Agenda item

Jaclyn Gibson, Chief Finance Officer:

a.    introduced the Annual Governance Report from the Councils external auditors, KPMG, summarising the findings from the 2017/18 audit, which was substantially complete

b.    highlighted that the Annual Governance Report identified the key issues that members should consider before an opinion, conclusion and certificate were issued

c.    explained that the Council’s financial statements were an important means by which the Council accounted for its stewardship of public funds, Council members held final responsibility for the financial statements; it was therefore important for Audit Committee to consider KPMG’s findings before recommending the adoption of the financial statements to Full Council

d.    advised that subject to the satisfactory conclusion of any outstanding work, KPMG proposed issuing an unqualified audit opinion by 31 July 2018

e.    referred to the draft letter of representation attached as Appendix B to thereport, to be approved by Audit Committee on behalf of the Council before KPMG issued an opinion,conclusion and certificate

f.     requested members’ feedback on the content of the report.

Andy Bush and Mike Norman, representing the Council’s external auditors, KMPG:

a.    presented the Annual Governance Report summarising the findings from the 2017/18 audit (Appendix A), which covered the following main areas:

b.    reported that the annual audit by KPMG was practically complete, there were still final procedures to be undertaken which did not however anticipate any problems, although Audit Committee would be notified if there were any issues apart from minor formatting changes

c.    detailed the summary messages from the 2017/18 audit as defined at pages 8-9 of the report

d.    advised that additional audit reporting requirements had been complied with in respect of £561,000 of listed debt on the London Stock Exchange now designated as an EU Public Interest Entity (EU PIE), details of which would need to be included with the published final financial statements

e.    reported on one adjustment identified, a transfer of £80k required between the Revaluation Reserve and the Capital Adjustment Account to correct a prior year issue, it had been agreed to action this adjustment in 2018/19

f.     reported that in addition a small number of presentational changes had been identified in the financial statements during the course of the audit and amendments to the draft accounts would be made in this respect

g.    advised that subject to the satisfactory conclusion of any outstanding work, KPMG proposed issuing an unqualified audit opinion by 31 July 2018

h.    reported that in relation to value for money the auditors had concluded that the authority had made proper arrangements to secure economy, efficiency and effectiveness in its use of resources and anticipated issuing an unqualified VFM conclusion by 31 July 2018

i.      added that audit fees for additional works resulting from the Authority being identified as an EU PIE would be agreed with the Authority’s SI51 Officer before the variation request was submitted to Public Sector Audit Appointments Limited (PSAA)

j.      requested Audit Committee’s consideration of the report.

Members raised concern in relation to uncertainty around the Western Growth Corridor project achieving funding from other parties, although the annual governance report did not flag up these concerns. The project had been over budget the previous year. Regular progress reports had been promised although only one had recently been given.

Mike Norman, KPMG responded as follows:

·         There would always be project risks. The external auditor’s review concentrated on whether clear arrangements were in place to identify and mitigate these risks.

·         Finance tracking was an area for officer management.

·         Regular updates on the Western Growth Corridor were presented to Executive. If members felt there was a need for further scrutiny this was a matter to be raised with officers.

Jaclyn Gibson, Chief Finance Officer, highlighted that an internal board of officers chaired by the Chief Executive met every two weeks to monitor progress with the Western Growth Corridor project to ensure the correct governance arrangements were in place and operating properly.

Councillor Hewson confirmed in his capacity as Chair of Performance Scrutiny Committee that reports were received each quarter covering major projects including the Western Growth Corridor, where members were given the opportunity to ask questions.

RESOLVED that:

1.    The matters raised in the report be noted and the financial statements be submitted to Full Council for approval.

2. The draft letter of representation attached as Appendix B to the report, be approved by Audit Committee on behalf of the Council before KPMG issued an opinion, conclusion and certificate.

3. Any further amendments to the letter, should any additional issues be raised by KPMG prior to 31 July 2018, be delegated to the Chief Finance Officer and Chair of this Committee, with any changes reported back to this Committee.