Agenda item

This report considers the issues raised in the Council’s external auditor’s Annual Governance Report, which incorporates the findings following the 2011/2012 audit of the Statement of Accounts.

The Accounts and Audit Regulations 2003 require that the Audit Committee consider these issues prior to 30 September.

Discussion:

The Chief Finance Officer introduced the external auditor’s Annual Governance Report for the year ended 31 March 2012. The Annual Governance Report, attached at Appendix 1 to the report, set out the key findings from the audit of the accounts and use of resources, together with the external auditor’s opinion on the Annual Governance Statement.

The report gave details of the main issues arising from the audit. A revised version of the Statement of Accounts, from that considered by the Committee in July 2012, was attached to the report and an addendum report was tabled at the meeting setting out further amendments. These amendments, identified by the external auditors since the circulation of the Committee report, were to the explanatory foreword and some disclosure notes and had no impact on the principal Statement of Accounts.

Robert Grant from PKF, the council’s external auditor, provided an overview of the external auditor's report. This included details of the deficiencies in internal controls, such as the need to maintain an effective fixed asset register, and the high number of ‘non-trivial’ but not material errors and inconsistencies that had been amended by officers. Issues highlighted to the Committee included removing the ‘negative’ balance disclosed on the Useable Capital Receipts Reserve, substantial amendments made to note 1 to the financial statements (Adjustments between Accounting Basis and Funding Basis under Regulations) and the separate disclosure of the Housing Revenue Account settlement amount on the Comprehensive Income and Expenditure Statement.

Robert Grant confirmed that, with the conclusion of their work, he would be issuing an unqualified opinion on the financial statements. It was further noted that the auditor was satisfied with the Annual Governance Statement and that they would also be issuing an unqualified value for money conclusion. Work on reviewing the consistency of the Whole of Government Accounts Return with financial statements was ongoing.

During the discussion on this item officers were asked to verify and amend, if necessary, the total payment received from Medway Community Healthcare in 2010/11, as reported on page 131 of the agenda. It was also noted that the final figure in paragraph 3.16 of the external auditor’s report should read “£80,000”.

The Committee acknowledged that this audit represented a significant improvement compared to previous years and congratulated officers on their work in preparing the Statement of Accounts.

Decision:

a)     The Audit Committee noted the issues raised and judgements made by the external auditor as presented in Appendix 1 to the report, and agreed the proposed response as set out at Appendix A to the Annual Governance Report.

b)     The Audit Committee agreed, subject to any amendment to the total payment received from Medway Community Healthcare in 2010/11 (as reported on page 131 of the agenda), the revised Statement of Accounts as set out in Appendix 2 of the report, including the amended Accounting Policies set out within that document and that these now form the published accounts of the Council.

c)      The Audit Committee agreed the Management Representations Letter, attached at Appendix C of the Annual Governance Report.

d)     The Audit Committee congratulated staff for their work in bringing forward the 2011/2012 Statement of Accounts.