Transcript

Just to let you know we're live streaming. [BLANKAUDIO] [BLANKAUDIO] Okay, Chair.

Right, well, good evening everybody. Welcome to the audit committee. Welcome to Helen Parks, our external auditors. I hope you'll well and feeling fit at Helen. Also, we have Sarah Knowles in person with us from Maseras, our internal auditors. So we'll be helping us through some of the agenda items that we've got with it before us tonight. Excuse me. Right, well, we'll crack on, Rebecca, apologies and substitutions please. We have apologies from Councillor Pendelbray, Councillor Gibbons, Councillor Hollick, Councillor Lambert, Councillor ALLAN and Councillor CERTS, with the substitution of Councillor Davis. >> Thank you very much, was it something we said? [LAUGH] I think there's a lot here that haven't turned up. Thank you for that. The minutes of the previous meeting, pages one to four, can we confirm the minutes of the previous meeting? Thank you very much. Okay, Becky. Item three, additional urgent business by reason of special circumstances. I haven't been informed of any declarations of interest, have we got any declarations of interest? No, thank you very much. Item five questions, I haven't been provided any questions. I don't know of any questions unless there's anything been lodged. No, okay, that's fine, thank you. Okay, so we'll go straight into the agenda, the item six, in order to do an audited statement of accounts, 2021 to 22, that's pages five to 136. I'll take it, you're taking us through that earlier. Yes, I mean, if care is okay with it, can I take a general item six and seven all in one go if possible, please? So that's the, on order to the council, 21, 22, and 22, 23. So in effect, these are the two years of prior completed statement of accounts, which I said, which still haven't been audited. There was a capacity issue within the excellent auditors across England, and we're still waiting for these to be signed off. So where we are with both of these is, they're going to give us a special type of opinion, and we work the excellent auditors are waiting from central government guidance as to what, what wording they're going to put in. So obviously it's not, it's not about the fact that they found fundamental errors, it's going to be more about the fact that due to capacity issues at all. I don't know how they're going to word it, but they're waiting for the wording, and once the wording's been sorted, it'll come back to this committee. Okay, so the only thing I'd say is, although they're waiting for the wording, what, to give an assurance, what they do need is a value for money assessment, so that they would have done the value for money assessment, they would have done a government concern assessment, which is not part of the accounts, but it's part more of the audit work to make sure we're okay as a government concern for the next financial year, basically. And what's also within that is the internal audit opinion, just to make sure the internal auditors haven't got any fundamental issues with the internal control systems, and if they have, then they would have brought them separately anyway, and the, one of the opinions is within, later on within the agenda right in many ways. So the only thing I'd point your direction to is on page 166 of the agenda item, and towards the bottom of the page, we've got your fund balances, which match back to the fund balances that would have got the committee as part of the February council committee report, part of the budget setting report. Okay, so unless members have got any further questions, which I'm willing to take, I don't prefer to say any more, I guess the only issue now is, and at some stage, not our current external auditors, but our old external auditors, EY, we've just got to wait on them to formalize the opinion, and obviously, we've obviously been informed that with the general election coming up, I'm not sure where they are, with sorting those words exactly central government, or I'm hoping on the basis of those various circles, we've already been circulated that they're all there about, and the latest concept conversation we've had with the EY, they were hoping to get it sorted by September, so we'll just have to wait and see what happens. I'm willing to take any questions, or that you may have, thank you. Just before we go any further, could I just raise the point of page 9 and page 141? On page 9, it refers to myself as the exact member, I think we ought to alter that, I am not the exact member, and also it's repeated on page 141, so we need to have that amended. Sorry, thank you, we'll do. We have our exalted executive member at the risk. It's all right, Keith, I'm not putting a bid in or anything like that, so don't, don't concern yourself. You've heard what Iliasas had to say on this, I've been through it, both reports and had a look, and completely confused myself, but we had a chat this morning to put my mind at rest. I don't have any particular issues with it. Members, anybody got anything that they'd like to raise from those, please? If you want a few moments to just ingest it, please feel free. Thank you, Chair. This might be a stupid question, but I'm going to ask it. So, we've got in front of us the unordered statement of accounts and things, which are everything's then going on to be audited. What are we therefore being asked to make decisions on or comments on? I think it's just a note, so the committee members are aware that these two standard of accounts are not going to be audited, but there's something that you can also review, and if you've got any concerns, you can always just come back to you that I saw the auditions with you concerns. Okay, because I have no concerns, but I would be interested in an external view of them, because that's the challenge, I think, with what's being presented. Notwithstanding that broader landscape, I'm not trying to be difficult. I guess the only set of assurance you'll have, or some type of assurance, is when the auditions are ordered at 2324 accounts, as part of that process, they look at the prior comparator as well. So, for any major changes, the auditions will be actually obviously bringing it, because we've got any concerns there, bring it up with the committee. The other thing that they will do is