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Audit and Governance Committee - Tuesday, 17th June, 2025 9.30 am
June 17, 2025 View on council websiteSummary
The Audit and Governance Committee of Worcestershire County Council was scheduled to meet to note the draft annual statutory financial statements for the year ended 31 March 2025, and to review the external audit plans for both the council and the pension fund. The meeting was also scheduled to cover progress on external audit recommendations from 2023-24.
Here's a more detailed look at the topics included in the agenda:
Draft Annual Statutory Financial Statements
The committee was scheduled to note the draft Final Accounts Pack, including the Statement of Accounts for the financial year ended 31 March 2025, as well as progress on the 2023-24 External Audit Recommendations.
The report pack included a draft Annual Financial Report and Statement of Accounts, which presents the overall financial position of the council, reflecting the council's outturn position and year-end net asset position. According to the Chief Financial Officer, Phil Rook, the year had been particularly challenging for local government and the council, with pressures on demand-led areas like adult social care, children's social care, and home-to-school transport. These pressures were partially offset by underspending in other service areas and central budgets.
The report pack noted that the financial position reported in the council's statutory accounts for 2024/25 was an overspend of £6.2 million against the net budget of £433.4 million, with an accounting deficit of £110.3 million, taking into account pension actuarial costs, capital costs and other financial adjustments. The impact of other movements, such as asset revaluations and an actuarial review of the assets and liabilities in the Pension Fund, was scheduled to generate an overall deficit for Worcestershire County Council of £96.4 million.
The report pack also noted that the cumulative Dedicated Schools Grant (DSG) deficit carried forward from the last financial year was £44.1 million, which would increase by the 2024/25 in-year deficit of £54.0 million, resulting in a carry forward into 2025/26 of £98.2 million. The report pack stated that this deficit is included in 'Unusable Reserves'.
The report pack stated that the external audit fieldwork and Value for Money assessment had commenced and would continue over the coming months, and that members would be updated on audit findings at subsequent committee meetings.
External Audit Plans
The committee was scheduled to review the external audit plans prepared by Grant Thornton for both the council and the pension fund.
Worcestershire County Council External Audit Plan
The audit plan outlined the key developments impacting the audit approach, including local government reorganisation and local audit reform. It identified management override of controls and the valuation of land and buildings, the EfW plant, and the net pension fund liability as significant risks. The planned audit procedures were detailed, as well as the approach to materiality. The audit plan also included progress against prior year recommendations and the IT audit strategy.
The audit plan noted that the audit team would undertake additional risk-based procedures to assess whether a significant weakness exists in the council's arrangements for implementing transformation projects at scale and pace, supporting officers to make changes, progressing in making savings and tracking this by Cabinet and the Audit and Governance Committee, as well as ensuring there is a robust plan in place outlining how the DSG deficit will be brought back into balance.
The audit plan stated that the audit team would also undertake additional risk-based procedures to assess whether a significant weakness exists in the council's arrangements for providing Internal Audit provision which is fully compliant with the requirements of the Public Sector Internal Audit Standards (PSIAS).
The audit plan stated that the proposed fee for the audit was £347,229.
Worcestershire Pension Fund External Audit Plan
The audit plan for the pension fund identified management override of controls and the valuation of Level 3 investments as significant risks. The planned audit procedures were detailed, as well as the approach to materiality. The audit plan also included progress against prior year recommendations and the IT audit strategy.
The audit plan stated that the proposed fee for the audit was £97,161.
Progress Against Prior Year Audit Recommendations
The committee was scheduled to receive an update on the progress made in addressing the recommendations made in the previous year's external audit. The report pack included a tracker outlining the actions taken to address the recommendations, including those related to financial sustainability, risk management, and internal audit provision.
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