Agenda item

To consider the external auditor’s audit findings 2018/19.

9.1             Attention was drawn to Grant Thornton’s report, circulated at Pages No. 27-56, which set out the audit findings for the Council for 2018/19.  Members were asked to consider the report.

9.2             The representative from Grant Thornton explained that the report highlighted the key findings from its audit of the Council’s financial statements for the year ended 31 March 2019 and its review of the Council’s value for money arrangements.  Under the National Audit Office Code of Practice, Grant Thornton was required to report whether, in its opinion, the Council’s financial statements represented a true and fair view of its financial position and income and expenditure for the year, and whether they had been prepared in accordance with the Chartered Institute of Public Finance and Accountancy (CIPFA) code of practice on local authority accounting and the Local Audit and Accountability Act 2014.  The key headlines were set out at Page No. 29 of the report and she was pleased to report that the final statement accounts process had gone very smoothly this year.  In terms of the findings, a small number of issues had been identified but none related to a material amount and there were no concerns in terms of being able to issue an unqualified opinion on the accounts.  At the time of writing the report, there were a small number of areas where work was ongoing, as set out at Page No. 40 of the report, but it was noted that these had now been concluded and the management letter of representation was the next item on the Agenda.  A final review of the Statement of Accounts would be undertaken prior to it being signed off and she extended her thanks to the Head of Finance and Asset Management and his team for their hard work and co-operation.

9.3             In terms of value for money, it was noted that an ‘except for’ conclusion had been issued in 2017/18; however, Grant Thornton was satisfied with the level of preparation made in response to the recommendations arising from that and would be pleased to issue a clean opinion this year.  The key findings from the audit were summarised at Page No. 33 of the report and showed that three issues had been identified, although none were material.  In terms of fees and charges, testing had shown that some income was related to the following year and should have been allocated as a receipt in advance and, when extrapolated, this had given a projected major error.  Additional testing was carried out in order to reduce the extrapolated error and no further errors had been identified, therefore it was not a material concern.  With regard to the cash flow statement, a few errors had been identified which had led to it being reviewed by management and subsequently being reinstated.  There was one item that could not be reconciled and, whilst not significant, it did need to be brought to the Council’s attention.  Members were advised that the third issue related to a longstanding court case dealing with age discrimination in the judges and firefighters pension schemes.  The government had applied to the Supreme Court for permission to appeal the ruling but that had been unsuccessful.  The ruling around age discrimination would have implications for the Local Government Pension Scheme and the Council’s actuary had been working on a best estimate in order to see the potential impact on the authority.  At this point in time it was thought that the impact on Tewkesbury Borough Council would be in the region of £174,000, although that would be refined over the coming months.  Given its size, Officers did not want to make an adjustment and Grant Thornton was not minded to either.  An action plan was included at Page No. 46 of the report which management had responded to accordingly.

9.4             A Member indicated that he had been concerned that the impact on the pension scheme might be more significant and the representative from Grant Thornton stressed that the exact amounts were very unclear but an exercise had been carried out based on the worst case scenario of 3.2% which had been adjusted to the specific circumstances of the authority; she did not want to give the impression that £174,000 was the definitive figure.  The Chair thanked the external auditors and the Council’s Finance Team on behalf of the Committee and it was

RESOLVED          That Grant Thornton’s audit findings 2018/19 be NOTED.