they do something, they have to do a separate assessment about going concerned to make sure that the council, they've got no issues as they're going concerned over the next few years. Unfortunately, what it is, it's from EY, and we're not going to get an assurance game from EY, apart from the basic assurance to say that the minimum assurance work they need to do, according to their audit regulations, to give an audit opinion, it's going to be as simple as that. I'm not sure whether Helen's coming, but just to follow that logic through, what happens when it does come to external audit in the 2324 year, and they go, ah, there is an issue. What do we do then? If the external auditors, I'm sure that Helen's here, but in the nutshell, if they have got an issue, they'll bring it to the audit committee, and depending on what the issue is, we'll either adjust the accounts, although it's a fundamental issue that basically means that they're going to give a qualified audit opinion. So, normally, if the final material errors and misstatements, they'll give us the chance between the draft accounts and the final accounts, to then put it right. But that will, yeah. And I've got every confidence that the emphasis has done their job, and that's what this committee is here for. You know, it's that thing of the whole point is externality, isn't it? It is, yeah. I'm not sure whether external auditors want to add anything to what I've just said, because I haven't mentioned them. Thank you. Helen's waiting to add in. So, if we could let Helen, and then I'll take yours, Paul, is that okay? Helen, please. Thanks, Chair. And so, I'll just cover off a couple of points on that. So, what we're expecting from me, why is that they will issue what we call a modified opinion. What that looks like, as Ilias has alluded to, is it's still being worked through with kind of the NAO, the FRC, which is the financial reporting council, and SIPFA. What that opinion looks like then impacts the work that we have to do on the prior year accounts. So, it's looking like we will have to do something on your opening balances to make sure that things in your balance sheet and your reserves have rolled forward properly, but we probably won't be doing lots of detailed testing on it. What we will do is, if we find an issue with opening balances or reserve movements, as Ilias has said, we would then bring them to you, along with anything we find for the 23-24 audit, and we would present them to use the audit committee. And depending on their value, it's whether we say we recommend that you ask management to amend this, or whether we say it's not going to have a material impact, you can leave them be. We are still waiting for further instruction in terms of what that looks like in relation to the prior years. So, as I said, SIPFA, therefore, seeing the NAO and other government departments are still looking into that at the moment. What EY have been, excuse me, what EY have been us to do is provide you a VFM opinion. So, when we, myself and Chris, have met with them, they are doing the minimum assurance, whether they need to issue a VFM opinion. They will not be issuing any opinions on the accounts themselves. So, that's where they will be giving you a modified or an adjusted opinion, but we still have to wait to see what that looks like. I hope that helps. If you've got any questions, I'm happy to go into any more detail. Thanks very much, Helen. Obviously, because of the historic nature of all of this, and I'm very grateful for Helen's input there. Paul, do you have a question still? Yeah, very briefly. I mean, these documents that we're going through today, I think I'm right in saying I've been in the public domain for some period of time. And my unease with the discussion we've just had, which goes along with it, but it just feels that we as a committee should be able to reserve the right. Once we see an opinion and a response to the opinion, we can bring back these accounts for a second look if we choose to. So, maybe the auditors are quite happy with it, but when we see a set of words in an opinion, we might want to just revisit some aspect of this. Otherwise, it just seems that we're losing that ability to comment on the... I'm not anticipating that. It's just a point. Yeah, Laurie Paul, thanks. Any further comments? Do you want to... Yeah, so basically, I'm actually right. So, I think, again, Helen, correct me if I'm wrong. So, we will bring a draft set of accounts, which is before they get audited, right? The auditors will do their work and then give their opinion to this committee to say these are the areas they've found, rather than material or not material. And normally, what we'll do is before it comes to committee, they'll have meetings with myself and Ashley, and we'll prepare a statement for this committee to say, We're going to adjust for this, adjust for this, adjust for this. And we think this is not material, so we want to adjust for it. Or if there's a fundamental issue, we think that's going to delay the audit opinion or something. Again, that's... which hasn't happened at this council before, but that's something for this committee then to decide with the auditors and decide whether they give a qualified opinion. But yeah, so in a nutshell, before that final sign up for the Excel auditors happens, this committee should have gone through the scrutiny process to make sure they're happy with what the auditors are saying. Lovely. Thanks, Celia, for that. So, everybody reasonably happy with those two reports. So, we're going to take the two reports as one, Becky. Can I have a proposal and a seconder, please? Yeah, for those two items. Yeah, thank you. So, we go on to item eight, which is statement of account, significant judgments and uncertainties. You're going to take that, I'll take it. I think it might be helpful just to give members a brief background to it, such as we spoke about this morning. So, basically, this report is for the forthcoming set of accounts that we're working on that are going to be published this week. And what this sets out is when we do the set of accounts, it's a view of the auditors are looking to see whether this true and fair view. So, within that circle, there's lots of things that have got subjectivity or where we use experts