Transcript

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OK, let's start. I feel a bit daffes. OK. Should we start, oh, do we start? I'm going to do it early. Come on then. We're being filmed. OK. OK. Good evening and welcome to this meeting of the Audit Governance and Standards Committee. My name is Councillor Lin Henderson, and I'm chairing this meeting this evening. In the event of an emergency in the sounding of an alarm, the emergency evacuation procedure is to leave the chamber by the fire exits at either end of the room and staircases at either end of the corridor. Please do not use the main staircase. Councillors and officers are asked to congregate by the statute in the marketplace. Anyone requiring assistance to remain in their seats and an officer. The public Wi-Fi for anyone who wishing to use it. The meeting is being filmed for live broadcast on the Council's website, and an archive version will be available on the website after the meeting finishes. The broadcast will be suspended during any adjournments or proceedings as your Council results to consider information's exempt business. Members are reminded that microphones must be switched on and spoken to directly included in the webcast. I'll direct any, no we haven't got any public speakers. Please can everyone present at the meeting ensure that their mobile phones are switched off or in silent mode for the duration of the meeting. Right, the first item on the agenda is public questions. Have we received any public questions? No, no public questions. Thank you, Alice. I wasn't meant to introduce anyone. No, I wasn't okay. Are there any apologies or substitutions, Alice? Yes, thank you, Chair. We've received apologies from Councillor Tom Reeve and Councillor Worldridge is attending as his substitute. Thank you, Alice. Do members have any declarations of interest? No? Okay, thank you very much. Can we confirm the minutes of the meeting held on 28th? Oh, I thought the 27th of March is a correct record. Great. Agree? Okay. So I will sign them. Okay. Okay, it's 24th. I can't remember what the date is, 21st, okay. Okay. The next item on the agenda is item 4. The 2022-23 statement of account and external audit report which you can find at NXA of your agenda. I'm going to invite Rachel to introduce this item. Over to you, Rachel. Thank you, Chair. Good evening, everybody. So the report at Appendix A sets out the 2022-23 statement of accounts and long with two letters of representation for approval and the draft audit findings reports in respect of the main accounts and the pension funds which are for noting. Just by word, context since the committee last met the 21-22 accounts audit has been concluded with an unqualified opinion issued and those accounts have been published along with that audit opinion on the council's website. The obviously main business in relation to the accounts today is the 2022-23 audit which is almost complete and the last remaining few remaining queries should be resolved as soon as we possibly can. The accounts in front of you this evening reflects all the audit adjustments that we've agreed to date so no major changes are expected from those and we need the committees approval this evening in order for the Chair to be able to sign off those accounts once those final bits of audit work is completed and the opinion to be able to be issued in due course. I appreciate the accounts are really long and complex documents so despite this being a single item agenda you've probably got quite a thick pack of paper where you should have printed it out and that is just a reflection of the complex financial reporting arrangements that we have as a large local authority. I wasn't proposing to go into any specific detail. Myself and Jez can answer kind of technical questions if we need to but with your permission Chair I think it's probably sensible if Paul talks through the audit findings reports and then between us we can answer any questions on relevant areas. Thank you, Reg. Paul, would you like to? Yeah, thank you. So likewise I'll take our two audit findings reports as read. There's a lot in there but a lot of it is a requirement of auditing standards to communicate various things to you. So a big chunk of the report explains the areas that we've dedicated most of our audit focus on around. So that's either because it's a requirement of auditing standards around recognition of income or expenditure or management override of controls which every audit regardless of the sector is required for auditors to undertake various procedures in that area and also the areas of complexity. So the big numbers in the accounts relating to the valuation of land and buildings and your pension liability. So the first couple of sections of the report explain the risk and the audit procedures that we've undertaken. The works as Rachel said is primarily done. There are some outstanding queries. The report which we will get to, we'll look to finalise the work next month. The report includes the various appendices that set out the adjustments that were made to the financial statements. I think it's probably worthwhile flagging that because the 21-22 accounts were open at the same time. So that does create a difficulty when you're trying to respond to audit queries and also auditors on to take an audit when two sets of accounts are open and it's certainly not ideal but it has the advantage of allowing the opportunity to any issues that are identified in 22-23 that might relate to previous years. We were able to fix them or the accounts were able to be updated to the 21-22 set to reflect that. So some of the issues that we encountered in the audit are actually flagged in the previous audit findings report around some of those adjustments. So I was going to pull out any of the adjustments in particular on either report but I'm happy to take any questions if there are any specific ones on detail. It's probably just worth, we've talked about back stops and everything like that at the previous audit committees. So there's been no confirmation, formal confirmation, what's going to happen yet for the expectation is that the backstop would be September where if you've not signed an audit by then that you would issue a disclaimer audit opinion, we're very much of the view that we've got to the stage in the audit that we are so close that our preference and therefore what we look to do unless something very unforeseen was to come out would be that we would look to sign off the audit in advance of that and the intention would certainly be to come back and do the remaining work in June and then allow us to sign off however quickly we can do that, however quick we're able to conclude on the areas that are outstanding. So there isn't the intention that there's anything new to undertake. It's really just coming back and looking at things that we didn't quite finish when we completed our visits. But I think there's clarity on what needs to be undertaken and management taking the opportunity to prepare the 23-24 draft accounts in this window until we come back and look at finalizing the audit. So happy to take questions. All right. Thanks Paul. Does anyone have any questions? Councillor BEAR, it's going to call you Rowena. Thank you. I just have a couple of questions. One is could you just summarise what things are outstanding and why they weren't completed I suppose by now? I know you might have said a bit of that before but for the record. And then maybe if you answer that one first and then I'll ask the second one because it's not really related. Off the top of my head, I mean there's about 10. There's about 10, 10 or 15 things. So be that either providing an invoice or a couple of queries and transactions that we've picked for our sampling that we are still waiting for. So when we were doing the two sets of audits at the end, we agreed that actually what would be sensible would be rather than the team working, or both teams working across the two years, that there would be a brief pause on 22/23 to make sure that we definitely signed 21/22. So there was a period of time when management stops looking to resolve those queries and instead made sure that we were able to sign up 21/22 which we did. We were always in our timetable we had an agreement that after April that there'd be a gap where we wouldn't be able to undertake any more work. So we wanted to get the 21/22 before that. So that's why those things are now outstanding. It's just we run out of time between the window. We agreed that we wouldn't look to revisit the audit until mid-June, which is what we're going to do. Yeah, no thanks for that. So I think from what you're saying it was a number of follow-up things as opposed to one major thing. And my second question was on page 118 under related parties, there's one that's Coomhill Investments and I just wondered what that was. Off the top of my head, that's a property related company related to a former councillor, so a councillor that's no longer part of the council, but obviously was during part of the year in question and certainly in the prior year that relates to prior comparisons. So you'll appreciate there was an election in May 2022. So for the very first part of the 2022/23 financial year, we had a slightly different set of councillors than we did for the majority of that financial year. So we obviously had to take into account transactions related to both of those and that was from memory a company relating to a councillor that is no longer a member. So why would they be getting payments from Marbie Kay? Is that for social housing or rent like that? Yes, the property used through the private leasing scheme. The properties that that individual owned that we then leased to the council for accommodation. Any more questions? We asked the questions, so no, it couldn't be. Well, can I ask a question? Why are you thinking, if you wanted to ask questions? So those 10 to 15 things, Paul, no sort of significant items you think are going to come out of there and you've said on page 9 that the area is to be really sorted out all the stores and work to do is the - it's about - I can't have lost it. What is this? I think it's - It's at land and buildings, the evaluation. It's evaluation. So is there anything substantial there that we should have left to do? No, I think the overriding kind of approach, and a couple of years ago there was one of the reasons for the delay was there were some issues around evaluation and obtaining information from the valuer. That's not something that's taken place. This is, from my memory, this is evidence relating to some assumptions around a couple of assets in particular where we've asked the question as opposed to any fundamental over-arching approach to evaluation of land and building. So I'm assuming that once we come back and look at it, whatever piece of paper we need to see to evidence that will be provided. While you're thinking of any more questions, and just to confirm on page 25 there are no deficiencies noted from this year. No recommendations or anything like that. Yeah, not from - we didn't want to flag anything from a control perspective, weaknesses in control, so things not been authorised appropriately or anything like that. There was nothing arising from the audit that we would use this mechanism to report. So, you know, we look at IT controls and things like that. There was nothing coming out from that this year that we'd want to raise in the report. Yeah, that's right. Are there any questions to the questions? Oh, Councillor Bess. Sorry, I can't find it now. I was looking at earlier the adjustments. So there was quite a few quite large adjustments. Could you, for the record, say why that would be and what the Council needs to do to improve that situation going forwards? Sorry, I can't find the page, but there were some that I think were in millions. There weren't small adjustments. It was in the findings report. I've noticed those. Two-sixed. Yep. My reflection would be there was probably more last year than this year in terms of adjustments and numbers. So there were smaller things this year. But if you look at the note, I mean, there's no particular theme. It's things across most of it, it's classification. So it's moving things from one thing to another, which therefore suggests that the underlying information in the ledger is right. It's just how it's then been fed into the financial statements. So that would probably be the reflection, I guess. If you're doing that, it's the preparation between utilizing the information from the ledger