Agenda item - STATEMENT OF ACCOUNTS 2022/23 AND 2023/24

REPORT OF THE SERVICE DIRECTOR – RESOURCES

To approve the current status of the audited Statement of Accounts for 2022/23, a draft is enclosed with the report as Appendix B and to note the progress made in the audit of the 2023/24 Annual Statement of Accounts.

RESOLVED: That the Finance, Audit and Risk Committee:

(1) Noted the 2022/23 Annual Statement of Accounts as set out in Appendix B.

(2) Delegated to the Chair of the Committee the final approval of the 2022/23 Annual Statement of Accounts. This would include confirming that the Chair of the Committee can sign the Statement of Accounts to confirm that they have been approved by the Committee.

(3) Noted that the Annual Governance Statement for 2022/23 was approved by the Committee in September 2023, and that nothing has been identified since that date that would require a change to that Annual Governance Statement.

(4) Noted the progress made in the audit of the 2023/24 Annual Statement of Accounts.

(5) Noted the additional audit fees that have been notified by KPMG in relation to ISA315r of £11,597, which will be subject to approval by PSAA.

(6) Noted the completion report and the process that would be followed for the approval of the 2022/23 Accounts as detailed in paragraph 8.13 of the supplementary report.

(7) Formally thanked to Ernst and Young for their work and support to the Committee over the last eight years.

REASON FOR DECISIONS:

To ensure that the Council abides by the Audit and Account Regulations 2015, which require the approval and publication of audited Statement of Accounts. Furthermore, to meet the back-stop deadlines set out in the Accounts and Audit (Amendment) Regulations 2024.

Audio recording – 37 minutes 19 seconds

The Service Director – Resources presented the report entitled ‘Statement of Accounts 2022/23 and 2023/24’ and highlighted that:

· There had been a supplementary document published on 13 November 2024 which included a completion report from Ernst and Young.

· There was a date error in the third paragraph of the Executive Summary and the audit backstop date should read as 28 February 2025 for 2023/24 and the last sentence should read as 2023/24 instead of 2024/25

· Due to failures in the public and private sector there had been a strengthening of audit requirements which resulted in audits taking longer. This had been made worse by Covid. The Government worked to resolve this and backstop dates for audits were agreed. These were then delayed by the general election and had now been passed by Government.

· The first backstop date was 13 December 2024 for accounts for the financial year 2022/23 and before. Details of future dates were highlighted in paragraph 8.2 of the report.

· The Committee was originally asked to review the report at Appendix B and delegate final approval to the Chair of the Committee however, the reports had since been finalised and published.

· There was still a requirement to delegate final approval to the Chair and the Service Director – Resources, as minor adjustments would be made to the Statement of Accounts before it could be formally approved by the Chair of the Committee.

· The Annual Governance Statement had previously been approved by the Committee and would be published alongside the Statement of Accounts.

Debbie Hanson, Ernst & Young, presented the report entitled ‘Completion Report for Those Charged with Governance’ and highlighted that:

· The Interim Value for Money report was presented to the Committee in its June meeting and this was incorporated in this report.

· Ernst and Young were required to report on materially and risks under the Auditing Standards requirements.

· The requirements also included making checks with management regarding internal controls, compliance with laws and regulations, any significant fraud issues and good governance.

· There was a requirement to make basic checks on the account such as checking that the opening balances were the same as the closing balances from 2021/22 and checks against the CIPFA disclosure checklist.

· There were no specific issues at North Herts Council, the disclaimed opinion was the result of loal audit system wide issues and backlogs.

· Had the audit been completed as normal, an applied level of Planning Materiality would have been set at £1.26M and this was detailed on page 17 of the supplement. These levels had been applied when reviewing any accounts errors.

· The risks indicated in the plan had been similar to the previous year, they included the incorrect valuation of land and buildings and the pension liability.

· Ernst and Young were required to confirm their independence as auditors, and this was stated in the report.

· There had been no significant issues with the Value for Money Report. The basic checks on the financial statements had identified some minor issues and as a result some changes had been requested to the financial statements prior to sign off and these were highlighted on page 23 of the report. These were mainly internal inconsistences and the majority were not material and would be corrected.

· There was a Draft Audit Opinion on page 27 of the supplement and this was unlikely to be subject to any changes.

· A certificate would be issued along with the opinion after the 22 November 2024.

Jessica Hargreaves, KPMG, presented the report entitled ‘Statement of Accounts 2023/24’ and highlighted that:

· The audit plan for 2023/24 was approved by the Committee in June 2024.

· Progress was ongoing on the audit and was expected to be completed before the backstop date of 28 February 2025.

· The audit report 2023/24 would have a disclaimed opinion, but this would be for fewer items than the 2022/23 accounts.

· Audit procedures for 2023/24 would include income, expenditure and staff cost balances, as well as pension numbers and land and building revaluations which were all areas of significant risk.

· The opening balance for 2023/24 would not have been fully audited due to the backstop requirement, and therefore an assurance on that matter could not be given. Over the next few years the disclaimed differences would get smaller. This was a sector wide issue and not isolated to North Herts Council.

· The Value for Money report was progressing and an initial conclusion was expected by the end of the year.

The following Members asked questions:

· Councillor Ruth Brown

· Councillor Paul Ward

· Independent Member John Cannon

In response to questions, the Service Director – Resources advised that:

· There had been a £2M amalgamated error as stated in note 20 on page 23 of the report, however the figures when separated out added up to the correct figure. This would be corrected before the final sign off of the accounts.

· There had been an error on the reported Pension figures as stated in note 30 on page 23 of the report, and the wrong number had been input. This would be corrected before the final sign off of the accounts.

· Following the Value for Money report from Ernst and Young, the Churchgate property was reclassified as a property asset, rather than an investment asset.

· The new financial system had an assets register and any duplicate entries had already been corrected through updates to the current process.

· The Churchgate project had the same valuation and did not affect the overall balance.

· In 2018/19 the Council made savings from a new waste contract at a lower cost and the introduction of charging for garden waste.

The Chair proposed an amendment to recommendation 2.6 and an additional recommendation 2.7, that the Committee formally thanked Ernst and Young for their work and support to the Committee over the last eight years.

Councillor Ruth Brown proposed, as amended, and Councillor Stewart Willoughby seconded and, following a vote, it was: