Agenda item

To consider the statement of accounts 2019/20, letter of representation and review of AGS.

Andy Brown (Corporate Director Resources & Deputy Chief Executive (s151 Officer)) gave an update to the meeting. The statement of accounts 2019/20 were attached in draft format. Unfortunately, it had not been possible to finalise these accounts due to resource constraints however there was an improved direction of travel. In November 2020 the Statement of Accounts 2018/19 were approved which there had been some qualification issues with, which had caused delays and were having a knock-on effect on the 2019/20 Statement of Accounts. Some external technical support from David Bolden was being provided and a new Chief Accountant employed. The focus was on the 2020/21 accounts which it was hoped would be delivered on time.

Working arrangements and relationships with the external auditors had been worked upon and improved, so there as now a position of greater understanding and this was an improvement. Whilst there were issues with the 2019/20 accounts resources were in place to deal with these and the Cabinet Member for Finance was keeping a careful watch and holding the s151 Officer to account.

Lizzie Watkin (Assistant Director Finance and Deputy s151) stated that she recognised that there had been gaps in knowledge and expertise within the team. David Bolden had been instrumental in progressing the accounts to draft state, a review had been undertaken and several errors and misstatements were identified. Appendix A detailed all the changes that had been made and all errors and misstatements had been corrected apart from those noted in Deloitte’s update.

The team was responding more quickly with robust data and an improvement plan in terms of technical financial accounting was being implemented which focused on development and learning, sharing audits findings, expectations of standards, recruiting senior technical accounting resource and recruiting apprentices. Processes had been reset for the 2020/21 accounts which was helping with learning and development. It was explained that the statement of accounts and appendices were huge documents and the auditors were undertaking final reviews and checks on this and any changes which had occurred were clearly set out. In response to questions it was confirmed that the appendix contained all the changes which had been made.

Ian Howse of Deloitte then presented his report (page 173) on the Statement of Accounts 2019/20. The 2019/20 accounts had been very challenging and a lot of improvements made to the initial draft set of accounts. It was not easy to extract information from the current finance system, so he felt the fact that SAP was being replaced was good as were the improvements in staffing and expertise. A number of control recommendations and disclosure defficiencies had been raised in his report. A very positive workshop had been held with Deloitte and the finance team, helping to increase knowledge.

Mr Howse echoed the comments that the 2020/21 accounts were progressing very well so things would get back on track. They were outside the normal audit cycle on the 2019/20 accounts which impacted how long it took to complete the work. The report gave assessment of where issues were and he was encouraged by the actions being taken.

In response to questions it was stated that the finance team were making a real effort to get all information required to Deloitte. Work was progressing well on removing the qualification issues from 2018/19 and the aim was to ensure the removal of the qualification issues for the 2020/21 accounts. The complexity of the various systems used to gather information was explained and that Evolve and changing the ERP would give more control, being more dynamic and easier to use.

Cllr Pauline Church, Cabinet Member for Finance stated that she had been holding the s151 Officer to account and agreed that it was of the upmost importance that a good quality set of accounts that everyone was happy with were signed off. Cllr Church was pleased that the Evolve project was underway and felt that it would be fit for purpose. A new culture within the finance team was being fostered and the need for very technical expertise and both Lizzie Watkin and Andy Brown had worked hard on this. Cllr Church urged Deloitte to ensure the resources were in place so that the accounts would be ready in time for the July Committee.

The Chairman echoed that sentiment and very much hoped that the 2019/20 accounts could be signed off at the July Committee and that this would end the problems encountered with the statement of accounts. The Chairman was encouraged by the progress on the 2020/21 accounts.

There was a debate as to whether there should be a reference in the AGS (on page 47) to the steps taken to reinforce the finance department. Lizzie Watkin stated that would be more relevant to the AGS for 2020/21 when the actions were implemented. The Chairman felt that maybe it should be included I the “how we can improve section” for 2019/20. Andy Brown stated that as an alternative he could include that in his narrative report for the 2019/20 accounts, being transparent about the weaknesses inherited and, planned actions and the steps taken. At the conclusion of the debate it was,

Resolved:

·       To note the updated position on the Statement of accounts 2019/20.