Agenda item

REPORT OF ERNST AND YOUNG

Value for Money interim Report in relation to the audit of North Hertfordshire District Council 2022/23.

RESOLVED: That the Value for Money Interim Report 22/23 from Ernst and Young was noted.

REASON FOR DECISION: To enable the Committee to be provided with information on the work undertaken by the Auditors Ernst and Young and to highlight any significant weaknesses identified along with recommendations for improvement.

Audio recording – 19 minutes 2 seconds

Debbie Hanson, Ernst & Young, presented the report ‘Value for Money Interim Report 2022-23’ and highlighted that:

·       This report was noted as interim and could not be concluded until an audit opinion could be issued on the financial statement for 2022-23.

·       The financial statements for 2022-23 were likely to be a modified opinion with a disclaimer of opinion due to the statutory backstop.

·       This would not be a reflection on the Councils arrangements as the disclaimer would be due to the statutory legislation to clear the audit backlogs.

·       The Value for Money report commentary would form part of the Auditors Annual Report, and it was not expected to differ significantly from this interim report.

·       The National Audit Office (NAO) code required three key areas to be considered for Value for Money arrangement namely, financial sustainability, Governance arrangements and the arrangements of the Council to make economic, efficient and effective use of resources.

·       As part of the assessment process, Ernst and Young were required to identify any risks or weaknesses. None were identified and Ernst and Young were satisfied with the arrangements of the Council in the three key areas.

·       There were significant challenges facing Local authorities and it was important that the Council focused on delivering savings, bridging any budget gaps, ensuring that there was an appropriate level of reserves, and that the Section 151 Officer reported any reliance on using the reserves.

·       There had been an internal audit review and a peer review that had highlighted some area of improvement regarding the Committees of the Council. Training had been undertaken to strengthen these areas.

·       The internal auditors had given a reasonable assurance opinion on the 2022-23 controls, and governance framework that were in place.

·       Checks had been made regarding the disclosure requirements of the 2022-23 financial statement and included that cash and banking reconciliations were taking place. Ernst and Young were satisfied with the arrangements.

·       There were queries regarding the accounting classification of the Churchgate centre, currently classed as an investment property, and work was ongoing within the Council to consider this matter. This was a technical accounting area and did not raise any concerns in relation to governance.

·       Performance indicators were in place to report and monitor the economy, efficiency and effectiveness of the Council.

·       The Council had procurement arrangements in place and had partnership working arrangement with other local authorities.

In response to a question from the Independent Member, the Service Director – Resources stated that a professional valuer would have been used for the Churchgate centre and the valuation was based on the income stream generated. If the project was reclassified it was not expected to have any significant impact on the valuation but a different valuation basis may be used. This work was ongoing and would be resolved shortly.

In response to a question from the Independent Member, Ms Hanson advised that the asset may have a different value depending on the classification applied to the property and therefore the resulting valuation approach, but this had not been confirmed.

Councillor Daniel Wright-Mason proposed and Councillor Stewart Willoughby seconded and, following a vote, it was:

RESOLVED: That the Value for Money Interim Report 22/23 from Ernst and Young was noted.

REASON FOR DECISION: To enable the Committee to be provided with information on the work undertaken by the Auditors Ernst and Young and to highlight any significant weaknesses identified along with recommendations for improvement.