Agenda item

Update on External Audit 2018/19

Reporting Persons – Leigh Clarke / BDO

Minutes:

The Chairman noted that the BDO Audit Completion report for the 2018/19 financial year had been circulated to the Committee earlier in the day.

 

Leigh Lloyd-Thomas introduced the report and reported that the Audit work had been completed, with the Audit opinion anticipated to be issued by the end of July 2020.  The Committee was advised that due to the Covid-19 pandemic, additional work had been undertaken in respect of the impact on forecast cash balances and going concern disclosures, which BDO were now content with, noting that the latter was required to be referred to the Auditor’s Technical department due to its policy for all Audit completion reports to be submitted to such department.

 

The Committee was advised that the level of Materiality for corrections for the financial statements had been set at 1% of the value of gross assets on the balance sheet and 2% of income on the Comprehensive Income and Expenditure Statement (CIES).  Material corrections had been made for the classification of revaluation gains and losses between CIES and reserves; presentation of loans to subsidiaries as short term or long term in the Council’s balance sheet; and reclassification of debtors / creditors and borrowing in the Group balance sheet.  The adjustments had decreased the deficit for the Council by £22.032 million and decreased the Group deficit by £20.514 million. The net assets had reduced by £1.880 million for the Council and £3.126 million for the Group.

 

Leigh Lloyd-Thomas stated that Audit work had included the valuation of the Council’s car parks, housing stock, Pension Liability, and Hoe Valley School land and buildings.  A further query had been raised earlier in the day relating to the correct line within the cashflow statement for the placement of £42m relating to the valuation of housing properties, which would be dealt with shortly.

 

Leigh Clarke stated that the Council approved its Minimum Revenue Provision (MRP) Policy each year as part of the annual Budget setting process and it was felt that no further funds needed to be set aside for debt repayments, with the next review due in February 2021.  It was added that the Council undertook valuation reviews of assets over a certain value on an annual basis, with the remainder conducted over a five year rolling programme.

 

The Chairman noted that it would be inappropriate for the Independent Member to sign the Audit report and so the final page would need to be amended.

 

Regarding BDO’s recommendation that the presentation of the Statement of Accounts be updated to take account of the latest CIPFA model, Leigh Clarke stated that much work had already taken place on the finalising of the Accounts for 2019/20 and therefore they would be in the same format as the previous year, noting the level of resources required to make presentational changes.

 

Members expressed concern over the delays in finalising the External Audit report.  Leigh Lloyd-Thomas stated that around 40% of External Audit reports for 2018/19 had been delayed and that the timescales were not practical for local authorities with subsidiary company arrangements.  The revised arrangements for the 2019/20 financial year were noted as the Accounts being finalised by the end of August with the External Audit opinion being provided by the end of November.

 

The Chairman thanked BDO for attending the meeting and the Audit Completion report.

 

            RESOLVED

 

            That the Audit Completion report for 2018/19 be received.

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