Final Accounts 2016/17 and BDO Audit Completion Report - Audit for the year ended 31 March 2017
Item 3) The Assistant Director, Financial Services and Revenues, presented a report which sought approval of the Audit Committee for the Statement of Accounts 2016/17 on behalf of the Council. Under the Accounts and Audit Regulations 2015, the Audit Committee was required to approve the Statement of Accounts on behalf of the council, prior to publication on the 30 September 2017.
The committee considered the final accounts together with the year-end report for the same period by the council’s external Auditors, BDO. Members were given an overview of the audit process which assessed the accuracy of the council’s financial statements and the assumptions made as part of the budget setting process.
Item 4) The Assistant Director, Financial Services and Revenues, submitted a report which considered the matters raised by the council’s external auditors (BDO) in respect of their governance report.
BDO had assessed the council’s final accounts for 2016/17. The report and recommendations were considered, together with the final accounts for 2016/17.
The Assistant Director, Financial Services and Revenues, introduced 2 representatives from BDO and thanked them for their hard work. They provided the audit committee with an overview of their findings and concluded that there were no material mis-statements to be found in the Financial Statements, no unadjusted errors to report and no significant control weaknesses in our financial systems. They anticipated giving an unmodified audit opinion
External audit brought to the attention of the audit committee that they had challenged and accepted the classification in the accounts of the acquisition of Hastings Retail Park (Sedlescombe Road) and that this asset will be used for economic and regeneration purposes.
They concluded that there are no issues with the Annual Governance Statement and that the Medium Term Financial Strategy is underpinned by valid assumptions. The reserves have been carefully managed and they therefore anticipate giving an unmodified opinion on the council’s use of resources.
The indicative audit fees as at the audit plan stage haven’t changed.
Councillor Rankin thanked them for all their work in preparing the audit.
Councillor Sinden questioned the financial assessment made of the Pensions fund and was informed that as a result of the 3 yearly valuation new contribution rates had started this year. Employer contributions will increase in each of the next two years.
Councillor Davies enquired in to the comment made by external audit that whilst “impairment allowances for receivables have not been mis-stated; they were likely to be on the prudent side”. Councillor Chowney also sought clarification about the comment on prudence and as to why the provision rate applied to all overpayments of 65% had been reduced from 70% used in the prior year. External audit confirmed that the council had carried out some analysis in the year which suggested that the collection rates could be around 60%. External audit confirmed they are satisfied with what is shown in the accounts as management have an explanation of why there is a 5% difference.
Councillor Rankin queried the external auditor’s report under Key Audit and Accounting Matters, Hastings Retail Park (Sedlescombe Road) where it said “We intend to take a written management representation to confirm that the purchase was made for economic regeneration rather than for the rental stream as an investment”. He specifically asked “Why do we put it in Land & Buildings rather than Land”? A discussion was held on the classification in the accounts of this acquisition. Whilst all investment property acquisitions increase economic regeneration to a degree, this site is on one of the main entrance roads to the town making it more accessible, is managed by the Estates team and gives the council flexibility and for these reasons, has been classified in that way. Clearly, if the council borrows to purchase an investment property outside the borough, that is classed as an investment property.
The external auditor explained there was no advantage in the classification but would revise their letter in light of the discussion.
Councillor Rankin raised the weakness regarding retrospective purchase orders detailed in appendix II, recommendations and action plan found in the report. The Chief Auditor said most businesses require a purchase order number before they will release goods or provided a service as it forms a guarantee of payment, nonetheless, retrospective purchase orders had happened albeit to a relatively low extent. It is anticipated that raising purchase orders in retrospect will not be possible in the new accounting system but internal audit will be examining this.
Councillor Rankin raised a question on the Priority, Income & Efficiency Review (PIER) process highlighted by External Audit at the end of appendix II, Recommendations and Action Plan of their report. The process was discussed in detail between the Assistant Director, Financial Services & Revenues, External Audit and members. The PIER savings are always carefully assessed and challenged to see how they will be achieved. They are continuously monitored in-depth by officers. The recommendation is considered fair and the outturn variance will be included in year-end outturn report that goes annually to Cabinet.
RESOLVED (unanimously) that
1. The draft Statementof Accountsbe approved and acopy signed by theChair of the Audit Committee in accordance with the Accounts & Audit Regulations 2015.
2. That the report and action plan be accepted
The reason for the decision was: Compliance with statutoryrequirements and goodpractice. TheCouncil is accountablefor the use of public money and continuously seeksto improve Value for Money.
The Council’s external auditors are required to submit a report to the Council’s Audit Committee on any matters that are identified during their audit.
- Final Accounts 2016-17 21_09_17 Audit committee Covering report Final, item 3. PDF 99 KB
- Appendix - Financial Report and Statement of Accounts 2016-17, item 3. PDF 834 KB