Agenda item

This item includes 2 supplementary reports. 

The Committee considered the Audit Findings for Newcastle under Lyme Borough Council presented by Andrew Smith of Grant Thornton. 

Andrew Smith explained that the Audit was nearing conclusion; there were a few matters that were still being worked through with the Council’s finance officers, the main item related to the valuation of car parks.  He explained that, pending the outcome of the car park issue, he expected an unqualified audit opinion would be given.  He confirmed the Council had made proper arrangements to secure economy, efficiency and effectiveness in its use of resources.  He placed on record his thanks and appreciation of the work done by Council staff during the Audit process during unprecedented circumstances. 

The Committee’s attention was drawn to key points in the report:

·         The ‘significant audit risks’ were outlined – the Committee was informed that no significant issues in terms of revenue had been identified; nor had any risks been identified in terms of management override of controls.  In relation to valuation of land and buildings, some issues had been identified in relation to valuation of property and equipment and uncertainty around these values due to the timing of valuations prior to 31^st March 2020.  There was also uncertainty around the valuation of the Pension Fund and the ongoing impact of the pandemic on illiquid asset values.   

·         Other audit risks – these included the Fixed Asset Register System – the Committee was advised that the new system was a significant improvement but some historical errors had been identified; and the audit had identified that some Investment Property had not been revalued during the year in accordance with good practice.

·         Going concern – the audit had not identified any issues that cast doubt on the Council’s ability to continue as a going concern.

·         Value for Money – the Audit identified that good arrangements were in place and although a deficit budget had been set there were sufficient reserves in place.  Regular reports were submitted to Cabinet and an external consultant had been brought in to advise.  The audit did include a note that the Council needed to continue to build reserves to become more financially resilient. 

·         The Action Plan contained 2 recommendations around revaluing assets categorised as investment properties on an annual basis; and secondly, that the Council review the useful lives of Vehicles, Plant, Furniture and Equipment to ensure they more accurately reflect actual lives. 

·         The report followed up the prior year’s recommendations and all had been followed up.

·         Audit adjustments were as outlined.

·         A table of unadjusted misstatements was drawn to the Committee’s attention; the table included the reasons the Council had decided against making an adjustment; these related to Flexible Use of Capital Receipts, Investment property where assets were not revalued in 2019/20; and Depreciation correction.  The Committee was required to approve the Council’s action in not making an adjustment.

Members were given the opportunity to raise any queries and clarification was sought on the meaning of REFCUS. The Committee was advised this referred to Revenue Expenditure funded by Capital; the Council was allowed by law to do this.  The auditor felt projects should have been accounted for as REFCUS rather than flexible use of capital receipts.  Members asked where this expenditure had occurred and the Head of Finance advised it was partly on the new waste and recycling service including project and staff costs and costs of leaflets. 

RESOLVED: That

(a)  The accounts for the financial year 2019/20 be received;

(b)  The Audit Findings Report for the financial year 2019/20 be received;

(c)  The Committee approves the action of not making an adjustment to the final set of financial statements in relation to the three items listed in Appendix C of the Audit Findings Report; and

(d)  Delegated power be granted to the Chair of the Committee to sign off the final audited accounts on completion of the Audit.

(Note: in relation to item (c) above, Councillor Mike Stubbs requested that his name be recorded that he abstained from voting on this part of the resolution).