Agenda item

The Committee gave consideration to the report and appendices (at pages 45 - 72) as jointly-delivered and summarised by the Interim Chief Finance Officer (Section 151 Officer), the KPMG Director, Mr Tony Crawley, and the KPMG Audit Manager, Mr Sundeep Gill, which should be read together with these minutes as a composite document.

The Interim Chief Finance Officer added that the revised timetable for external audit submission(s) was to be trial-ran in the upcoming financial year (2017/18) and no difficulties were envisaged at the present time to meet all revised deadlines.

Annual Report on Grants and Returns 2015/16 (“the Report”)

The Audit Manager summarised the contents of the Report in turn (at pages 47 - 56).

He highlighted that three minor errors on Housing Benefits Claims (“the Claims”) totalling approximately £5,000 (in the context of a £9m claim) and one minor error on the Pooling of Housing Capital Receipts Return (“the Return”) were made resulting in the a qualification letter and the necessary adjustments having to be made (‘Summary of Certification Work Outcomes’ at pages 51 and 52). He stated that the Chief Finance Officer was working in partnership with the Interim Community Services Manager in respect of the latter to ensure the error did not re-occur in accordance with the prescribed recommendation in relation to use of retained capital receipts (at page 55).

Councillor L A Bentley enquired as to why ‘limited information on the working paper file’ in relation to the Return was provided and how the prescribed recommendation was to be implemented to ensure compliance (‘Recommendations’ at page 55).

The Interim Chief Finance Officer advised that limited information was provided due implications stemming from a temporary dislocation of personnel in April 2016. He gave Members assurances that the recommendation together with greater resilience was to be implemented to ensure that the error did not re-occur in future years.

Councillor M L Darr enquired as to the frequency of the errors made in relation to the Claims for 2015/16 vis-a-vis­ errors (or lack thereof) made in the previous year.

The Audit Manager advised that the errors identified were based upon a random sample/selection of claims as opposed to a systematic review of all claims made.

Councillor J W Boyce sought further clarification upon the inconsistency of housing stock records (‘Recommendations’ at page 54).

The Member stated that the revised timetable for the trail-run of the external audit submission(s) was a challenging one and that a contingency plan was required if the initial deadline was not met (on 26 July 2017).

The Interim Chief Finance Officer advised that the Fixed Asset Register did not correspond with the Housing Stock Repairs Register at the present time. He acknowledged that a contingency plan for audit submission(s) was required.

External Audit Plan 2016/17 (“the Plan”)

The Director summarised the contents of the Plan in turn (at pages 57 - 72).

He highlighted several risks and areas of focus that required specific external audit attention in the Plan, namely:

(a)       The risks associated with the changes in the pension liability due to the Local Government Pension Scheme (LGPS) Triennial Valuation (at page 61);

(b)       The risks associated with key financial statements and analyses to comply with Code of Practice on Local Authority Accounting (at page 61);

(c)       The Authority’s arrangements to continue to build financial resilience in an increasingly-austere public-sector economic climate (at page 67); and

(d)       The Authority’s arrangements to continue to implement change to address the issues raised in the Independent Investigator’s Report (“the Penn Report”) (at page 67).

Councillor J W Boyce questioned the feasibility of the proper, independent and co-harmonious arrangements for the commission of external audit work when ‘working with partners and third parties’, in notable relation to the proposed establishing of a Combined Authority for Leicester and Leicestershire (“the Combined Authority”) (‘Value for Money Arrangements Work (Cont.)’ at page 64). He further enquired as to whether a conflict of interest arose by virtue of a single external auditing firm auditing all the constituent authority members of the Combined Authority.

The Director advised that the overall criterion was reviewed and applied to any given public body, which assesses the arrangements in terms of cost-effective outcomes and benefits for taxpayers, local people and stakeholders, and extended to all public, private and voluntary-sector entities with whom partnership work was or may be undertaken. He stated that no conflict arose owing to a duty to objectively-assess.

Councillor K J Loydall sought acknowledgement within the Plan of the £1.4m budget gap inherited by the Council as a result of the Government’s Financial Settlement.

The Director advised that the Council continued to face similar financial pressures and uncertainties to those experienced by others in the local government sector and that, via its Medium Term Financial Strategy (MTFS), the Council needed to have in place effective arrangements for managing its annual budget, generating income and identifying and implementing efficiency-savings required to balance the same until 2020.

The Director stated that the Plan provided a summary of the Council’s present position and an update would be subsequently reported and, if necessary, a qualification issued. There was nothing to warrant a qualification at the present time. He further advised that the Chief Finance Officer (Section 151 Officer) was equally responsible to notify Members of any budgetary concerns on a regular and periodic basis.

The Chair sought to clarify that the Council was not operating on a “budget deficit” and that the Council had a robust, financial strategy to bridge the budget gap.

The Chair moved the recommendation(s) as set out at paragraph 2 of the report (at page 45).

The Vice-Chair seconded the recommendation(s).

UNANIMOUSLY RESOLVED THAT:

(i)     The Annual Report on Grants and Returns 2015/16 (at Appendix 1) be noted; and

(ii)    The External Audit Plan 2016/17 (at Appendix 2) be noted.