Agenda item

10 Statement of Accounts 2020-21 Report of Head of Finance (attached)

10.1 Audit Findings Reports – Report of the Council’s External Auditor, Grant Thornton (attached)

10.2 Appendix A Draft Statement of Accounts 2020-21 (attached)

10.3 Appendix B Letter of Representation 2021-21 unsigned (attached)

The council’s Head of Finance confirmed that changes had been made to the Introduction to the Annual Governance Statement as a result of feedback and recommendations from the Audit Committee members.

The representative of the Corporate Services Director noted that the draft accounts had been published on the council’s website and considered by the Audit Committee at a workshop on 29 July 2021.  He added that the revised accounts were attached to the meeting papers and the amendments to date had been minimal.  He noted there were no amendments which impacted the core statements or outturn for the year and that the audit was substantially complete save for a few items as set out in the Audit Findings Report.  Reference was made to the workshop provided to support members in their role of considering and approving the Annual Statement of Accounts and the Annual Governance Statement.  The officer highlighted areas of the workshop that supported members in their role notably a review of the core statements, explanations of significant variances and trends over previous years, the going concern concept and basis for preparing the accounts, critical judgements in applying the Council’s accounting policies and significant accounting estimates and sources of estimation uncertainty.  He added that members had provided feedback and challenge on the content of the accounts at the workshop.

In presenting his report, the representative of the Director of Corporate Services highlighted the appendices attached to his report namely the revised Statement of Accounts 2020/21; the letter of representation to the external auditors to be signed by the Chief Financial Officer and the Chairman of the Audit Committee; the sources of assurance available to members of the Audit Committee in reviewing and approving the Statement of Accounts and the letter referenced under item 9 on the agenda, the “Informing the Risk Assessment Letter” from those charged with governance to the external auditors.

The representative of the Director of Corporate Services noted that electronic signatures would be used by the Chairman and the Chief Financial Officer once the financial statements had been agreed.

Members asked questions on the following matters: the valuation bands of council tax and when they were dated from; the process and layout of the accounts and whether amendments to the process and layout would be for this year or next.

The Chairman expressed his thanks for the improvements in clarity to the documents that had been made by officers.

Jon Roberts of Grant Thornton thanked the council’s officers for their work involved in arranging for the audit to be signed off by the published timetable.  He noted that whilst there were improvements to be made in presentation and disclosure to aid readers of the statements and that this was to be expected, there were no unadjusted misstatements that needed to be brought to members’ attention.

He summarised the main findings of the external auditors report and made particular reference to the formulaic nature of the Audit Findings Report which helped the external auditors demonstrate their compliance with their reporting responsibility to the Audit Committee and in turn helped committee members deliver their responsibility as “Those Charged with Governance” to consider and confirm the Annual Accounts and Annual Governance Statement.

He pointed out the list of outstanding items as per his report but noted that this list was subject to change between the draft report and the presentation of the report to members.  Some tests were still outstanding notably the pension assurance from the Avon Pension Fund and further payroll testing around full-time equivalent numbers as it was proving difficult to obtain without considerable manual intervention.

The representative from Grant Thornton drew members’ attention to the new issues and risks section of his report and noted in particular risks surrounding Covid 19 grants which had been well handled by the council and ICT risks for which there was an action plan with officers.  Reference was also made to two improvement recommendations concerning related party disclosures as three disclosures had not been received by the time of the audit and the transfer of a school to academy status which had not been recognised in the accounts in the 2017/18 year when it took place.  He further commented on two prior year recommendations.  One related to journals for which the recommendation still needed to be implemented and the other to the retention of supporting documentation which was in the process of implementation.

Members asked questions and received answers on the following areas of the Accounting Statements and Annual Governance Statement; journal management and the comparison with other authorities; the outstanding area of valuation of the Sovereign Centre; the academy transfer in 2017/18 and the operating expenditure error identified in the report.

Members highlighted areas of the Annual Governance Statement which they wished to be considered for the future including a reference to the committee’s contribution to the change of governance of major capital projects and the purpose of the Annual Governance Statement.  It was confirmed that the Annual Governance Statement would not reference all changes that had occurred during the year; only those of significance would be reported and that not all risks would be referred to otherwise the Statement would become unmanageably long.  It was noted that other authorities operated on a similar basis.

Resolved: 

1. That the Audit Committee:

a. considered the matter(s) raised in the Annual Governance Statement;

b. took note of any adjustments to the financial statements set out in the external auditor’s report;

c. approved the draft letter of representation; and

2. That subject to any comments under 1 above, the Audit Committee:

a. approves the Statement of Accounts for 2020/21, subject to, any amendments necessary upon quantification of the impact of any issues arising from on-going work by the external auditors.

b. arranges for the Chair of the Council’s Audit Committee and the Chief Financial Officer to electronically sign the Accounts for 2020/21 as representing a ‘true and fair view’ of the financial position as at 31 March 2021, following any amendments necessary upon quantification of the impact of any issues arising from on-going work by the external auditors; and

c. arranges for the Leader of the Council and the Chief Executive Officer to formally approve the Council’s Annual Governance Statement as part of the financial accounts and sign accordingly with electronic signatures.

The Director of Corporate Services thanked all those involved in the production of the annual accounts and to the external auditors for expediting the audit so that they may be signed off by the statutory deadline.

The Chairman added his thanks to the team for all the work involved in preparing the accounts and to the Audit Committee members for their commitment in engaging with the audit and governance process.