Agenda item

·        To present the Statement of Accounts for 2014/15.

·        To present the External Audit report on the audit of the Financial Statements.

3.1  The report of the Interim Head of Resources and Section 151 Officer incorporating the final Statement of Accounts for 2014/15 was presented for the Committee’s consideration. The report confirmed that for the fourth consecutive year the statutory deadline for completion of the audited accounts had been met and that the improvements in the audit process identified the previous year had continued with the issues arising therefrom having been dealt with promptly and in a satisfactory manner.

The Interim Head of Resources and Section 151 Officer said that he was satisfied with the way in which the closure of accounts process had been conducted and that he anticipated that an unqualified audit opinion on the financial statements would be issued.

The Accountancy Services Manager referred the Committee to the key sections of the accounts covering the Movement in Reserves Statement; the Comprehensive Income and Expenditure Statement and the Balance Sheet. The Officer said that the General Fund is relatively stable at £7.193m; the HRA reserve is up at £2.821m and there is also an overall increase in usable reserves.

3.2  The report of the External Auditor on the outcome of the audit of the Financial Statements for 2014/15 (Report under International Standard on Auditing 260) was presented for the Committee’s consideration.

Mr Martin George, Engagement Manager, PwC confirmed that subject to the satisfactory completion of outstanding work as outlined in paragraph 6 of the report, it is the Auditor General’s intention upon receipt of a Letter of Representation (based on that set out in Appendix 1) to issue an unqualified audit report on the financial statements (as per Appendix 2). The Auditor elaborated on the more significant issues arising from the audit to which the Committee’s  attention was drawn as the committee with oversight of the financial reporting process as follows:

•  There are no misstatements identified in the financial statements that remain uncorrected.

•  A summary of the corrections made to the draft financial statements which have been accepted and actioned by Management are listed in Appendix 3 to the report. Many of those involve reclassifications on the Balance Sheet which do not affect the General Fund; neither do those adjustments that relate to the revaluation of property affect the Fund. The net impact on the General Fund is £279k (the balance of the General Fund in the draft statement being

£7.47m revised down to £7.193m in the final statement)

•  The significant and elevated audit risks identified during the audit planning process were dealt with in accordance with the procedures set out in the Financial Audit Strategy and the outcome is set out in paragraph 13 of the report. An additional elevated risk was identified in relation to the accounting of the Job Evaluation exercise and an amendment proposed to the treatment

thereof in the accounts. The Auditors will continue to monitor this area until the accounts are signed off.

•  The audit findings arising from the examination of areas that are subject to estimation risk are provided in paragraph 16 to 40 of the report. Those areas relate to Fixed asset valuation methodology and assumptions; pension liabilities; Equal Pay liabilities; Job Evaluation and Waste provision.

•  No risks of material misstatements of the financial statements due to fraud were identified during the course of the audit.

•  There were no concerns regarding the qualitative aspects of the Authority’s accounting practices and financial reporting. The information provided was found to be relevant, reliable, comparable and easy to understand.

•  The Auditors did not encounter any significant difficulties during the audit and no significant matters were discussed and corresponded upon with management that need to be reported to the Committee.

•  Whilst no material weaknesses in the Authority’s internal controls were identified there are areas wherein it is deemed it would be possible to improve control and recommendations to that end are made in Appendix 4 of the report. These relate to the revaluation of the Council’s property assets and the accuracy of the information provided in the Pensions Annual Return to Gwynedd Council.

•  The Authority’s Annual Governance Statement was reviewed and found to be compliant with the CIPFA/SOALCE Delivering Good Governance in Local Government framework.

The Committee considered the information presented and made the following points thereon –

•  The Committee acknowledged that the accounts had been prepared, presented and audited within the statutory timescale and that they were qualitatively sound. The Committee also took assurance from the External Auditor’s positive views regarding the qualitative aspects of the Authority’s accounting practices and financial reporting.

•  The Committee sought confirmation that the improvements in practice recommended by the External Auditor with regard to Revaluation and Pensions would be implemented and the Committee provided with an update thereon. The Interim Head of Resources confirmed that reporting on the response to the recommendations of the External Auditor has been scheduled for the Committee’s first meeting in the New Year.

•  With reference to the valuation of the Council’s property assets and the adjustments recommended by the External Auditor in relation thereto, the Committee queried whether the Authority should be seeking specialist external input with regard to the valuation of its asset portfolio. Mr Martin George said that PwC does engage one of its internal valuation specialists to consider the valuation work undertaken by the Authority in order to obtain an opinion on the appropriateness of the valuation. The Authority’s investment properties are all revalued annually whilst its operational assets are revalued on a rolling basis. The PwC valuer has raised certain points, but subject to the amendments proposed by the Auditors, the view is that the valuation for the purpose of the accounts is appropriate. The Interim Head of Resources confirmed that as the report indicates, Management, as part of its response to the recommendation made, is considering the options around the provision of services for valuations for next year and will include this as part of the process.

•  The Committee noted that the process for selling assets identified as not required by the Authority has been slow. The Committee sought clarification of whether the Authority has in place a schedule of those assets listed for sale and whether it is monitoring that process. The Interim Head of Resources and Section 151 Officer confirmed that such a schedule  has been formulated and that steps are in place to market for sale assets and to bring their sale to a successful conclusion.

It was resolved –

•  To recommend to the County Council that it approves the Statement of Accounts for 2014/15.

•  To accept the report of the External Auditor on audit of the Financial Statements and to note the findings therein.

•  To approve the Annual Governance Statement for 2014/15 and to refer it to the Leader of the Council and the Chief Executive to be signed.

ACTION ARISING: Interim Head of Resources and Section 151 Officer to circulate the schedule of the Authority’s for sale assets to Members of the Audit and Governance Committee.