Agenda item

This report presents the Statement of Accounts 2020/21 for Medway Council, the Audit Findings Report 2020/21 from Grant Thornton and a Sectoral Update from the Auditors.

The Accounts and Audit Regulations (Coronavirus) (Amendment) 2021 require that the Audit Committee consider the issues raised by the external auditors prior to approval of the Statement of Accounts.

This report presented the Statement of Accounts 2020/21 for Medway Council, the Audit Findings Report 2020/21 from Grant Thornton and a Sectoral Update from the Auditors.

The Chief Operating Officer introduced the report and the Engagement Lead, Grant Thornton provided further information to the Committee.

The Engagement Lead, Grant Thornton highlighted that the report was an update on the report considered by the Committee in January 2023 and new text had been underlined for ease of reference. The final issues to be resolved were presented at page 23, however, the substantial portion of the work had been completed.

The Engagement Lead, Grant Thornton noted the adjustments which had been made (page 56 refers), the errors which were unadjusted (page 59 refers) and those areas which were carried over from 2019-20 (page 60 refers). It was the opinion of the auditors that none of those matters were material or would impact on the outcome of the audit with one caveat. Further work was required on the area of property, plant and equipment to test the inputs, adjustments and judgements of the expert valuer to ensure the valuations in the accounts correlated with the auditors understanding and market intelligence.

Council properties had been valued using the beacon methodology.  This method assigned the 3,000 council properties to 198 representative properties. The valuer had reviewed properties from 118 of those of beacons to undertake the valuation. The audit had reviewed 30 beacons to test the valuer’s methodology and were unable to replicate the valuer’s conclusions. Grant Thornton had not judged the valuation to be wrong but with over 3,000 properties at a total value of £156million a small difference in valuation had the potential to have a material impact and further work had been required.

Members then raised comments and questions including the following:

Property Valuation - A Member commented that the differences in rights of tenants between public and private sector was something which needed to be considered in the valuation of properties, however the audit contained a significant level of detail and he was reassured that auditors stated any anomalies were not material.

The Chief Operating Officer expressed his confidence that there would be no need to restate the values, he explained that the valuations were undertaken by a well-respected professional firm of valuers. The only issue was that they  had not yet demonstrated to the auditor the basis of their valuations.

Value For Money - A Member commented that value for money being considered a significant weakness of the Council was caused by the inadequate judgement by Ofsted with respect to Children Services (page 24 refers). Officers put a great deal of effort in making the best use of resources and it was felt that the reason for the decision of significant weakness could have been clearer in the report.

The Engagement Lead, Grant Thornton explained that page 24 of the report was a summarised position, and the position was clearer in the main report which had been presented to the Audit Committee in October 2022.

Follow up of prior year recommendations ­- In response to a question about why recommendations from 2019-20 have not been completed the Head of Corporate Accounts stated that this was a timing issue. By the time the 2019-20 audit was completed in October 2022 and the recommendations reported the Statements of Accounts for 2020-21 had been completed and it was part way through the 2021-22 financial year. Officers had worked to ensure that those issues were resolved and would not be repeated in the future.

Captions – A Member commented that a number of pictures and captions used were out of date. The Head of Corporate Accounts explained that timing on completing the Statement of Accounts had meant there was limited availability to review those pictures with the communications team and undertook to ensure the pictures and captions were updated.

Decision

a)       The Committee noted the issues raised and judgements made by the Auditor as presented at Appendix 1 to the report.

b)       The Committee agreed the Management Letter of Representation presented at Appendix F within the Audit Findings Report, itself presented at Appendix 1 to the report and noted that the Chief Operating Officer will sign this letter on behalf of the Council at the conclusion of the audit.

c)       The Committee approved the Statement of Accounts 2020/21 as presented at Appendix 2 the report.

d)       The Committee noted the update report presented at Appendix 3 to the report.