Agenda item

This report details progress on implementing the recommendations in the Annual Governance Report since the January meeting. The report also includes the External Audit plan for the audit of the accounts for the financial year 2015/16

Discussion:

The Chief Finance Officer presented a report which detailed progress on implementing the recommendations in the Annual Governance Report since the January meeting of the Committee (see minute no 609). The report also included the External Audit plan for the audit of the accounts for the financial year 2015/16.

As mentioned at the previous meeting, BDO had recommended that the Council review the content of the Senior Officers’ Remuneration Note to ensure that the disclosures were in line with the Code of Practice on Local Authority Accounting and only identified those officers who reported directly to the Head of Paid Service. The Council’s response was that only officers who met the definition of a statutory Chief Officer or Head of Service that reported directly to the Head of Paid Service would be included in the disclosure but other senior officer remuneration details could be reported via the data transparency route and the Chief Finance Officer would be consulting with members on how this could be best done. Following a discussion about the most appropriate mechanism to report these details and the extent to which senior officers’ remuneration outside the Code should be reported, BDO commented that the intention behind the Code was for officers with decision making roles to be identified. However, if the Council was to publish more than was required then BDO would be content with this approach as long as the officers who met the criteria set out in the Code were clearly identified. Members agreed with this approach and also with a suggestion that posts at Assistant Director level and above should be included.

With regard to the recommendation that management should review and revisit current resources and timetables in place to ensure that they were prepared for the earlier deadline for the closure of accounts that would be imposed in two years’ time, BDO queried again whether sufficient resources were available to meet these deadlines and also improve the quality of accounts and reduce the number of errors. The issue of resources was not just about the numbers in the finance team but referred also to the wider support across the Council that the team needed.  BDO added that it was important that a clear message was sent to the rest of the organisation about what was needed to meet the new timescales for the closure of the accounts. The Chief Finance Officer commented that he had already made it clear to the Council that the deadlines were being brought forward in 2016/17 and as such he would require cooperation across the organisation to meet the new deadlines. The priority for accountants from 1 April onwards was to close the accounts and training on this had been provided. By bringing forward the timescales for the closure of accounts two years earlier than strictly necessary, it was hoped that issues and pressure points could be identified in time and overcome before the new required timescales were in place.  Whilst acknowledging the assurances from the Chief Finance Officer, some Members commented that BDO’s concerns about whether sufficient resources were available had been made clear and they would continue to monitor the Council on this matter.

Referring to the External Audit Plan, BDO stated that a key focus would be the financial pressures facing the Council and how it planned to respond to these in the medium term. A Member added that this was made more challenging by the many uncertainties and unknowns regarding local government finance and asked how far BDO would take this into account in their audit process. BDO accepted that there would always be unknowns which would be taken into account as far as possible before issuing an opinion.  BDO’s primary focus was to look at what had happened in the course of the year. From 1 April onwards they would carry out a reality check to see if the Council was still on track with its plans. If it was then a qualified opinion was unlikely.

A Member asked what BDO was doing to test the ability of the Council to cope with unexpected developments such as a major industry in the area closing down.  BDO replied that they would not look to challenge the Council’s policy decisions and accepted that things would go wrong. However, if the Council was heading in a strategic direction within an agreed framework and decisions were thoroughly considered and risk assessed then BDO was likely to be supportive. 

In response to a question whether the Council’s levels of reserves were  adequate to meet potential risks, BDO responded that external audit could never give an assurance on this question but confirmed the Council’s reserves policy was not unreasonable. 

Decision:

The Committee agreed to:

a)        approve the proposed annual audit plan for 2015/16;

b)        note the contents of the Planning Letter 2015/16 and

c)         note the contents of the report and the progress addressing the issues raised in the Annual Governance Report.

d)        recommend that the Chief Finance Officer include in the draft statement of accounts details of the salaries of all officers at Assistant Director level and above, indicating which posts are required to be included under the. Code of Practice on Local Authority Accounting