into then what the accounts look like. Yes, go on. Yeah, it's just that the camera then goes on. That's why you have to have just one. And I noticed that the audit fee went up quite substantially. And it said about which area that was, I think it was housing, was the housing system. So what was the reason for that significant increase in the audit fee? Was that the information wasn't ready or you had to do extra work? Or could you just give her a favour of why the audit fee increased? So there were two areas where it's important to say that this is a proposed audit fee that the PSA will sign off. So they will take a view on it based on the other variations that they undertake. So there are two elements. The first bit is the proposed amount around overruns. So the additional work that we've had to do across the board as opposed to one area in particular. If not said it's just PPE, it's other bits. Then the second area that you've made reference to is around housing subsidy. So that is a consequence of if your external auditors do not undertake your housing benefit subsidy audit, they need to undertake work as part of the financial statements work that they will undertake. And if we're not the auditor of certifying the claim, then we need to do that work as part of our financial statements audit. So that's the additional amount. And again, the PSA will need to approve that. So you're going to have a different order. So we'll be doing your claim and you can't use the same work. So they'll be needed to do the work that they need to do for that. But if we were doing both, then you would be paying for it through that route as opposed to through the audit fee. Any more questions? Yes. So you mentioned about the overruns. So I know there was a delay in signing the accounts. And I thought that would just shift the work later on, but it would be the same amount of work. So why is it then additional? I know it was later, but I thought that was shifted. So why is it then additional work for the overruns? So yeah, it started later, but the amount of time that we've taken to do the audit after we've started later has been longer than we feel that it's taken. So based on the fee that we're proposing is based on the kind of additional hours that we've done past. What we think is the time that it takes to do the audit based on the working papers that we ask you to provide and the testing we do, that the iterations of either looking at the information that we've received or the testing or working through the adjustments. That's the bit where we've made that calculation. Any more questions? Okay, so I will now move the recommendation on page A1 of the report. Councillor Benion, will you second this? Okay, thank you. And now I'm going to call on the committee to debate the report. Councillor Bess. Okay, it might not be a debate question. So we're receiving this draft. Could you just set out the anticipated, I suppose, timeframes to actually sign it? And will it be coming back to this committee or is it delegated if you just explain the timing and the expected how we're going to sign these off? Well, I think we've heard tonight that we're hoping for June the 24th to be the time and everything is finished. Sorry, is that Rachel, you're going to do that now? Okay, thank you. I can come in first and then Paul may add to it. So I think the Grant Daunton team are expected to come back in mid-June to complete their last bits of work. In subject to being able to turn that round as quickly as possible, the aim would then be that the opinion can be issued as soon as possible as that works concluded to June or possibly July, hopefully. And subject to being no major changes to the Councillors has been reported tonight. I wouldn't anticipate these coming back to committee just as we've had in previous year and the committee have approved it. And then we've been able to enact that approval and get the Chair and 6-1-5-1 of us have designed so enough of the accounts at the point of the opinion is issued. So I wouldn't expect them to come back to the committee unless there's something really fundamentally changed as a result of that final piece of audit work. Do we have to agree at committee that that will happen because I thought it was like standard that they would have to be approved here before they were signed the final accounts? Do we have to agree that that would be delegated or what's the mechanics of that? The recommendation 3 is that the audited accounts are set out and then it's one are approved subject to any minor presentational amendments as a result of required as a result of finalizing the audit work. So I think that's covered by that recommendation. Any other comments to be made? No. Okay. I think we're pleased if we are at this point because I think if we reflect 6 months ago we were somewhat nervous but we're in a better place today. So I'm going to then say I think we've made all the comments we want to make tonight. And I'm going to propose that the committee has us resolve that the comments and recommendations the external orders are set out and annex 2. And that's the ABK Council draft audit finance report and annex 3 Kingston pension fund draft audit finance report unnoted. Second point, the list of representation issued on behalf of the council sit out and annex 4 and annex 5. 1 for ABK and secondly for the Kingston pension fund are approved. And the audited accounts, the audited accounts including pension fund accounts as sit out and annex 1 are approved subject to any minor presentation amendments required as a result of finalizing the audit work. You have short counts of best. Yeah, no, I see that it's covered in 3 but could I just ask and I just have to be on here that the committee that we will be notified when it is approved. And if and just be told of what amendments even if they're minors so that we so that we just have oversight of that. I think that's reasonable. Will you note that Alice? Okay, thank you. So can we agree this unanimously or do members wish to go to a vote unanimously? Okay, thank you very much. I'm not aware of any urgent items this evening and so I think we can say we're finished at 753 tonight. Okay, thank you. All right, thank you very much. Thank you Paul. Thank you. Thank you. Thank you. [BLANK_AUDIO]