Agenda item

REPORT OF THE DIRECTOR – RESOURCES

To consider the Statement of Accounts 2024/25.

RESOLVED:

(1)   That the Committee noted the KPMG Annual Report as attached at Appendix B and the KPMG Year End Report (ISA 260) to the Finance, Audit and Risk Committee at Appendix C.

(2)   That the Committee approved the 2024/25 Statement of Accounts as attached at Appendix A (with the Auditors Report to be added), and that they can be signed by the Chair of the Committee.

(3)   That the Committee approved the signing of a Management Representation letter by the Director – Resources, as attached at Appendix D.

(4)   That if there are minor changes required to the Statement of Accounts or the Management Representation letter then these can be approved by the Chair of the Committee.

REASON FOR DECISION: 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 – 15 minutes 09 seconds

The Engagement Director (KPMG) introduced the item and advised that:

·         The Statement of Accounts item contained three reports from KPMG, the Auditors Annual Report, the ISA260 Report and the Management Representation Letter.

·         They had completed the 2024/2025 audit and tested the in year movement of income and expenditure, as well as assessing the liabilities of the Council.

·         The audit opinion was ‘disclaimed’, as KPMG were unable to access appropriate audit evidence, but this was a result of the ‘disclaimed’ position on previous audits and was an expected part of the backstop arrangements put in place.

The Public Sector Audit Manager (KPMG) presented the appendix entitled ‘KPMG Year End Report (ISA260)’ and highlighted that:

·         There were a number of Outstanding Matters outlined on page 184 of the reports pack, but these did not cause a risk to the audit as they were normally outstanding matters at this stage.

·         There were four significant risks identified as part of the audit, which were ‘Valuation of Land and Buildings’, ‘Valuation of investment property’, ‘Valuation of post-retirement benefit obligations’ and ‘Management override of controls’.

·         There was detail provided on the identified significant risks, including the findings of the auditors, at pages 185-197 of the reports pack.

·         The auditors also reviewed the transfer of data as a result of the general ledger migration during that year.  

·         There was an assessment of Value for Money at pages 199 and 200 of the reports pack, from which improvements were observed and auditors were comfortable that management have implemented previous recommendations.

The following Members asked questions:

·         Councillor Daniel Wright-Mason

·         Councillor Paul Ward

In response to questions, the Engagement Director (KPMG) advised that it was too early to consider the impact of Local Government Reorganisation (LGR) on accounts, but this was considered as part of the Value for Money assessment. Consideration of the impact of LGR would be more relevant as part of the 2025/26 audit process.

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

·         The management responses to issues would be tracked by KMPG going forward, but could be reported to the Finance, Audit and Risk Committee to ensure work was happening.

·         There had been responses provided by management to the outstanding items under ‘Control Deficiencies’.

·         Item 6 was a one off, but spot checks would take place going forward to ensure this did not happen again. It was felt that anything further would be disproportionate to the time required.

·         A new applicant tracking system would be implemented and would be better at monitoring contracts to address Item 7.

·         To address Item 12, the revaluation of assets would be managed through the finance ledger system, rather than a spreadsheet, which would remove the risk of errors occurring and was due to be implemented before the end of this financial year.

The Audit Assistant Manager (KPMG) presented the appendix entitled ‘KPMG Year End Report (ISA260)’ and highlighted that:

·         There was on uncorrected audit misstatement included on page 29 of the report. However, this was a closing amount and would not affect the audit itself.

·         The corrected audit misstatements were included on page 30 of the report.

·         The detail on each of the Control Deficiencies identified was provided from page 31 of the report onwards.

·         The Control Deficiencies identified were in line with best practice and would require action from the Council to address these and ensure controls were in place.

In response to a question from Councillor Paul Ward, the Director – Resources advised that the cost of implementing recommendations on the identified Control Deficiencies 1 and 2 would not be proportionate to the outcome and therefore would not be implemented. Management would consider what could be done to address the recommendations in Control Deficiency 3.

The Engagement Director (KPMG) presented the appendix entitled ‘KPMG Auditors Annual Report’ and highlighted that:

·         The Auditors Annual Report was included at page 155 of the reports pack onwards and, whilst there had been some updates to the draft version presented to the Committee in November 2025, the recommendations had remained the same.

·         The summary of the Value for Money assessments were included at page 167 of the reports pack, however, once assessed, there were no areas of concern identified.

·         There was no requirement on the Management Representations beyond the standard responses required.

·         A letter was sent by the Ministry of Housing, Communities and Local Government in November which confirmed the timetable to return to the standard audit cycle and for the disclaimer period to come to an end.

·         To support this timetable, ahead of the 2025/26 audit, risk assessment work would be carried out on the two disclaimed audit reports, for 2022/23 and 2023/24, to consider whether any further work was required. This would then be considered alongside management to see how this could be delivered for the 2025/26 and 2026/27 audits.

The Director – Resources presented the appendix entitled ‘Statement of Accounts 2024/25’ and highlighted that:

·         The reports outlined the audit work carried out by KMPG.

·         The Statement of Accounts outlined that although there was a ‘disclaimed’ position provided, there was lots of work which had been carried out by KPMG, supported by the finance team, to ensure that there could be confidence in the systems.

·         The Committee was asked to approve the Statement of Accounts, and the Management Representation letter. However, as there was still some work required, a delegation to the Chair of the Committee had been included in case of any minor changes required.

·         The appendix included highlighted sections which were to show where there was a difference from the draft Statement of Accounts.

·         A minor amendment was required to recommendation 2.3, and it should be the Director – Resources, not the Chair of the Committee, to sign the Management Representation letter. 

The Chair highlighted that as the audits had provided ‘disclaimed’ positions, it was important that the Committee provided oversight to ensure the robustness of the processes in place and had confidence that the authority was in a good overall position.

Councillor Stewart Willoughby proposed and Councillor Paul Ward seconded and, following a vote, it was:

RESOLVED:

(1)  That the Committee noted the KPMG Annual Report as attached at Appendix B and the KPMG Year End Report (ISA 260) to the Finance, Audit and Risk Committee at Appendix C.

(2)  That the Committee approved the 2024/25 Statement of Accounts as attached at Appendix A (with the Auditors Report to be added), and that they can be signed by the Chair of the Committee.

(3)  That the Committee approved the signing of a Management Representation letter by the Director – Resources, as attached at Appendix D.

(4)  That if there are minor changes required to the Statement of Accounts or the Management Representation letter then these can be approved by the Chair of the Committee.

REASON FOR DECISION: 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.