Agenda item

(Note: the details set out in this section of the minutes also affect item 8 - BDO ISA 260 report and item 10 – Annual Governance Statement 2017-18).

The External Auditor gave a verbal update on the progress of their audit of the Council’s 2017-18 accounts and related matters.  In terms of the overall position, the External Auditor advised that the audit was not yet completed as there were a number of outstanding queries and issues (identified from the audit process) to be resolved.  Given this, it was not going to be possible for the committee to receive the Final Statement of Accounts for approval at the Extraordinary meeting of the committee scheduled for 31 July.  The External Auditor’s ISA 260 report would also not be completed by 31 July. The issues currently outstanding in relation to the audit included:

a.      Heritage assets (increase in valuation for insurance purposes): Further work was taking place to review the adjustment and disclosures in the final set of accounts.

b.      Pension liability assumptions: Clarification was being sought in relation to mortality assumptions.

c.       Severance payment in respect of former Chief Executive: Clarification was being sought from BCC officers relating to the interpretation of the employment contract.

d.      Management override of controls: In addition to pension assumptions, there was outstanding work in relation to property, plant, equipment and investment properties.

e.      Risk of fraud in expenditure recognition: The External Auditor was awaiting documentation from the Council in relation to a number of items of expenditure to confirm that amounts had been recorded in the correct period.

f.        Non-domestic rates appeals provision: The value of the appeals provision had increased to over £20m.  Further information was awaited from the Council to confirm possible reclassification from the appeals provision to creditors.

In terms of context, it was also noted that the date for finalising the accounts had been brought forward 2 months compared to previous years.  There had also been a change during the past year in terms of the BDO staff allocated to the audit of the BCC accounts although the External Auditor confirmed that this change had not impacted on BDO’s capacity and ability to deliver the audit.

In discussion, the following points were raised/noted/clarified:

a.      The Chair and members were very concerned that the committee was not going to be in a position to approve the accounts by the 31 July deadline.

b.      Queries were raised as to whether the External Auditor had allocated sufficient resources to this audit.  In response, the External Auditor advised that the audit had been appropriately resourced from the outset.  Additional resource had also been allocated as issues for further investigation had been identified as the audit had progressed.

Cllr Mead arrived at the meeting at this point and took the Chair.

c.       In relation to the issue of the severance payment in respect of the former Chief Executive, the External Auditor confirmed that information was awaited in relation to BCC’s legal interpretation of the employment contract.

d.      The External Auditor confirmed that a number of local authorities were facing the position of not being able to approve their finalised 2017-18 accounts by the 31 July deadline.

e.      It was noted that in light of the fact that the finalised accounts and ISA 260 report would not be able to considered at the 31 July Extraordinary meeting, the committee’s consideration of the final Annual Governance Statement 2017-18 would also need to be deferred.

Following further discussion, it was

RESOLVED:

1.      That the External Auditor be requested to submit a written audit progress report on their audit of the BCC accounts for the year ended 31 March 2018 to the Extraordinary meeting of the committee scheduled for 31 July.

2.      That it be noted that Cllr Cheney, Cabinet member for Finance, Governance and Performance will be briefed on the position regarding the audit.

3.      That it be noted that once the audit has been completed, a further Extraordinary meeting of the committee will be arranged to enable the committee to consider the following items:

* Finalised Statement of Accounts for the year ended 31 March 2018

* BDO (External Auditor) ISA 260 report 2017-18

* Final Annual Governance Statement 2017-18

4.      That it be noted that once the audit has been completed, a further Extraordinary meeting of the committee will be arranged to enable the committee to consider the following items:

* Finalised Statement of Accounts for the year ended 31 March 2018

* BDO (External Auditor) ISA 260 report 2017-18

* Final Annual Governance Statement 2017-18