Meeting documents

Audit Committee
Tuesday, 25th September, 2018 10.30 am

Date: Tuesday 25th September 2018 Time: 10.30 a.m. Place: Council Chamber, Civic Centre, Ebbw Vale

Please note: all Minutes are subject to approval at the next Meeting

PresentAndWithReport toReport of
G Collier (Portfolio Holder/ Deputy Leader), M Cross, L Elias, D Hancock, S Healy, M Moore, G Paulsen, B Summers, S Thomas, L C Winnett, P Williams (Chair), J Collins (Vice-Chair)
Item/Resolution Status Action
Tudalen Glawr Agenda Gymraeg/Welsh Agenda Coversheet (168K/bytes)

It was noted that no requests had been received for the simultaneous translation service.


The following apologies for absence were reported:-

Councillor P. Edwards
Councillor H. Trollope


There were no declarations of interest or dispensations reported.

Report (159K/bytes)
Appendix (9M/bytes)

Consideration was given to the report of the Chief Officer Resources.

The Chief Officer Resources advised Members of the Audit Committee of the requirements for the preparation, audit, approval and publication of the Council's completed Annual Statement of Accounts by the end September each year. The Authority, in the usual course of events, would anticipate receiving a signed audit opinion from Auditor General for Wales by 30th September 2018, however due to investigations being carried out by Gwent Police, no opinion for 2016/17 or 2017/18 would be issued at this time.

The Chief Officer as the responsible finance officer further advised that on the basis of the information currently available regarding the ongoing investigation she did not consider that the value of any potential financial implications would be material and the 2017/18 accounts as presented represented a true and fair view of the Council's financial standings. However given her wider responsibilities in respect of financial governance and the uncertainty surrounding the issues under investigation which may require some amendments to disclosure notes within the Statement of Accounts, she was not in a position to certify the accounts until these matters were resolved

Therefore she asked Members to disregard Options 1 and 2 as noted in the report as these were no longer applicable and advised Members that following discussions consideration should be given to Options 3 and 4; namely that in the absence of certification by the Chief Officer Resources and an audit opinion from the Auditor General for Wales the Committee consider whether to approve the Statement of Accounts (Option 3) or not approve the Statement of Accounts (Option 4).

The Chief Officer Resources then referred to information in section 6 of the report which detailed the significant adjustments made to the accounts since the draft was presented to the Committee in July 2018 and clarified that these adjustments were in no way related to the investigation currently being undertaken by the Police and represented items that have been identified in the normal course of the annual audit and these had not significantly changed the core financial statements of the Council.

At the invitation of the Chair, the Chief Accountant Corporate Services then provided additional detail on the significant corrections made as follows:-

- Increase in items classified as grants and contributions in note 21 ( 5.407m in 2017/2018; 4.604m in 2016/2017; and 4.459m in 2015/2016);
- Reclassification of an asset from Infrastructure to Other Land and Buildings in note 29.1 ( 1.401m);
- Adjustment in note 25.4 to the Accounts to the calculated decrease in the Authority's assets (an increase of 1.094m);
- Increase in depreciation charges ( 0.727m to 2015/2016; 0.344m in 2016/2017; and 0.343m in 2017/2018), relating to assets that had been identified on the asset register as not previously having been depreciated;
- Correction of classification of debtors from non-current to current ( 0.940m); and
- Reduction in the Members' Allowances figure disclosed, to ensure consistency with previous years by excluding employers' pension contributions.

The Chief Accountant also advised that in addition to the aforementioned identified by the Wales Audit Office, officers of the Council identified and corrected a misstatement between schools balances and the Council Fund General Reserve which arose from the treatment of provisions and reserves. This reduced the reported General Reserve balance by 0.577m and increased the previously reported schools balances by the same amount. It was clarified that this had not amended the level of balances that had been reported to Schools or Welsh Government. The Officer noted the summary of changes and advised that the level of usable reserves as at 31st March 2018 remained unchanged at 19.495m. He further outlined the additional changes to the Balance Sheet as noted in the report.

In conclusion, the Chief Accountant advised that the changes reported had not substantially changed the understanding of the accounts presented when compared to the draft accounts previously considered by the Audit Committee.

A Member referred to the correction of classification of debtors from non-current to current and advised that this had occurred in previous years. She thereupon asked if this was due to an invoice being sent in one year although the debt was collected in another year. The Chief Accountant advised that this was related to a specific debtor and a revised determination that the debt would be collectable within the next 12 months rather than a longer period and was not the same issue that had arisen in previous years related to sundry debtor invoices.

Another Member asked if these corrections had any negative affect on the accuracy of the statement of accounts. The Chief Officer Resources confirmed that she was content that the adjustments would not materially change the financial statements. The Director, Wales Audit Office concurred with this comment and advised that the matter outstanding relating to Silent Valley Waste Services was the only issue which prevented the Auditor General for Wales signing off the accounts.

The Member further reported an amendment to the Statement of Accounts 2017/2018 (Page 41 of 200) which stated that the Authority amended the structure and membership of the Board of Directors of Silent Valley Waste Services Limited in May 2012, however this information was incorrect. The Silent Valley Waste Services was restructured on Wednesday, 28th March 2012 and the report which was presented to the Executive gave the Authority more control over the Company and made Silent Valley Waste Services Teckal compliant. The minutes of the Executive were then ratified by Council on Thursday, 26th April, 2012.

The Chief Officer Resources noted the comment and agreed to review the information and to make the amendment to the Statement of Accounts 2017/18 if required.

At this juncture the Chair proposed that the Wales Audit Office be permitted to present their report which would allow Members to consider all the relevant information to make a decision on the options presented in this report.

RESOLVED accordingly.

The Wales Audit Office presented their report (Item 5) at this juncture prior to a decision being taken on
Item 4.

FURTHER RESOLVED, subject to the foregoing that the report be accepted and Option 4 was agreed as follows:-

- the Authority would publish its Statement of Accounts for 2017/2018 before the deadline of 30 September, 2018.
- In the absence of certification by the Chief Officer Resources, the Authority would immediately publish a notice in compliance with section 10(4) of the Accounts and Audit Regulations. This would set out the reasons for the Accounts not being certified and specify an agreed course of action to ensure compliance as soon as possible.
- As the Accounts have not been certified by the Chief Officer Resources and the Audit Committee also withheld its approval, the Wales Audit Office would not provide an opinion on these accounts. The Authority would therefore make a declaration in compliance with section 10(2)(d) of the Accounts and Audit Regulations, explaining the fact that at the date of publication, the auditor has given no opinion.
- The Accounts would be published with 'Unaudited' clearly marked on the cover.

Covering report (67K/bytes)
Report (157K/bytes)

Members considered the report of the Wales Audit Office dated September 2018.

The Financial Audit Manager, Wales Audit Office spoke to the report which outlined results of the 2017/18 audit along with further information of the audit of the 2016/17 financial statements. The audit of the Authority's financial statements for 2016/17 and 2017/18 have been largely completed, however as reported by the Chief Officer Resources due to an ongoing issue the Wales Audit Office are unable to issue an audit opinion. He noted that the initial WAO investigation had been brought to the attention of the Audit Committee at its meeting in September 2018 and at that time it was envisaged that it would be concluded with no significant delay, however since the matter was now subject of a Police investigation this had resulted in neither 2016/17 or 2017/18 financial audits being concluded. The Financial Audit Manager advised that other than the issues reported there were no other misstatements identified which remain uncorrected. He further commented that it was only the issue with Silent Valley Waste Services that was preventing an audit opinion being provided.

The Financial Audit Manager, Wales Audit Office referred to the account and audit deadlines going forward and advised that under the Accounts and Audit (Wales) Regulations 2018 local government bodies and the Auditor General would be required to meet earlier statutory deadlines. These would change in stages as noted in Exhibit 1 of the report. He stated that these new timelines would be challenging to meet, however workshops would be arranged with officers and members to assist in meeting these deadlines.

The Chair thanked the Wales Audit Office for their update on the Financial Statements 2016-17 and 2017-18 and invited questions from Members.

A Member asked if these new timelines were realistic as staff within the Authority was constantly being downsized due to continued cuts in budgets. The Financial Audit Manager, Wales Audit Office concurred that it would be difficult as the accounts would need to be produced earlier and to the same quality. The Director, Wales Audit Office added that it would be a challenge, however it was being undertaken in other authorities.

The Chief Officer Resources reiterated that the new timelines would be a challenge, however she felt that these new deadlines could be met by working with colleagues from the Council and the Wales Audit Office. The Authority had robust processes in place and had already streamlined a number of processes to support achievement of earlier statutory deadlines but further efficiencies would need to be introduced. The Chief Officer was confident the Authority could achieve the deadlines which would be phased in from 2018/19.

A Member welcomed the clarification by the Wales Audit Office that the only reason for the accounts not being signed off was the matters relating to Silent Valley.

A Member further asked if there would be any repercussions for the Council if the accounts were not signed off by the 30th September, 2018. The Director, Wales Audit Office advised that regulations stated that the Council need to publish their accounts by the end of September and there are no penalties in place for such a breach. He indicated that if this was the option taken by the Committee it would be a technical breach and therefore no repercussions would be forthcoming for the Authority.

RESOLVED that the report be accepted and the information contained therein be noted.