and they've got mainly their best guess estimate on these sorts of things. So, I think previously we used to probably haven't over the last five or six years, but I think to this committee just to highlight the three or four main areas where we're using judgments, basically, to do the accounts or the experts are using judgments to give us the information for us to do the accounts. So, the main job areas that we're concerned with are things like funding and partnerships. Obviously, we're making assumptions on the level of funding etcetera. We're getting in future years and we're basing our accounts on that. And primarily, the other things, the driftment areas are the three or four things that are on page 226 and 227. It's a property, plant and equipment. What we do is our extent on value is value our assets. And basically, they're based on their own risk guidance, etcetera. And those valuations will be based on how we basically maintain those assets, estimated useful life, and based on that, for example, the depreciation figure. But no, that's an estimate because we don't know whether the house is going to last 50 years, 40 years or 30 years. So, those are the judgments that we do and make the accounts. But those, potentially, those judgments, as we've got to make sure we do them on the basis of guidance. But they have a fundamental impact on how we do our accounts, basically. The material figures in the accounts that we're using are judgment for. Likewise, for the pension's liability, obviously, Iraq actuaries will have done various calculations about future investment levels, how people, how many years somebody's going to live. And obviously, nobody knows, but obviously, a person's life span. So, those sorts of estimation tools are used by our experts to come up with a valuation figure to value our pension assets and to have value our fixed assets in effect. So, those are the sorts of things that we use. And the provisions is there. So, if you think about business rates, there's lots of organizations that have gone to the valuation office, basically, that will appeal against that, for example, their business rates. Now, those, we try and make a judgment based on what we think those responses are going to be. But we don't know what the valuations office is going to be. So, we would be making those judgments and doing the accounts based on safe for guidance. But they're judgments we have to make as accountants, basically. And those judgments are then tested for reasonable, as it's part of the orders to buy by X, they've already spent the order of the accounts. So, and there'll be, obviously, and then if they've got questions, they'll be looking at how we've used the data for my experts and how we've basically scrutinized that data as well. Lovely, thanks. Was that clear enough, members? You have for that. Robin? I'm happy with that. I just think it might be worth us thanking officers for Report 6, 7, and 8, because there's clearly been a shared load of work that's gone into it. I just think, you know, for me, that's worth. Yeah, it's, I think that the sweeping up exercise and so on and so forth has been challenging. And I think you're absolutely right to commend our officers for the work that they've put in to in very difficult times, because we know how difficult it's been with all the uncertainties that have surrounded audit for n years. Hopefully, we're entering into a new phase that should allow us to do our job properly a little bit more effectively. But yeah, thanks for that, Robin. Are members happy with that Report Number 8? Yep. Can I have a proposal and a seconder? Lovely, thank you very much. So that leads us on to item 9, and that's pages 271284. This is the section 106 planning obligations, the internal audit report. And I think that will be you, Sarah. So this section 106 planning obligations report is the last report from the 2223 internal audit plan to be issued. I haven't got a lot to say about it. It was a moderate assurance opinion overall. There were two medium priority recommendations and two low priority recommendations raised, all of which accepted by management and will be followed up during the normal internal audit programme for 2324. So I've got nothing more to add to that. Well, thanks, Sarah. I have to say that I've followed the section 106 situation for some considerable time. And I'm very happy with the report we have in front of us. Sharon's with us tonight, and I take it you would like to make some comments, please. Yes, just a couple, really. I think the first is to Bank Leslie, who's the compliance officer. I think we really benefit from at the Council of having Leslie's post and the fact that she's got such a close control over the section 106 work. And she's worked very closely with the auditors and those recommendations that have come through are just going to tighten up really, even more what Leslie does. I think that acknowledgement for that. And just on 4.1, the transfer of land delays, just to kind of cross reference it back to scrutiny. And there is going to be a task and finish group starting in the autumn, winter around adoption of new developments. So that will tie in nicely with that recommendation there and we'll be doing some more in-depth work into that. So thank you. Thanks, Sharon. Could I just support you and where Leslie is concerned? She's a fine officer and I've seen considerable improvements over the time that Leslie's been in charge of this. So all power to that area. Members, have we got any questions, Paul? Yeah. Thanks, Chair. Obviously, the 106 issues that some of the ones that have been identified where money has been spent by perhaps a parish council and they haven't been able to find evidence of any voices, something that's got to be tackled and I'm quite happy with that. My only concern is that I think in order to do that, I think there's going to be an offset in terms that the parish would be expected to spend the money and then reclaim it in effect. And that for some of the smaller parishes might possibly be a problem. And so my only comment would be that we ensure that the control is monitored to make sure that it's not becoming an obstacle, particularly to the smaller parishes to get these monies out going forward. But that's my only comment. I recognise the