Agenda item

To consider Grant Thornton's report on progress against planned outputs.

33.1           Attention was drawn to Grant Thornton’s progress report, circulated at Pages No. 11-24, which set out the progress which had been made in relation to the audit plan together with any emerging national issues and developments that might be relevant to the Borough Council.  Members were asked to consider the report.

33.2           With regard to the outstanding 2012/13 audit, Members were advised that the grants certification work had now been completed and a report setting out the findings in relation to the housing benefit claim would be brought to the next meeting.  The claim had been submitted with a very small amendment and a qualification letter.  Whilst Officers had been disappointed to receive the letter, Grant Thornton was obliged to report these findings and overall had concluded that the claim was accurate and the processing behind it was good.  The detailed audit work for 2013/14 had not yet commenced, however, the planned dates were included within the report. 

33.3           In terms of emerging issues and developments, the Audit Commission had published a report in September which provided an analysis of Councils’ 2011/12 income from charging.  One of the key findings was that charges were the main source of income (20%) for the majority of District Councils and the report set out what the Audit Commission saw as a way forward in terms of maintaining control over the income and charges which were levied by local authorities. In relation to the second issue, Members were reminded that the Government had introduced a business rates retention scheme in April 2013 so that local authorities as a whole would be able to keep half of the business rates income they collected rather than paying it all into the national pool.  As a result the Audit Commission had published a paper based on the information gathered from local authority accounts in relation to collection rates and the cost of collecting business rates.  This was a useful source for putting the performance of Tewkesbury Borough Council into context; business rates arrears varied between £200,000 and £4.5M and Tewkesbury Borough was at the lower end of this range. 

33.4           Members recognised the importance of ensuring that the Council had an effective procurement function in place due to the need for authorities to make further savings and operate under tighter constraints.  In terms of simplifying and streamlining the presentation of local authority financial statements, Members were advised that Tewkesbury Borough Council’s Statement of Accounts for 2012/13 had consisted of 108 pages which was an average length when compared to other District Councils locally.  This indicated that there could be some scope to reduce the content and this would be discussed with the Finance team prior to the commencement of the 2013/14 audit. 

33.5           Another significant development related to the 2013/14 Local Authority Accounting Code of Practice which had changed the requirements for the frequency at which authorities were required to carry out valuations on property plant and equipment.  Previously the Code had permitted valuations to be carried out on a rolling basis over a maximum of five years, however, the Code now required that assets were shown at a reasonable value for each year during the five year period.  There had been a significant change in guidance in that, in order to comply with the Code, all assets within a particular class should be valued within the same financial year which could result in additional costs being incurred if revaluations were required.    It was also noted that Grant Thornton and CIPFA had run a series of workshops over the last year in relation to the consultation on the local authority accounting code of practice for 2014/15 and issues in respect of IFRS 13 and infrastructure assets had been discussed.  Another emerging issue related to the Audit Commission briefing note, published in September, in relation to the Local Audit and Accountability Bill which was currently going through Parliament.  The briefing provided information on what would happen when the Audit Commission was abolished which would eventually result in local authorities being able to choose their own auditors

33.6           The Audit Manager indicated that Grant Thornton had issued a report in relation to financial resilience based on the work which it carried out with local authorities.  The report contained some useful examples of good practice and guidance around understanding financial resilience and comparisons with others.  Two copies of the report were circulated around the table for information.  The Chairman expressed the view that Tewkesbury Borough Council was performing quite well in terms of the level of financial control, particularly when compared to the National Health Service.  The Engagement Lead from Grant Thornton explained that there were many more issues and concerns about financial viability within the National Health Service and some hospitals were in severe difficulty.  Tewkesbury Borough Council had been awarded a ‘green’ status in the previous financial resilience report, however, some Councils were now finding it increasingly difficult to bring their finances under control.

33.7           A Member queried whether reference was made to pooling within the Audit Commission briefing paper on business rates.  The Engagement Lead indicated that although a whole raft of ‘Shire’ authorities had sought to pool, the Gloucestershire authority pool was one of the few which had taken this through to the final stage. The Finance and Asset Management Group Manager indicated that a number of authorities were now looking to pool in the second year and were looking at the governance arrangements in the Gloucestershire pool as best practice. 

33.8           In terms of investments, a Member sought a view from Grant Thornton as to the use of the Council’s reserves for a single investment which may not make a profit.  The Engagement Lead explained that the financial resilience work carried out by Grant Thornton had regard to a whole range of areas but focused on the balance sheet and reserves.  Clearly the external auditors would check that the Council had demonstrated that it had sufficient reserves based on its own assessment of risks and the flow of funds in the future.  He was well aware of the recent decisions in relation to the leisure centre and recognised that, whilst it was an inherently risky project, the Council was taking a staged approach to move this forward.  Grant Thornton would be seeking assurance that the Council had the correct project management in place and that it was bringing in specialist skills at the appropriate points.  The Finance and Asset Management Group Manager confirmed that the Council would be bringing in specialist support to deliver the project which would require significant expenditure.  Both capital and revenue reserves would be considered to mitigate against any future risks. 

33.9           Having considered the information provided it was

RESOLVED          That the Grant Thornton progress report be NOTED.