Agenda item

·        To present the Statement of Accounts 2012/13 and Annual Governance Statement.

·        To present the External Audit report on the Audit of the Financial Statements. (ISA 260)

•           A report by the Head of Function (Resources) incorporating  the Statement of Accounts for  2012/13 along with the Annual Governance Statement was presented for the Committee’s consideration and endorsement. The report provided a synopsis of the main issues arising from the audit of the accounts including a reference those areas to which the significant amendments in the accounts apply along with an updated version of the Annual Governance Statement and the revisions thereto following the submission of the draft to the July meeting of the Audit Committee. Also included in the report was a breakdown of the 3 Towns Programme funding as per the Committee’s request at its previous July meeting.

The Head of Function (Resources) informed the Committee that the County Council’s draft accounts were presented for audit on 28th June online within the statutory deadline. The accounts as made available to the Audit Committee ahead of this meeting include amendments made as part of the audit process. However, since that time there have been additional adjustments made particularly as a result of the audit of the Gwynedd Pension Fund Accounts which has disclosed discrepancies between the  number of active and deferred members within the scheme between February and August, 2013 which could materially affect the value of the pensions liability within the 2012/13 accounts. The accounts have been revised accordingly and an updated version prepared and made available online earlier in the day. Some delay has been occasioned due to the departure early in September of the lead officer on the accounts and due to the main Accountant being on leave at this time also meaning that it has been a challenge to collate all the information and incorporate it within the final accounts. Following the audit, a debriefing meeting with the Auditors will be held to review the number and extent of the adjustments to the 2012/13 accounts with a view to further improving the accounts preparation process for next year.

•           The report of External Audit setting out the matters arising from the  audit of the Financial Statements of the Isle of Anglesey County Council’s for 2012/13 that require reporting under ISA 260 was presented for the Committee’s consideration.

Mrs Lyn Pamment, Engagement Partner, PwC informed Members that at the time of the writing of the ISA260 report, there were several matters outstanding in relation to the audit as listed under section 6 of the report. The Auditor proceeded to table a letter which provided an update on each of the audit procedures identified as outstanding in section 6 along with the outcomes. She referred to the fact that at the time of the presentation of the ISA 260 report the Appointed Auditor was considering the form of his audit opinion on the financial statements pending resolution of the issues identified regarding the valuation of the pension’s liability in the Statement of Accounts. Since those have now been dealt with and the accounts amended accordingly as noted in the update letter and to the satisfaction of the auditors with regard to there being no risk of a remaining material misstatement in this regard, the Appointed Auditor intends to issue an unqualified opinion on the Statement of Accounts 2012/13.

The Auditor then proceeded to highlight other significant issues arising from the audit which the Committee was asked to consider prior to endorsing the financial statements as follows –

•           Uncorrected misstatements identified in the financial statements as at section 10 of the report and the update letter and the value thereof. These have been discussed with management but remain uncorrected. If the decision is to not correct these misstatements then the Authority is asked to provide reasons for non-correction.

•           Corrected misstatements as set out in Appendix 3 of the report and the update letter which document matters that have been corrected by management but which it is considered should be drawn to the attention of those charged with governance, the most significant one being in relation to an error in the way that internal recharges were dealt with in the accounts.

•           The significant audit risks that were identified during the audit planning process and the outcome of the audit procedures in respect of those risks as set out in paragraph 12 of the report.

Audit procedures undertaken in relation to the following areas subject to estimation risk:

•           Fixed Asset valuations

•           Job Evaluation and equal pay liabilities

•           Waste provision

•           Pensions – the Auditor specifically referred to the tabled latter which provided an update on the adjustment actions taken by management to rectify the situation with regard to the IAS19 provision within the accounts.

•           Other significant issues arising from the audit confined to the oversight of the financial reporting process as explained under section 38 of the report.

The Auditor drew Members’ attention to one other matter noted in the update letter with regard to the pressure put on the finance team at the latter stage of the accounts production process to produce a CIPFA Code complaint final draft of the Statement of Accounts in time for the Audit Committee and the need consequently to put in place arrangements to ensure that the finance team has adequate and appropriately skilled resources going forwards.

In the ensuing discussion, Members of the Committee sought clarification of a number of points relating to the following matters to which the Officers and Auditors responded with  additional information and explanation:

•           With reference to the errors identified by sampling whether there was potential for further errors if more extensive testing had been undertaken

•           The material misstatement identified in relation to the oversight of the production of accounts which it was pointed out was substantial and whether this was due solely to lack of more detailed scrutiny pre-audit.

•           Whether in light of the identification of the difficulty in permanently filling positions in the Finance Team as a risk to the accounts preparation process, it is timely to be considering reinforcing the Finance Team.

•           Job Evaluation and Equal Pay liabilities and whether contingency arrangements are sufficient to meet any unforeseen eventualities.

•           Slippage on the 3 towns programme and whether the oversight arrangements with regard to ensuring the timeliness of expenditure on such programmes as well as their value for money are adequate particularly in terms of accountability. It was suggested and agreed that the Head of Service for Economic Development be invited to a meeting of this Committee to explain the grants process in respect of monitoring arrangements, ensuring grants expenditure provides value for money and ensuring that grant programmes and expenditure have the desired impact with particular reference to the 3 Towns programme..

It was resolved –

•           To recommend to the County Council at its meeting on 26th September, that it approves the Statement of Accounts inclusive of the amendments as reported by External Audit to this Audit Committee  and subject to the receipt of  confirmation by External Audit via the Chair of the Audit Committee of the finalisation of its  accounts review process.

•           To approve the Annual Governance Statement 2012/13 and to refer the document to the Leader of the Council and the Chief Executive for their signatures.

ACTIONS ARISING:

•           Chair of Audit Committee to confirm with full Council on 26th September the receipt of External Audit confirmation regarding the completion of its review of the accounts.

•           Head of Function (Resources) to invite the Head of Service (Economic Development) to a meeting of the Audit Committee to explain the oversight and accountability arrangements in relation to the grants process with specific reference to the 3 Towns Programme.