need to do it, but we just have to be clear that we don't create a separate problem. Thanks for that, Paul. Any further comments? No? Can I take it that we accept the report? Again, for both ones, seconded. Okay. Right, we go to item 10. That's the internal audit annual report for 2223. That's pages 285 to 296, 40 the internal audits. So I think it's you again, Sarah. Yes, so this report, as mentioned, is our annual report for 2223. So this just summarises all the work that we did in the internal audit plan for that year. It also includes our head of internal audit opinion for that year as well, which you will see in section two of the report. This overall assurance opinion is moderate, which is the second highest level of assurance. And the definitions for those are in the appendix at the end of the report. Section three of the reports sets out all the audits we carried out and hopefully illustrates how we came to our moderate assurance conclusion, given that every audit in the plan received a moderate assurance level for this particular year. Going on to section four in the report, we just put in a comparison. It's not a direct comparison because the audits in the plan change year on year, but it just gives you an idea of the assurance levels that we gave in the previous year compared with the current years reporting. It's also compared to the number of recommendations and the level of recommendations that were raised as well. So you'll see that for 2223, no high priority recommendations were raised compared with five in the audits that we performed in the previous year. And again, that's all I have to say really on this. It just summarizes our work for that particular audit plan. And as Elias mentioned, it goes into your annual governance statement in terms of any significant control weaknesses that were identified, but in this case, they weren't any. Thanks for that Sarah. Members, any questions? Robin? I mean, not that you can disagree, it's moderate and it's moving in the right direction. I just kind of benchmarking question really. How would other councils of a similar size pan out and you know, overall, is it moving towards a position that's more substantial? Fairing degrees right across client portfolios. Every local authority is different. Every client is different. What I would say is where we look at core financials, they generally tend to be at the higher end. There are really good controls around core financials. But as I said, when you're looking at a risk-based audit program and you're focusing your areas of resource into the highest levels of risk, it is sometimes very difficult to get substantial in every case. I'm not, you know, I don't get me wrong. I'm not kind of uncomfortable with where we are, but it's I think it's appropriate just to ask the question, which is how does this fare compared to others and is it moving in the right direction? I have to say, one of the lessons I've learned where auditors are concerned, if you get a moderate, that's not bad actually. You're doing rather well. That's no reflection on our esteemed auditors before us and so please please. Chad, none of it's a criticism. It's just a question. Right. There's no further comment on that. Can we have a motion second please again to clear that one? Lovely, thank you very much indeed. Item 11, any other items of business? I'm a little disappointed that we're so thin on the ground tonight because one of the, I just wanted to let everybody know that the action plan that we devised and the improvement program that we're working to as a committee, obviously because of the fact that we've got an election on at the moment, I've taken the view that we slip the program a little in order to ensure that we don't fall foul of any of the pre-election components or whatever. But Ashley and I will be meeting next week, I think we're meeting on Wednesday, to look at the timescales that we've put on our action plan and adjust them accordingly. And then I'll be getting in touch with members to advise when we will be picking up a game, which will be towards the end of the month. But I thought it'd common sense to move things over slightly while we were in this election period. That's about all I've got other than just to say that the item 12, we've got nothing on item 12. So it just leaves me to thank Helen for your attendance and if you'd like to pass on our good wishes to Chris and to you both and also to Sarah and hope that Ashley's having a good holiday and he comes back refreshed and full of vigor. And thank you for coming along. Chair, the person you try to usurp is trying to... He's an exec member, he's not allowed. Thank you Chairman and I was merely heard of time be helpful to your committee because if you don't want the help to make that happen, that's up to you. It's just an observation, which is not a criticism and meant to be helpful to both officers and your committee. The two items that you started with, there was obviously confusion about what you were supposed to do and I think that confusion was fair enough because I think the introduction to those two reports could have been broader and clearer and having said that, all of the rest of those documents, everybody else had those. Anybody who was elected after 19 anyway has already had those documents on more than one occasion. That makes it, I think, if there's 10 or 12 copies of this issue, so there are 3,000 pages of printing, which is pointless, together with a great deal of time for those of you who actually tried to understand it. And it seems to me that a broader introduction, this is the situation and this is what you're expected to think about, would it be more sense just to have observations so perhaps it's not something I haven't said in the past, but let's see whether they take any notice this time. Thank you for that, Keith. We could have probably constructed that a little bit more effectively, but we have made notes. I've learned by my mistakes. Thanks for that, Keith. But if that's it, folks, thanks for everybody's attendance and safety only home for those who are travelling, and we shall see you again on the 29th. Is it when the next one is? When's the next one, Rebecca? We as a committee will be meeting. It's on the line and the survey. Yeah, that's the meeting closed.