Apologies for absence were received from Councillor Galer.

There were no declarations of interest given at the meeting.

The Committee received and considered the report from the Executive Director - Resources who presented for approval the draft Statement of Accounts for 2023/24 and provided the committee with an update on the progress to meet the Governments backstop date for the draft 2023/24 outstanding Statement of Accounts.

To meet the backstop date of 28 February 2025 for the 2023/24 accounts, EY (as the external auditors) need to have completed their respective tasks in order to be able to complete their report to issue a modified opinion on the accounts for the two financial years. EY will provide a verbal update on the report to the meeting however due to the tight timescales delegated authority is being requested to be given to the Chair of the Audit, Risk and Standards Committee and the S151 Officer to approve the final accounts for 2023/24 by the deadline. 

The External Audit report will be circulated to Members of the Committee 
ahead of the sign off and enacting the delegation.

The backstop date of 28 February is achievable, providing the delegated authority option will enable the accounts to be signed off following the receipt of the audit completion report, this report will be circulated to Members of the Committee ahead of final sign off. 

Councillor Wainwright thanked Officers for getting the accounts up to date and referred to the Balance Sheet where Council dwellings were shown as being an asset of £269m and asked for an explanation for this figure as due to there being 6000 council dwellings, this would value them at £45k each. 

The Financial Services Manager advised that housing stock is valued at the existing use cost and currently discounted to 38% of its value, although under new government figures they would be revalued at 34% of their value.

Councillor Wainwright also queried the increase in surplus assets from £150k last year to £680k this year. It was explained that surplus assets are those assets that are not currently operational. They are moved to surplus assets whilst the Council investigates options for them. 

Councillor Newcombe referred to the Finance Team capacity review and whether any pressure from the devolution plans were impacting on capacity.

The Executive Director – Resources advised that there had been turnover in the team over the past year, but some good appointments had been made. This had enabled three accountants to work solely on the 2023/24 accounts and similar plans were in place for the 2024/25 accounts which key personnel would be working on. However, she was mindful of the effect this could have on other services, e.g. property. She also advised that there would be a resource requirement for the Local Government Reorganisation, but it was not causing an impact at present and funds have been set aside for it. She offered reassurance to EY that she was confident in the team and its capacity.

Councillor Capewell commented on the increase in costs for External Audit which had increased 74% from 2022/23 – 2023/24 and asked what factors had contributed to this.

The Financial Services Manager advised that this was an estimate of accruals from the years 2021/22, 2022/23 and 2023/24. Updates on figures had been received, and the final amount is likely to be less than expected. 

Councillor Wainwright stated that he was confident in the Finance Team’s capacity but queried whether the departments working on the evaluation of council stock would have the capacity.

The Executive Director-Resources advised that she would be working on the revaluation of council stock with the Executive Director - Property, and it would be prioritised.

Councillor Newcombe queried the increase in soft loans for housing adaptations which had doubled over the past year. The Financial Services Manager advised that this was due to catching up with the backlog from Covid when work was unable to take place.

Councillor Carpenter asked what impact the full integration of GYS had on the 2023/24 accounts. The Financial Services Manager advised that there had been a substantial impact as the transactions were more substantial than enterprise companies. The impact of the new assets for the company has deferred capital receipts lease arrangements which has made the accounts more complicated than in previous years.

A presentation was given to the Committee by Debbie Hanson (EY).
Debbie clarified that the 2023/24 accounts cannot be approved until the end of the inspection period so not until 28th February when they can then be signed by the S151 Officer and the Chair. Before an opinion can be issued, an updated and signed AGS will be required.
Debbie gave a brief overview of the report and outlined the different sections including work completed, results and findings, and value for money reporting. 

Although EY had planned to undertake limited work to rebuild assurance ahead of the 2023/24 backstop date, due to the delays in the production of the Council’s accounts, as noted in this report, there was insufficient time and resources available to complete the planned work. Taking this into account, for the year ended 31 March 2024, EY have determined that they cannot meet the objectives of the ISAs(UK) and anticipate issuing a disclaimed audit report.

Debbie advised that two significant weaknesses had been identified: arrangement for the production of the Council’s Statements of Accounts and overall capacity of finance function and arrangements for procurement and contract management arrangements. Consideration was given to elevating these matters to the level of statutory recommendations. However, should these recommendations not be addressed to facilitate the timely publication of the 2024/25 financial statements in line with the regulatory deadlines and to address the wider capacity issues noted within the report, then consideration will be given to exercising additional audit powers through the issuing of statutory recommendations.
           Debbie acknowledged that it had taken a significant effort to produce three sets of accounts in the period and advised that production of the 2024/25 accounts would be closely monitored.

Internal Audit have issued a reasonable/limited assurance report in respect of their annual Head of Audit opinion for 2023/24 and Debbie advised that it was imperative that the Council take steps to address the recommendations from Internal Audit to improve the Council’s overall system of internal controls and to take action to ensure timely responses to Internal Audit recommendations, as some from 2018/19 were still outstanding.

Councillor Carpenter thanked Debbie for identifying the weaknesses and advised that the outstanding audit reports would be discussed under AOB.

The Executive Director – Resources advised that she would be dealing with the matters raised in the report as a priority and was confident in the capacity of the Finance team to resource the 2024/25 accounts successfully.

Debbie advised that she would work closely with the financial team. The audit work should be completed by the end of November with the opinions work completed by the end of December to rebuild assurance.

The Chairman reported that Heads of Service would be invited to the next meeting of the Audit, Risk and Standards Committee to explain why Priority 1 and 2 audits are still outstanding for their departments.