This meeting of the Audit and Risk Committee will focus on the reports of the Council’s External and Internal Auditors for 2023-2024. The report pack for the meeting also contains a review of the Council’s Annual Governance Statement for 2023-2024.

Wolverhampton Council's finances

The report pack for the meeting contains an update on the progress the Council has made in implementing its savings and transformation programme, Our Future Council , to address its projected budget deficit. The Council's Medium-Term Financial Strategy (MTFS) for 2024-2025 to 2026-2027 identified a budget deficit of £27.1 million for 2025-2026, rising to £32.6 million for 2026-2027. The Council set a balanced budget for 2024-2025 using £6.0 million of earmarked reserves, but did not need to draw on its general fund reserves. The report pack notes that, since the 2024-2025 budget was set, the Council has identified potential efficiencies totalling £7.1 million for 2024-2025, potential savings totalling £10.4 million for 2024-2025, and further potential savings totalling £19.9 million. In addition, the report pack notes that work is ongoing to revise the MTFS to account for changes to the Council's projections.

External Audit 2023-2024

The report pack for the meeting contains the Annual Auditors Report of the Council’s External Auditors for 2023-2024. It was prepared by Grant Thornton, the Council's external auditor. The report considers the Council’s financial sustainability, governance arrangements and value for money. In particular, the auditors make the following observations about the Council’s arrangements for ensuring financial sustainability:

The Council has a clear understanding of the financial challenges it faces over the medium term, and the strategic risks associated with its financial position and operations. The Council has good processes in place to identify and monitor financial risks and to manage these, including financial resilience. We are therefore satisfied that the Council has proper arrangements in place to ensure financial sustainability. The External Auditors make one recommendation for improvement, about the identification and delivery of savings. The auditors also conclude that the Council has not identified any significant weaknesses in its governance arrangements or its arrangements for improving economy, efficiency and effectiveness, and makes no further recommendations.

The report pack also contains the City of Wolverhampton Council - Audit Findings Report 23-24. It notes that it is anticipated that the external auditors will give an unqualified opinion on the Council's accounts, subject to the finalisation of the audit. The audit identified one significant finding: a technical accounting adjustment relating to the Council’s pension liability. The report pack notes that the adjustment will be discussed in more detail in the Annual Findings Report, also included in the pack.

The Audit Findings Report also notes that the external auditors will shortly be presenting their report on the audit of the West Midlands Pension Fund (WMPF) to the Pensions Committee, which will take place on 11 December 2024. The report on the audit of the Pension Fund is contained in the report pack as WMPF Audit Findings Report 2023-24.

The report pack also contains the draft 2023-2024 Statement of Accounts.

Internal Audit 2023-2024

The meeting report pack also includes an update on the findings from the internal audit work which has been completed so far in the 2024-2025 Internal Audit Plan. The Committee will be asked to note the contents of this report. The Internal Audit Update Report is not included in the publicly available information for this meeting.

Annual Governance Statement 2023-2024

The Committee will also be asked to review a report on progress made so far in 2024-2025 to address the issues identified in the Council’s Annual Governance Statement 2023-24 which was approved in June 2024.

Procurement compliance

The Annual Governance Statement identified that the Council needs to improve its compliance with its Contract Procedure Rules. The report pack notes that the Council is taking steps to improve its compliance by increasing the involvement of the Procurement Team in lower-value procurements, working to ensure that staff understand the Council’s rules, providing training, and filling vacant positions. It also notes that the implementation of the Procurement Act 2023 has been delayed to February 2025, and that the Council has therefore paused work to update its Contract Procedure Rules until the Government publishes updated statutory guidance. The Council has established a project board to oversee the implementation of the Act and to identify areas where the Council can further improve its procurement arrangements.

The Public Sector Internal Audit Standards

The Council’s internal audit service has been externally assessed against the Public Sector Internal Audit Standards (PSIAS) and determined to be generally compliant. However, the external assessor identified a number of recommendations to bring the service fully into line with the standards, and to prepare it for the implementation of new global internal audit standards in April 2025. An action plan to address the issues raised by the external assessor has been developed, and will be fully implemented by the end of 2024-2025.

Recruitment and retention

The Annual Governance Statement noted that recruitment and retention continued to be a risk to the Council. The report pack notes that a number of steps are being taken to address the issue, including using targeted advertisement, making improvements to the recruitment process and to the information available to potential candidates on the Council’s WVJobs website, supporting career progression for employees, introducing certificates of sponsorship, improving the onboarding process, reviewing the benefits package, and increasing the Council’s emphasis on growing its own staff.

Other non-compliance

The Annual Governance Statement identified that there had been an increase in reports of non-compliance across a range of directorates. The report pack notes that this non-compliance has typically been low-level, but that the Council is monitoring the situation closely. Departments are being encouraged to ensure compliance with existing policies, and to regularly review their governance documentation.