Ernst and Young stated that the valuation of land was important to be correct as they are one of the biggest items on the balance sheet.
17.17 Councillor McLaren also enquired if the pension liability position for Babergh was common and should it be a concern.
17.18 The representative from Ernst and Young replied that from an audit perspective it was not a concern.
17.19 Councillor Matthissen asked if the deficit was being reduced by a steady amount each year.
17.20 The Assistant Director – Corporate Resources replied that it was correct that both Councils’ were making 2 types of contributions to reduce the deficit.
17.21 Councillor Matthissen also enquired if the deficit would be completely closed within three years.
17.22 In response the Assistant Director – Corporate Resources confirmed that the deficit was reducing at rate that would result in it being fully funded within three years.
17.23 Councillor Matthissen sought clarification regarding the auditing of the various companies within the group.
17.24 The representative from Ernst and Young confirmed that the group accounts were not audited by Ernst and Young but were checked as part of the consolidation with Council accounts.
17.25 Councillor Caston asked if any areas of concern were found that had not already been covered.
17.26 In response the representative from Ernst and Young reported that no other areas of concern had been identified.
17.27 Councillor Matthissen requested that when the external company accounts had been scrutinised by Joint Overview and Scrutiny a report be brought to the following Joint Audit and Standards Committee.
17.28 Councillor Norris sought an explanation for the changes from +1,736 to -5,620 for the actuarial gains and losses arising on changes in financial assumptions on page 62 of App C of the report (Page 258 of the report).
17.29 In response the Assistant Director – Corporate Resources informed Councillor Norris that she would provide clarification as soon as possible.
The recommendation was Proposed by Councillor McLaren and Seconded by Councillor Muller. By Unanimous vote. .( Councillor Amorowson was unable to vote on this item as he joined the meeting half- way through the item)
It was RESOLVED:-
(1) That the Councils’ S151 Officer in consultation with the Chairs of JASC be authorised to sign the accounts (including the auditors unqualified opinion) once completed. This will include:
(2) That the joint external auditor’s report for 2018/19, once complete, be approved.
(3) That the Statement of Accounts for 2018/19 for Babergh District Council, produced following the completion of the audit be approved.
(4) That the Statement of Accounts for 2018/19 for Mid Suffolk District Council produced following the completion of the audit be approved.
Report author: Melissa Evans
Publication date: 26/02/2020
Date of decision: 27/01/2020
Decided at meeting: 27/01/2020 - Joint Audit and Standards Committee
Accompanying Documents: