Agenda item

Report attached. A copy of the Statement of Accounts is to follow.

We have agreed to take agenda items 6, 7 and 8 as one item.

We were given a run through the accounts by officers and subject to minor amendment we have approved the Statement of Accounts, noting that these must be published by 30 September, 2013.

The Council’s external Auditors PricewaterhouseCoopers (PwC) had issued their report which showed:

·         They had completed the majority of their audit work and expected to be able to issue an unqualified audit opinion on the Statement of Accounts in September 2013.

·         That the key outstanding matters, where their work had commenced but was not yet finalised, were:

o   Certification work on the Housing and Council Tax Benefits grant claim is subject to completion;

o   The review of their certification grant claim work on business rates;

o   Review of the final draft of the Statement of Accounts;

o   Approval of the Statement of Accounts and letters of representation;

o   Completion procedures including subsequent events review; and

o   Audit procedures on the Whole of government accounts return.

PwC identified two matters which they wished to draw to the Council’s attention. These were:

1.    Treatment for construction and transfer of academies,

2.    Accounting standards issued but not adopted.

The treatment of Academy Schools was subject to on-going consideration by CIPFA/LASAAC. PwC had considered an alternative approach to that adopted by the Authority, but were not minded to challenge the accounting procedure adopted by the authority given that the difference in approach was not material to the financial statements. Officers pointed out that the approach they had adopted was consistent with the approach of a number of local authorities.

The auditors also draw the authority’s attention to the treatment of Valuation of property, plant and equipment and investment properties. The Committee’s attention was drawn to the following in relation to the assumptions:

1.    Useful Economic Lives (UEL) – some of the assumptions on the remaining lives were considered to be simplistic and should reflect the specific characteristics of the property.

2.       Apportioning land values – the external valuer has used an approach of apportioning land values as a percentage of building costs in their valuation. However, PwC valuerswould adopt an approach that derived the land values by using a land value per acre based on market comparables.

Officers advised that these matters had been reviewed and considered by Management, including the Council’s Internal Property team, who were comfortable that the assumptions and methodology adopted by WH & E do not materially misstate the financial statements.

PwC have considered the approach adopted by WH&E and the Authority and, in the context of the truth and fairness of the accounts as a whole, were not minded to challenge. However, they recommend that management, WH&E, and their internal valuers discuss the approach to be adopted for the 2013/14 valuations. Officers indicated that they would arrange such a meeting.

PwC also raised some concerns re Payroll Reconciliation.

‘The payroll reconciliation was not completed for the year end on a timely basis. We understand from payroll team that payroll reconciliations have been produced throughout the year, but with issues needing to be resolved.

PwC worked together with the payroll team to determine the right payroll report needed for the purpose of reconciling the payroll system to the General Ledger. We received the payroll reconciliation after five weeks from the start of the audit.

The remains a small difference on the payroll reconciliation which should be reconciled jointly by the payroll and finance teams.’

Management’s response was as follows:

‘ISS Management have discussed with PwC the format of reconciliations and agreed a revised format to be put in place for 2013/14. Separate monthly reconciliations will be in place during this year (2013/14) in the agreed format. The automation of the payroll reconciliation report is still in development therefore ISS is still reliant on Business Systems resources to produce adhoc reports.’

We are not aware of any

1.    instances of actual or potential breaches of or non-compliance with laws and regulations which provide a legal framework within which the Authority and the group conducts its business and which are central to the authority’s and the group’s ability to conduct its business or that could have a material effect on the Statement of Accounts, and

2.    irregularities, or allegations of irregularities including fraud, involving members, management or employees who have a significant role in the accounting and internal control systems, or that could have a material effect on the Statement of Accounts.

Nor have we changed our view of fraud risk or been aware of any additional matters which have arisen which should have been brought to our attention.

We have approved the Statement of Accounts confirming that no amendments are required to be made to the accounts in respect of the items set out in the auditor’s report.