Agenda item

Aaron Rose of KPMG introduced the External Audit report to the Committee and advised that overall the External Audit report was good, and they anticipated issuing an unqualified  opinion on the Council’s financial statements and value for money arrangements which demonstrate how resources are used efficiently, economically and effectively.

The report set out four recommendations for the Council to consider on page 19:  journal controls, journals authorisation, faster close preparations and timeliness of processing transactions into the Financial Information System.  The Committee welcomed the news that there were no external audit recommendations outstanding from previous years.

Leigh Clarke, Finance Director, reported that from next year the Council would be required to have brought forward approval of its Statement of Accounts by Council to the end of July and it was stated that there would therefore be a greater reliance on estimates rather than actual figures.  Recent upgrades in the Integra finance software would assist the Council with working towards a faster close at the end of the financial year.

On page 22 of the report, it was noted that the adjusted audit difference related to a consolidation adjustment between the Thameswey accounts and the Council’s accounts.  The Committee was advised that the end of the Thameswey financial year was the end of December and so the accounts would still be able to be incorporated within the Council’s accounts under the new timetable.

Following a question on page 14 of the report, it was noted that the impairment of £12.3m regarding a reduction in the value of Wolsey Place was due to a decrease in the rental stream received due to the town centre development.  The Council would be reimbursed for the fall in asset value as Victoria Square (Woking) Ltd would be purchasing that part of Wolsey Place as part of the Victoria Square development.

The Committee noted that paragraph 2.13 of the covering report stated that the Medium Term Financial Strategy had identified the need for £7.5m of ongoing cost savings or increased income to be in place by 31 March 2022, of which £3.5m remained to be secured.  The Council had received a greater level of income than forecast from Business Rates in 2016/17 and the funds received from the Business Rate Pool with neighbouring Surrey local authorities could contribute towards both the 2017/18 and 2018/19 budget.  It was noted that there was the possibility of Surrey applying to become one of the pilot areas for 100% Business Rate Retention in 2018/19. 

Following a question, it was noted that the level of interest rates was expected to increase over time and that the Council had recently secured some long-term borrowing of £60m at a low interest rate.  It was stated that the Council would only purchase properties for rental income if they also presented a strategic value to the Borough.  During the current year it was noted that Thameswey Housing had been investing in rental residential properties which would enable the Council to receive income from the loans advanced to the company.

The Committee was advised that KPMG tested the assumptions of the Thameswey Group to rely on the going concern opinion set out by its auditors and it was noted that the External Auditors held no concerns over their operation.                                                                             STA17-011

Recommended to Council

That the Report to Those Charged with Governance (ISA 260) 2016/17 and the Management Representation letter be received.