Agenda item

To consider a report from the Chief Executive, Deputy Chief Executive, Monitoring Officer, and Section 151 Officer, in respect of a Statutory Recommendation issued by the External Auditors, Deloitte, under Section 24 Schedule 7 (2) of the Local Audit and Accountability Act 2014.

The recommendation states:

The Council needs to address the 49 control weaknesses reported from page 35 to 70 in [its] report, to ensure it has a financial reporting system that allows it to meet its statutory responsibilities to produce reliable and accurate financial statements.

The Council must consider the recommendation and decide whether the recommendation(s) are to be accepted, and what, if any, action to take in response to these recommendations.

Introduction

The Chairman invited Cllr Nick Botterill, Cabinet Member for Finance, Development Management, and Strategic Planning, to present a report providing detail of the statutory recommendation issued by the council’s External Auditor, Deloitte. This was in relation to the Statement of Accounts for 2019/20.

Cllr Botterill explained that the matter related to the technical valuing of assets held by the council, and that as a result of attempts to further regular the audit process there had been an unintended consequence resulting in many councils facing considerable delays with hundreds of delayed audits.

He expressed concern that the conclusion was not proportionate, and that the methodology of asset valuations used by the auditors did not reflect that assets such as roads or bridges were not trading or tradeable assets. It was stated the recommendation and judgement had no impact upon working capital or the finances of the council.

Cllr Botterill concluded that it was a requirement that the statutory recommendation be considered by Full Council within 30 days of it being issued, and that the Audit and Governance Committee had considered the draft report and approved a response. This would enable the council to move forward in relation to other delayed accounts. It was proposed that the meeting note the action taken, and this was seconded by Cllr Iain Wallis, Chairman of the Audit and Governance Committee.

Group Leaders and Chairman comments

Cllr Richard Clewer, Leader of the Council, noted that the issue of delayed accounts was being faced by councils across the country, and that the response proposed would enable the council to move forward.

Cllr Gordon King, Deputy Leader of the Liberal Democrat Group, supported the preceding comments, and that he was content there was an action plan to work through what was demanded by the external audit process.

Cllr Wallis made reference to hundreds of external audits being outstanding nationally. He stated he was impressed with the work the auditors had put in and the constructive criticism offered. He thanked the Audit and Governance Committee for its work and stated that the issue had been thoroughly reviewed.

Debate

During debate the long delays towards completing the 2019/20 accounts was noted, and that the process would be concluded with the resolution of the meeting. It was stated that the issue was a technical one not financial, and that the statutory recommendation did not reflect current concerns regarding the finances of the council.

A comment was also raised about whether there had been any external legal advice regarding the issue of valuation of assets, noting the council had a statutory duty to maintain many roads without owning those assets.

There was also a comment criticising the level of information on the matter that had been provided to Members directly throughout the process, instead relying on updates to the Audit and Governance Committee, and requesting that where there were concerns that these be raised more prominently for the attention of all Members who could not be expected to be familiar with all council papers that were issued. In response a comment was made on the public reporting on the issue of council audits, assurances from the Audit and Governance Committee, and reference within some previous reports to Council.

At the conclusion of debate, it was then,

Resolved:

That Council consider the Statutory Recommendation and note that the response to the section 24 Statutory Recommendation from the External Auditor had been approved by the Audit & Governance Committee and that response will be returned to the External Auditor following this meeting of Full Council.

There was a recorded vote on the proposal

Votes for the Motion (63)

Votes against the Motion (2)

Votes in abstention (2)

Details of the recorded vote are attached to these minutes.