Agenda item

To receive the Council`s audited Statement of Accounts for 2019/20 and obtain formal approval of the Committee to the audited accounts and to ask they be singed off by the Chair of the Committee.  To approve the Letter of Representation from the Head of Finance and Property to the external auditors and sign off by the chair. To inform of the audit findings.

The Head of Finance and Property submitted a report to:

1.    Present the Council’s audited Statement of Accounts for 2019/20, to obtain formal approval of the Committee to the audited accounts, and to recommend and request that they be signed by the Chair of the Committee; and

2.    To request the Audit and Standards Committee to approve the Letter of Representation from the Head of Finance and Property to Grant Thornton (external auditors) and to recommend and request that it be signed by the Chair of the Committee; and

3.    To inform the Audit and Standards Committee of the audit findings.

Grounds for the above recommendations and requests were outlined within the report.

The Committee was reminded that it had been a challenging year, due to various factors such as remote working, staff vacancies and redeployment of staff for covid related work.  As a result of these pressures, deadlines had not been met for publication of accounts. 

It was reported that the external audit has been concluded by Grant Thornton who were satisfied that the accounts presented a true and fair view of the Council’s financial position.  The accounts were attached to the report at appendix 1 for information.

It was further reported that there had been five recommendations for the Council which were detailed in the report along with the proposed actions to mitigate the recommendations.

The Head of Finance and Property advised that as the Accountable Chief Finance Officer, he was required to make representation about a range of issues upon which confidence is placed during the audit to obtain favourable opinion from Grant Thornton.  A copy of the Letter of representation to Grant Thornton that the Committee was being requested to approve, for the Financial Statements for the year ended 31^st March 2020, was attached to the report at appendix 2 for information.

Barrie Morris gave a brief introduction to the Audit Findings report, advising that the audit was near completion and conclusion and opinion were anticipated within the following couple of days.  Barrie also referred to the impact of covid and the significant impact on delivery of the audit which had resulted in the original deadline date of 30^th November 2020 not being possible to be met. There had also been a further agreed target date of 24^th March 2021. 

Barrie advised that the pandemic had exposed significant capacity challenges within the Council.  He also advised that the Finance team had worked extremely hard and diligently to respond to audit queries effectively and in a timely manner.  He recognised that the team had also faced many additional challenges.

Barrie further referred to the 5-month delay from the original deadline stating that it was a serious issue and advised that consideration had been given to making adjustments to the VFM conclusion, to reflect that there may be capacity constraints within the Finance team. He also advised that this option had been considered by the partner panel within the firm.  The partner panel had agreed against this course of action as it had been recognised that the Finance team had worked diligently, proactively and because the challenges faced had been outside the control of the Finance team.  The panel had concluded that such an option would not be an appropriate, to give a fair reflection of the efforts of the team. 

The Committee was advised that the work on the financial statements would lead to an unqualified conclusion and that several amendments to financial statements had been identified (as covered by Helen).  The VFM commentary and conclusion would also be unqualified.  There had not been a requirement to exercise statutory duties on the financial statements.

Barrie advised that there were increased expectations by regulators who expected significantly more work on areas of evaluation of property plant equipment and pension revaluations.    This work would continue over the year including work on management overrider controls, journals and management estimates.

Helen Stevenson advised of the overview of the scope of the Audit and of the significant audit risks, findings and other issues.   Helen also advised of details of the action plan including recommendations.

Barrie advised the Committee of the increased final proposed Audit fees as detailed on page 209 of the report.  Barrie reported that the increase proposed fee reflected the additional costs that had been incurred due to Covid-19 and remote working and additional costs incurred due to the delay of the account preparation.  The final proposed fee was £62,720.

The following points and responses were made:

Louise Gaskell – Referred to the Significant findings and in particular to Provisions for Non-Domestic Rate Appeals “The provision has increased slightly by £6,436k in 2018/19”.  Louise queried the amount of £6,436k as this was not a slight increase. 

The Head of Finance and Property agreed that this figure appeared to be high and agreed that he would investigate this and confirm the accurate figure. (Update, the figure should have read £6.436k)

Louise Gaskell – Significant delay in accounts to Auditors.  Has this been seen in other Local Authorities or is this specific to Burnley Council?

Barrie Morris – This was seen in a relatively high number of Councils.  Burnley was not the worst but did miss the deadlines.   Nationally across all Local Authorities just under 48% were signed off by November 2020 deadline. The situation had improved in December, but a number remained outstanding to be signed off.  This has had a significant effect on commencing work for the 2020/21 audit.

Louise Gaskell – The recommendations within the report that the Auditors have put forward to the Council, have they been accepted?

The Head of Finance and Property – Management comments have been put against each of the recommendations.  We have accepted the majority.  They will be either be amended in 2019 accounts or incorporated into 2020/21 accounts.

Councillor Lishman – Referred to potential capacity gaps in Finance Team and of additional work in meeting governments request to provide grants to various businesses and self-employed persons.  Did you go to Grant Thornton Panel for every other Local Authority case?  Was Burnley an exception?

Barrie Morris - Not for all Councils.  Only those with significant delays in production of accounts.  There were a small number of Councils in which we took the view to go to Panel.  We fully accept your observations that the Finance Team were dealing with lots of other initiatives.  Statutory reporting is an important function.  If capacity is too constrained, this can have potential significant ramifications.

Councillor Lishman – Note comments about knock on effect because work on this year’s accounts will be delayed.  When will you be presenting a timetable about how this will be met and the impact on the Council if there is a delay?

Barrie Morris - In terms of 2020/21 accounts, there will be a delay.  Planning and interim work would have been well underway now.  We will be agreeing a timescale. Getting back to the right place will take a couple of years.  At the next meeting there will be a timeline set out and agreed with officers regarding the delivery of the 2020/21 Audit.  In my view we will not be able to meet the 30^th September 2021 revised deadline.  Should the Council be able to demonstrate sufficient capacity and we can match that capacity, we will review that to see if we can get back on track.

The Head of Finance and Property referred to item 12 on the agenda Council arrangements for 2020/21 which was reporting on deadlines for the next two years.

IT WAS AGREED

1.         That the Audit and Standards Committee approve and sign the Statement of Accounts; and

2.         That the Audit and Standards Committee sign the Letter of Representation; and

3.         That the Audit and Standards Committee note the audit findings.

As this was a remote meeting, arrangements had been made for the Statement of Accounts and Letter of representation to be signed outside of the meeting.