Report of: the Head of Financial Services

Purpose of report: to submit the Council’s Statement of Accounts and Letter of Representation for approval and authorisation.

The Statement of Accounts and supporting documentation are attached as a separate supplement.

Recommendations: That the Committee:

1.         approve the audited 2019/20 Statement of Accounts as certified by the Head of Financial Services and authorise the Chair of the Committee to sign the Accounts; and

2.         approve the Letter of Representation to enable the opinion to be issued.

The Committee considered the report of the Head of Financial Services, the Council’s Statement of Accounts for the year ending 31 March 2020 (2019/20), and the Letter of Representation.

Bill Lewis (Financial Accounting Manager) introduced the report and the Statement of Accounts and answered questions.

The Committee asked the Monitoring Officer and Head of Financial Services to consider routes and mechanisms for oversight of the council’s companies, to avoid any gaps in the corporate understanding of the risks and exposure the council faced from the performance of its companies. There were separate audit and governance processes for each companies, and the council acting as shareholder exercised oversight and scrutiny. However there was no clear role for the council corporately to be satisfied that its companies as a whole were robustly managed going concerns and unlikely to create significant financial problems for the council. They considered this essential in the light of the economic impact of Covid on the companies, and the recent serious financial impacts on Nottingham and Croydon councils as a result of the failure or poor performance of their wholly-owned companies

The Committee resolved to:

1.  approve the audited 2019/20 Statement of Accounts as certified by the Head of Financial Services and authorise the Chair of the Committee to sign the Accounts; and

2.  approve the Letter of Representation to enable the opinion to be issued; and

3.  note that these documents would be signed electronically.

Report of: the external auditor EY

Purpose of report: to inform the Committee of outcome of the audit of the accounts.

Recommendation: to discuss and note the report.

The Committee considered the report of the external auditor EY inform them of outcome of the audit of the accounts. Maria Grindley and Adrian Balmer (EY external auditors) outlined the outcome of the audit and their findings, and answered questions.

The auditors noted the difficulties in conducting an audit remotely, and the changes made to facilitate their testing. Roughly 40% of local authority audits would not be completed by the 30 November deadline.

There were no outstanding matters preventing the issuing of an unqualified opinion and the Chair of the Committee signing the accounts.

The opinion on the council as a going concern was based on an assessment for the 12 months following issuing the opinion (from 30/11/20 to 30/11/21). The balance sheet and value for money conclusions were accurate as of 31/3/20.

The Committee noted the report and the audit opinion.

The Committee asked the Head of Financial Services to also convey their thanks to the finance team for getting complex accounts through the audit process in time, accurately, and with an unqualified audit opinion despite the multiple challenges of this year.

Report of: the external auditor EY

Purpose of report: to inform the Committee of outcome of the audit of the accounts.

Recommendation: to discuss and note the report.

The Committee considered the report. Maria Grindley and Adrian Balmer (EY’s auditors) introduced the report and along with the Head of Finance answered questions.

The Committee noted:

·       The accounts would be presented to the October meeting for approval. The statutory deadline for completion and presentation of the 2019/20 accounts had moved to 30 November 2020 due to the disruption caused by the pandemic.

·       The audit should conclude in the next few weeks subject to completion of specialist audits of property, plant and equipment; fixed assets; and pensions all of which were made more complex by rapidly changing economic factors. These findings and the ‘going concern’ calculations would be reflected in the final accounts and final audit opinion.

·       Evaluation of the council as a going concern this year was complicated by current uncertainties in property and investments valuations; the impacts on wholly-owned companies, revenue and funding streams in the economic shutdown; and liquidity and access to revenue; as well as equity.

·       The audit differences highlighted and the amounts re-stated did not affect the overall financial position or balances.

·       Restatement of the Oxford Direct Services accounts, resulting in delay in completing these and finalising their audit, had a direct impact on the timetable for completing the council’s accounts. The Head of Finance was communicating with ODS and their auditors.

The Committee expressed concern about the delays in finalising the Oxford Direct Services accounts and the consequences for the council’s accounts.

The Committee noted the report and the answers to questions.