Agenda and minutes

Governance & Audit Committee
Wednesday, 24 July 2019 7.30 pm

Venue: Council Chamber - Time Square, Market Street, Bracknell, RG12 1JD. View directions

Contact: Derek Morgan  01344 352044

Items
No. Item

11.

Declarations of Interest

Members are asked to declare any disclosable pecuniary or affected interests in respect of any matter to be considered at this meeting.

 

Any Member with a Disclosable Pecuniary Interest in a matter should withdraw from the meeting when the matter is under consideration and should notify the Democratic Services Officer in attendance that they are withdrawing as they have such an interest. If the Disclosable Pecuniary Interest is not entered on the register of Members interests the Monitoring Officer must be notified of the interest within 28 days.

 

Any Member with an affected Interest in a matter must disclose the interest to the meeting.  There is no requirement to withdraw from the meeting when the interest is only an affected interest, but the Monitoring Officer should be notified of the interest, if not previously notified of it, within 28 days of the meeting.

Minutes:

There were no declarations of interest.

12.

Minutes of previous meeting pdf icon PDF 163 KB

To approve as a correct record the minutes of the meeting of the Committee held on 26 June 2019.

Minutes:

RESOLVED that the minutes of the meeting of the committee held on 26 June 2019 be approved as a correct record and signed by the Chairman.

13.

Urgent Items of Business

Any other items which, pursuant to Section 100B(4)(b) of the Local Government Act 1972, the Chairman decides are urgent.

Minutes:

There were no urgent items of business.

14.

External Audit - Audit Results Report pdf icon PDF 105 KB

To receive the report of the Council’s external auditor summarising the work carried out to discharge their statutory audit responsibilities.

Additional documents:

Minutes:

Andrew Brittain from Ernst & Young LLP, attended the Committee and presented the Report of the External Audit Results.

 

The Committee was advised that, based on a materiality measure of gross expenditure on provision of services, the overall materiality assessment remained unchanged at £5.6m with performance materiality, at 75% of overall materiality, remaining at £4.2m.  The basis of the assessment remained consistent with prior years at 2% of gross expenditure on provision of services.

 

The audit of the Council's financial statements for the year ended 31 March 2019 had been substantially completed.  The Committee was provided with the following updates on the matter which had been outstanding when the agenda had been published:

 

·        Pensions - procedures relating to the adjustment and disclosure of the McCloud judgment; Now complete

·        Assuranceletter from Berkshire Pension Scheme auditors; Deloitte were the overall auditor for the scheme and had communicated that they were unlikely to be able to provide their assurance letter by the publication deadline of 31 July 2019.  Without this assurance, the external auditor would therefore not be in a position to issue an unqualified opinion on the Authority’s financial statement

·        Related parties: outstanding declaration of interest from 6 members; Only 1 declaration currently remained outstanding

·        Some income and expenditure testing; Now complete

·        Journals testing; Now complete

·        Review of the final version of the financial statements; Will take place at point of signing

·        Completion of subsequent events review; Will take place at point of signing

·        Receipt of the signed management representation letter; Will take place at point of signing

·        Completion of procedures required by the National Audit Office (NAO) regarding the Whole of Government Accounts submission; Will take place at point of signing

 

There were three adjusted audit differences of:

 

·        PPE value increase of £14.5m

·        Pension liability increase of £4.4m to £539.3m

·        Pension assets value decrease of £3.5m to £262m

 

There was one unadjusted judgemental audit difference of £1.1m which did not materially affect the accounts.

 

The Authority’s arrangements to take informed decisions, deploy resources in a sustainable manner and work with partners and other third parties had been considered and the Audit Planning Report identified two significant risks:

 

·        Delivery of a sustainable medium-term financial plan

·        Commercialisation and the purchase of investment properties

 

Misstatements due to fraud or error were a significant risk area.  However, following testing, no material weaknesses in controls or evidence of material management override were identified.  Similarly, testing had revealed no material issues or unusual transactions to indicate any misreporting of the Authority’s financial position through the inappropriate capitalisation of revenue expenditure.

 

With regard to the Pension Net Liability Valuation, the external auditors were satisfied that the Council had correctly reflected the IAS 19 entries provided by their actuaries in the financial statements and also satisfied that the actuaries were appropriately qualified.  Taking into account the McCloud ruling, two adjustments had been made:

 

1.     Pension liability: The Council’s pension liability had increased by £4.4m to £539.3m.

2.     Pension asset: This estimate decreased by £3.5m to £262m.

 

With regard to  ...  view the full minutes text for item 14.

15.

Financial Statements 2018/19 pdf icon PDF 152 KB

To approve the Financial Statements for 2018/19 and authorise the Chairman of the meeting to sign and date the Statement of Accounts on behalf of the Committee and sign and date the Letter of Representation.

Additional documents:

Minutes:

The Chief Accountant presented a summary of the Financial Statements Report for 2018/19.

 

The Council had set a revenue budget for the 2018/19 financial year of £83.655m.  The actual outturn for the General Fund was within budget with an under spend of £2.528m.  As a result of the under spend the Council was able to return £0.013m to General Reserves rather than withdrawing the £2.515m included in the Budget.

 

The Committee noted that the most significant variances included:

 

·        An over spend within the Adult Community Team on residential costs and community services (£0.374m) partly offset by underspends within the team relating to staff vacancies (-£0.184m).

·        An over spend on directorate wide budgets within People due to delays in completing the Senior Leadership Restructure and additional transformation costs (£0.414m).

·        Within Central, underspends on Concessionary Fares (-£0.288m) and audit fees (-£0.095m) and additional income (-£0.431m), in particular from CIL and streets works.

·        A significant underspend on interest budgets (-£3.369m), due to the Council taking advantage of short-term interest rates, additional interest income and higher cash balances reducing the need to borrow.

·        Higher than forecast capital receipts in 2016/17 and significant capital carry forwards into 2017/18 helped to create an underspend against the Minimum Revenue Provision (-£0.415m).

·        A VAT refund relating to the overpayment of VAT on leisure income between 2010 and 2018 (-£2.299m).

 

The General Reserves balance at 31 March 2019 was £9.1m. Of this, £2.6m would be used to finance the 2019/20 budget, leaving £6.5m available (of which £4m was determined as the minimum prudent level).

 

The Comprehensive Income and Expenditure Statement showed a deficit on the Provision of Services of £39.4m but Members were advised this did not impact on reserves.

 

On Earmarked Reserves, the largest movement in the year related to the Future Funding Reserve (an £11.2m increase to £19.8m) which primarily related to gains from the Council being part of the Berkshire-wide Business Rates pilot.

 

The Council had had to fund part of the 2018/19 capital programme from internal and external borrowing and this represented 63% of the overall funding of the 2018/19 capital programme budget.  Members were advised that whilst the Council held reserves, borrowing was based on a cash flow analysis and some of the borrowing was from cash balances which reduced the need for external borrowing.

 

However, having considered the report, the Committee was advised that there had been a delay in receipt of the assurance letter from the Berkshire Pension Scheme auditors, Deloitte.  In the circumstances, the Committee:

 

RESOLVED that

 

1          The recommendation that the Committee authorise the Chairman of the meeting to sign and date the Statement of Accounts on behalf of the Committee be not agreed due to the delay of the production of the Assurance letter from the Berkshire Pension Scheme auditors, Deloitte. 

 

2          The recommendation that the Committee authorise the Chairman of the meeting to sign and date the Letter of Representation set out in Annexe B be  not agreed due to the delay of the production of the Assurance  ...  view the full minutes text for item 15.