Agenda item

To receive the External Audit Finding Report from Grant Thornton (to follow).

Recommendation

It is recommended that the Audit Committee endorses the External Audit Findings Report.

Iain Murray from Grant Thornton presented the External Audit Findings Report to the Committee. He advised that due to the new deadlines, at the time of drafting the report, some work was still ongoing however this had now been completed and Grant Thornton was proposing to issue an unqualified opinion on the financial statements.

A change had been suggested relating to the fair value of loans; this related to borrowing from the PWLB. Iain advised that this was a presentational change and did not impact on the reported figures; the amendment would be reflected in the final published version of the accounts. The Committee recognised the added pressures of the new timescales, but felt that any further updates should have been provided in advance of the meeting. Cllr Gray requested that should this occur in future years, an updated report be circulated the day before the meeting.

In relation to judgements and estimates, the audit had identified some old debt where it was not clear if it had a specific impairment against it, although the amounts identified were not material. The Committee was advised that some work was already under way to review and rationalise corporate debt.

In regard to the follow up of last year’s audit recommendations, it was highlighted that although all related party transactions declarations had now been received, they had not been returned in a timely manner, and therefore it could not be marked as completed. Graeme Clark acknowledged that this had taken longer than had been hoped due to a few outstanding declarations from councillors. The process for this was being worked on by officers as it would be especially important to complete these in a timely manner next year due to the upcoming elections.

Iain advised that in relation to audit adjustments, some minor disclosure improvements had been identified and these changes had now been incorporated into final set of financial statements. One unadjusted item was reported. This related to a capital invoice for which there was no accrual. Iain explained that the auditor was obliged to report this, but that it was not indicative of any underlying weaknesses in the Council’s processes and so should not give rise to undue concern.

Grant Thornton would also be issuing an unqualified Value for Money conclusion. This was in the context of an increasingly challenging financial environment and uncertainty around the fair funding review. Cllr Townsend noted that this section referred to property investment, but felt that this could be made more explicit. Iain responded that property investment was becoming the norm across local government and there were no concerns about Waverley’s current approach. Graeme added that he discussed property acquisition issues as part of an ongoing dialogue with the auditors, which would enable any concerns to be raised promptly if required.

Members noted that the management response section was incomplete and some sections of the report would require updating. The Committee was disappointed to have been presented with such an incomplete external audit report and asked for a completed version  to circulated without delay.

[Secretary’s note: The updated report was issued to Members on 30 July 2018 and is attached to these minutes.]

 The Committee RESOLVED to endorse the External Audit Findings Report.