Agenda item

This report presents the Committee with the outcome of the work of the Council’s external auditors, Grant Thornton, to review whether the authority proper arrangements in place to secure economy, efficient and effectiveness in the use of our resources.

This report provided the Committee with the outcome of the work of the Council’s external auditors, Grant Thornton, to review whether the authority proper arrangements are in place to secure economy, efficient and effectiveness in the use of Council resources.

The Audit Director, Grant Thornton introduced the report and highlighted this was the first value for money report under the new code of practice. It considered the arrangements the Council had in place in three areas which were financial sustainability, governance and economy, efficiency and effectiveness. The report notes practice and areas for improvement.

The Committee was informed that the report identified one significant weakness which was Children’s social services drawing on findings fromOfsted.

This was an interim report, most of the work had been completed and a final report would be produced at the end of the financial year. If at the time, there were further value for money issues Grant Thornton would provide an update report.

Members then raised a number of questions and comments which included:

Medium term financial strategy – In response to a question on whether the medium term financial strategy was withdrawn from the September Cabinet meeting due to inadequate resourcing of the finance department, the Chief Finance Officer advised the report was not withdrawn, the meeting was cancelled due to the passing of HM Queen Elizabeth. The report would be considered at the 18 October Cabinet meeting. The Chief Finance Officer explained that the five year financial strategy was reduced to two years as a result of the Covid 19 Pandemic. The aspiration has been to return to five year projections in 2021 but this had not been possible due to the timing of the government spending round, and the short term funding allocations made.   It was envisaged that the five year statement would be published as part of the Council Budget in February 2023.

The Chief Finance Officer added that a restructure had recently taken place which had delivered savings and strengthened the financial management resource.

Redirection of departmental funds - it was asked how departmental budgets were redirected between directorates when restructures occurred. The Chief Finance Officer said that when services were shifted from one directorate to another, budgets were also moved where appropriate.

Dedicated Schools Grant High Needs Block – in response to a question on whether the position of the Dedicated Schools Grant was of concern, the Chief Finance Officer advised that this was an issue for many authorities where national grant funding had not increased to cover new burdens. The government had introduced a statutory override to enable local authorities to reflect this pressure in a deficit reserve and not have to offset this against general reserves, however the override would soon expire. The Council had enough funds in its reserve to cover this deficit if needed and was working to ensure that remained the case. The Council is also currently in discussion with Government on a Safety Valve Intervention Programme which would limit the impact this deficit on the Council’s general fund.

Medway Development Company (MDC) – A member commented that the statement regarding the numbers of homes built by MDC (page 55 refers) was inaccurate. The MDC contributed around 20 homes to those built in the period rather than 1,130 stated.

Members’ role on third party companies – in response to a comment relating to Cabinet Members being Directors, the Key Audit Partner, Grant Thornton acknowledged the difficulty of dual roles and issues found in other authorities. CIPFA best practice states that they are two separate distinct functions. A recommendation was made by Grant Thornton that going forward, consideration be given to moving away from the current arrangements of having Cabinet Members sit on subsidiary company boards as directors

It was commented that it would be important going forward to ensure that Cabinet Members that assumed Board roles be provided with extensive training as part of the induction process and support in order to effectively and confidently fulfil requirements of their role.

Audit of third party Companies - in response to a question on how the Council could receive audit assurance of the third party companies, the Chief Finance Officer advised that should the companies grow they would be subject to requirements to haver internal audit and external audit processes which would seek for assurance on their operations. The Head of Internal Audit and Counter Fraud added that the Council had representation on those companies’ Boards.

Workforce strategy - In response to a question on whether a whole workforce strategy is in place, the Chief Finance Officer explained that the Council did not currently have in place an overarching whole workforce strategy, however the workforce strategy to support the Children’s Improvement Programme was in place. The wider organisation strategy was an area of work that was being considered by the Chief Organisational Culture Officer.

Decision:

The Committee noted the content, recommendations made and management responses in the Interim Auditor’s Annual Report.