Agenda and draft minutes

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.

There were no declarations of interest.

To approve as a correct record the minutes of the previous meeting of the Committee

RESOLVED that, subject to the amendments above, the minutes of the meeting of the committee held on the 13 November 2024 be approved as a correct record, and signed by the Chairman.

There were no urgent items of business.

To enable the Council’s External Auditors to present to the Committee their Annual Audit Letter covering findings from the 2023/24 financial year.

Note: Audit report to follow

Andrew Cardoza, Adam  presented the External Audit Report, covering findings from the 2023/24 financial year audit. KPMG planned to issue a disclaimer audit opinion due to unresolved matters. The report included audit quality measures, significant risks, audit misstatements, and value for money considerations. Members were informed that the transition between Ernst & Young and KPMG had led to different expectations of Council officers, and a full debrief would be carried out to set out expectations.

The report highlighted the challenges faced during the audit, including delays in reconciling valuation workings and the impact of the statutory backstop on the audit process. The report also discussed the use of the going concern assumption and the extent to which the audit was capable of detecting irregularities, including fraud. Members were assured that KPMG was well-placed to carry out work on the 2024/25 audit and that the government’s timescale for 2023/24 audits had coincided with the budget setting process, resulting in a challenging process.

In response to questions the following points were noted:

• KPMG faced significant challenges due to the transition from Ernst and Young, including the lack of reliance on the previous year's work. KPMG had to train their team extensively to ensure they asked relevant questions and challenged the evidence provided. Despite starting late and facing a disclaimed opinion from the previous auditor, KPMG worked hard to complete as much work as possible.

• The scale fee set by the tender was £304,000, with additional fees agreed upon for extra work required during the audit.
• Maintaining independence throughout the audit process was emphasised.
• Fee variations included additional work for the value for money assessment and the disclaimed opinion, reviewed and approved by the PSA.

• Areas where the audit work was not completed included journal testing, valuations on investment property and PPE, other expenditure, and revenue items.
• Concerns were raised by the Committee and questions asked about why this was the case. Members were advised that the delays were due to the late start of the audit, the need to involve specialists and experts, and the impact of the previous auditor's disclaimed opinion.

• The disclaimed opinion from the previous auditor had a significant impact on the audit process, causing delays and challenges. KPMG had worked hard to address these issues and ensure a thorough audit.

• The understanding built this year would help in the next year's audit, allowing for a detailed debrief and a better head start.

• The value for money assessment covered budget management, procurement, social care provision, and governance. No significant weaknesses were identified in these areas.
• While there were some weaknesses in budgeting processes, the Council had a plan to address these issues and had provided training to budget holders.
• The procurement system was being reviewed to ensure all relevant contracts were included, and the Council was working on addressing any identified issues.

Having discussed the matter, it was RESOLVED that

1.    The annual Audit Letter for the year ended 31 March 2024 from the Council’s external auditor KPMG by received;  ...  view the full minutes text for item 4.

This report summarises for Committee Members the key elements within the accounts and the findings of the audit. 

Note: Annex to follow

Stuart McKellar, Executive Director: Resources, summarised the key elements within the accounts and audit findings. The report highlighted a £1.225 million overspend, adjustments between accounting basis and funding basis, and the impact of the Safety Valve Intervention Programme on the Schools Budget. Members noted that the Council had overspent for the first time since being established as a Unitary Authority in 1998.

The report provided a detailed comparison of the outturn and estimated expenditure, highlighting significant variances in areas such as Education and Learning, Adult Social Care, and Early Help and Communities. The report also discussed changes to accounting policies and disclosure requirements, the Comprehensive Income and Expenditure Statement, and the Balance Sheet. Members were informed about the Council's reserves and balances, including earmarked reserves and the General Reserve. The report emphasised the importance of maintaining a prudent level of reserves to manage the Council's medium-term financial position.

On receipt of the report, it was RESOLVED that

1.    The financial statements for 2023/24 be approved; and

2.    The Chairman of the meeting be authorised to sign and date the Letter of Representation.