Issue - meetings

To consider the Executive Head of Finance Report No. FIN1923 (copy attached), which sets out the financial statements for 2018/19.

The Committee received the Executive Head of Finance’s Report No. FIN1923, which informed Members of the audit progress for the Council’s Statement of Accounts for 2018/19, the process for approving and publishing the Statement of Accounts and to draw to the Committee’s attention the fact that the deadline for issuing a final set of audit statements of accounts and audit opinion would not be met by 31st July, 2019.

The Committee was reminded that the Council was required under regulation to obtain an independent external audit opinion on the true and fair nature of the statement of accounts.  Following receipt of this external audit opinion, the Licencing, Audit and General Purposes Committee had delegated powers to approve the accounts and to publish the approved set of accounts and the audit opinion by 31st July, 2019.

The Committee was advised that the external audit opinion would not be available by 31st July, 2019, primarily due to an ongoing property valuation query related to the valuation of a significant asset, where a second independent valuation had been commissioned by the Council.  The Committee noted that the valuation of pension fund liabilities was also to be finalised.

The Committee noted that paragraph 10(2) of the Accounts and Audit Regulation 2015 outlined the process for publication and approval when an audit had not been concluded by 31st July, 2019, whereby the Council was required to publish as soon as practically possible the reason for not publishing an audited set of accounts by the above deadline.  The wording of this announcement in respect of the unaudited statement of accounts for 2018/19 would be agreed by the Council and external auditors in advance of its publication by 31st July, 2019.

The Committee was advised that the Council and external auditors would work together to achieve an audit opinion on a third and final set of accounts by the next Committee meeting on 23rd September, 2019.

The external auditors had provided an External Audit Progress Report and highlighted that risk management was an issue still to be properly addressed by the Council and that an “except for” value for money conclusion in relation to formal risk management would be given in respect of the Council’s arrangements to secure economy, efficiency and effectiveness in its use of resources.

In discussion, Members raised a number of detailed queries, which would be answered outside of the Committee.

RESOLVED: That the Executive Head of Finance’s Report No. FIN1923 be noted. 

To consider the Executive Head of Finance Report No. FIN1822 (copy attached), which sets out the financial statements for 2017/18 and letter of representation for approval, together with the Audit Results Report for noting.

The Committee considered the Executive Head of Finance’s Report No. FIN1822, which sought approval of the Council’s Statement of Accounts for 2017/18 and set out the findings of the Council’s auditors, Ernst & Young, in carrying out their audit work in relation to the 2017/18 financial year.

The Committee was advised that the Statement of Accounts had been prepared in line with CIPFA’s Code of Practice on Local Authority Accounting for 2017/18, under International Financial Reporting Standards and in accordance with the Accounts and Audit (England) Regulations 2015.  The Regulations required the Committee to consider and approve the Statement and to ensure that the Chairman signed them off and for the Statement to be published by 31st July 2018.  The Committee was also advised that the Council’s Annual Governance Statement, which had been approved by the Committee in May 2018, would be published alongside the Statement of Accounts. 

The Report then set out the Council’s draft letter of representation to the auditors, as part of the annual audit process.  The letter was an important factor is enabling the auditors to form an opinion as to whether the Statement of Accounts provided a true and fair view of the financial position of the Council. 

The auditors had substantially completed their audit for 2017/18 and their conclusions were set out in the Audit Results Report,  attached at Appendix C to the Report.  Ernst & Young had reported that it anticipated issuing an unqualified opinion on the financial statements and that the Council had made proper arrangements to secure economy, efficiency and effectiveness in the use of resources. 

Members’ attention was drawn to the Audit Results Report which outlined a single unadjusted audit difference of £426,487 which related to the Council’s share of the variance between the estimated fair value of the £6,582,000 Hampshire Pension Fund assets and the actual fair value of the fund assets at 31st March 2018, which had been found to be higher at £6,613,000.   Details of the unadjusted audit difference was set out in the Management Representation Letter, set out in Appendix B to the Report.  The Council had not corrected the difference because it was a timing difference based on information available from the Council’s actuaries at the time of compiling the statements and was an estimate of the position at the year end.  There was no material effect on the accounts, given that the materiality level had been set at £994,000.

RESOLVED: That

(i)            the Auditor’s Audit Results Report be noted;

(ii)          the financial statements for 2017/18 be approved;

(iii)         the letter of representation be approved; and

(iv)         the Chairman be authorised to sign the Statement of Accounts 2017/18 to certify the Committee’s approval.