Agenda item

Report No: PAS/WS/19/008

[Councillor Peter Thompson arrived at 5.05pm during the consideration of this item, and prior to the vote taking place]

The Committee received Report No: PAS/WS/19/008, which presented the results from Ernst and Young’s (EY) audit of the 2018-2019 financial statements for Forest Heath District Council and St Edmundsbury Borough Council (West Suffolk’s predecessor councils).  The report set out issues they were formally required to report on to those charged with governance.  EY were also required to report on the results of the work undertaken to assess the council’s arrangements to secure value for money (VFM) in the use of resources.

The councils’ unaudited 2018-2019 Statement of Accounts, signed by the Chief Finance Officer (Section 151 Officer) on 30 May 2019, had been updated to reflect adjustments recommended by EY from their audit work.  It should be noted by Members that these adjustments did not affect the councils’ overall financial position and were in most cases merely presentational changes.

A copy of the Audit Results Reports, dated 22 July 2019 were attached at Appendix A (Forest Heath) and Appendix B (St Edmundsbury), and were presented to the Committee by Mark Hodgson (Associate Partner) and Mark Russell (Manager) from EY.  Also attached at Appendix C and D to the report were Letters of Representations, on behalf of the councils’ in accordance with the audit of the financial statements for both Forest Heath District Council and St Edmundsbury Borough Council for the year ended 31 March 2019.

Mr Hodgson presented the report and explained that Forest Heath had the most audit risks, which related to the solar farm asset.  He explained that Forest Heath’s overall materiality assessment was £0.755m and St Edmundsbury was £1.401m.

He then wished to draw to the Committee’s attention to the following areas for both councils:

1)   Page 9 (Both) – (Significant risk – misstatements due to fraud or error).  EY had completed the majority of the procedures and testing of recharges.

2)   Page 12 (Forest Heath) – (Valuation of land and buildings) – The value of the solar farm had been amended to £13.8m, which was now in an acceptable arrange to which EY would expect, and discussions were being held with the Finance Team to resolve the issue.

3)   Page 13 (Both) – (Land value) – no issues to raise.

4)   Page 14 (Both) – (Pensions) – Both sets of accounts had been adjusted to reflect the pensions increase relating to the McCloud (age discrimination) and GMP (sex discrimination) rulings.  These were both national rulings which had effected all local authorities.

5)   Page 15 (Both) – (Accounting standards) – no issues to raise.

Mr Hodgson then informed the Committee that EY still had a number of outstanding items to be completed on the audit of the Statement of Accounts.  EY would be working on these to ensure they were completed by the statutory deadline of 31 July 2019.  He confirmed that there were no audit adjustments and there were no unadjusted audit errors. However, he reiterated that EY was on track, and subject to the satisfactory completion of the outstanding items, EY expected to be able to issue an unqualified opinion on the financial statements and the value for money conclusions next week.

The Committee considered the report in detail and asked questions to which responses were provided. In particular discussions were held on the revaluation of the solar farm and whether provision for the pension fund was robust enough, to which comprehensive responses were provided.

Councillor Victor Lukaniuk then moved the recommendations, this was duly seconded by Councillor Karen Richardson, and with the vote being unanimous, it was:

          RESOLVED: That

1)     The External Auditors opinion, as of today (25 July 2019) on the Finance Statements for Forest Heath District Council (Appendix A) and St Edmundsbury Borough Council (Appendix B) for 2018-2019 attached to Report No: PAS/WS/18/008, be noted.

2)     The External Auditors value for Money conclusion, as of today (25 July 2019) stating that Forest Heath District Council (Appendix A) and St Edmundsbury Borough Council (Appendix B) had proper arrangements to secure economy, efficiency and effectiveness in its use of resources, issued by the Auditor, be noted.

3)     The Letter of Representation on behalf of Forest Heath District Council (Appendix C) and St Edmundsbury Borough Council (Appendix D), attached to Report No: PAS/WS/19/008, be approved, before the Ernst and Young Associate Partner issues his opinion and conclusion.

4)     The Chief Finance Officer, in consultation with the Chair of the Performance and Audit Scrutiny Committee be given delegated authority to conclude the signing of the accounts.