Agenda item

To consider the report of the external auditors, Grant Thornton (to follow).

This item of business was taken en bloc with minute number 46 (S151 Officer Response to Auditor’s Annual Report). The Auditor’s Annual Report 2021/22 and 2022/23 were presented by the Principal Consultant (Grant Thornton – External Auditors). The response of the S151 Officer was provided by the Strategic Director (Finance and Housing) who was also the S151 Officer.

The Principal Consultant advised Members of the following key recommendations contained within the Auditor’s Annual Report:

·        KR1: The Council must urgently develop and execute a recovery plan and a project team that should incorporate (a) adequate project management capability, finance team capacity and appropriate expert advice along with a resource budget; (b) clear lines of accountability; (c) an accelerated timetable for completion; (d) regular reporting to Cabinet on progress; (e) resolution of any ongoing deficiencies with the TechOne system configuration; (f) completion of back reconciliation to be up to date; (g) take steps to clear the backlog of outstanding VAT returns.

·        KR2: The Council should review the level of detail and develop more comprehensive financial performance information within the quarterly performance report to Cabinet.

·        KR3: The Council should as a matter of urgency produce auditable draft accounts for 2020/21, 2021/22 and 2022/23 and in due course 2023/24 based on the available financial information and ensure that there was a robust audit trail to support them.

·        KR4: The Council must implement all of the recommendations made by Internal Audit to prevent future projects from suffering similar implementation issues to the TechOne project.

There were also a number of improvement recommendations which included the following:

·        IR1: As a priority the Council should establish a formal savings programme governance mechanism to manage and monitor the delivery of the savings the Council requires to balance its Medium Term Financial Plan (MTFP).

·        IR2: The Council should focus its MTFP on delivering a sustainable financial position while reducing reliance on reserves and rebuilding them to strengthen financial sustainability beyond 2023/4.

·        IR3: The Council should consider appointing an Independent Member with accounting experience to the Governance Committee.

·        IR4: The Council should encourage full attendance at the Governance Committee and ensure that members are provided with sufficient ongoing training opportunities to support them in their governance role.

·        IR5: The Council should introduce a formal process for tender waivers to go to Governance Committee for their information and challenge.

The Engagement Lead (Grant Thornton) stressed the key recommendations were brought to Members’ attention in the event of a risk emerging in the future and that a balanced opinion was required when considering the council’s and auditor’s opinions.

In response the Strategic Director (Finance and Housing) emphasised the good relationship between the auditors and the council and addressed the report of the S151 Officer and his response to the recommendations, and highlighted:

·        The period covered in the auditor’s report being a challenging period for all councils and the impact of the pandemic and lockdowns. Other challenges included staff turnover and recruitment difficulties and the implementation of a new system.

·        The effective collapse of local audit with all auditor companies including Grant Thornton having delays with their clients.

·        The delays and issues in the 2020/21 audit process had a significant impact on the capacity in the finance team.

·        Despite delays with the audits the council was always fully aware of the balances held in its bank accounts and investments.

Members raised the following points:

·        With regard to IR1 whether the council had made provision for adequate savings. In response the Strategic Director (Finance and Housing) advised that savings proposals had been built into the existing budget.

·        With regard to IR4 and the importance of member training, Members requested additional training on finance and Risk Management to be provided throughout the year. Officers agreed to bring back a report setting out training options for the Committee.

·        With regard to IR5 there was a discussion about the frequency by which tender waivers could be reported to the Governance Committee. The Strategic Director (Finance and Housing) advised that it would not be feasible for the Governance Committee to see tender waivers prior to being issued but an annual report might be an alternative.