Agenda item

The Committee was provided with reports which set out the Statement of Accounts for 2019/20 by Ernst & Young LLP (EY), the Council’s external auditor. The reports  included the Annual Governance Statement, together with the External Audit Report on the Audit for the year ended 31/03/20 and the Audit Report on the Pension Fund Annual Report and Accounts for the year ended 31/03/20.

The auditor confirmed that they would be issuing an unqualified opinion, and that the Statement of Accounts gave a ‘true and fair’ view.  Additionally, in terms of value for money, the auditor reported that they had no matters arising to include in the auditor’s report about arrangements to secure economy, efficiency and effectiveness in the use of Council resources.

The Statement of Accounts was inclusive of the Pension Fund accounts, and the auditor reported that this part of the Financial Statements was also receiving an unqualified opinion and that the Statement of Accounts gave a ‘true and fair’ view.

It was confirmed that, subject to the Committee approving the Statement of Accounts, and the Chairman subsequently signing the Letter of Representation, the accounts would be signed off the following day, ready for submission by the forthcoming deadline.

Details of the report were summarised, including the areas of the audit where work was ongoing and where further amendments could arise, with the Property, Plant and Equipment valuation and the Going Concern assessment particularly highlighted. Regarding the Going Concern, it was clarified that the assessment had included a review of cashflow pressure points, liquidity, loss projections due to Covid-19 and relevant stress testing, borrowing positions, and Hillingdon’s position in respect of local authority and London borough analysis, and there were no material concerns arising from this analysis.

Audit differences were set out as per the report, including judgemental differences regarding valuations of secondary schools, and a mis-statement of ISA19 pension adjustments in respect of the Goodwin case. These were not considered to have a material impact.

Regarding the differences of opinion in the valuation of the secondary schools, officers clarified that the Council’s asset valuations had been conducted by a specialist external company, whose approach (including visiting the schools) was deemed prudent and correct. EY advised that the differences of opinion between valuers were predominantly as a result of disagreements over land values, and obsolescence and depreciation of new buildings. It was suggested that a common approach between EY and the Council’s valuers could mitigate such differences of opinion moving forward. In terms of the IAS19 issue, officers advised that the specialist external advisers did not make an allowance for Goodwin as there was so much uncertainty, no official guidance in place in terms of how the judgement should be applied and that the figure was so immaterial no adjustment was required.

On the Designated Schools Grant (DSG), it was confirmed that pressures identified on the DSG last year were forecast to continue. Moving forward, the DSG was to be moved into a ringfenced unusable reserve, and this would be considered when predicting any associated risks in next year’s report.  Officers had reassured EY that the Council was engaging with the Department for Education (DfE) regarding the  deficit. It was expected that government intervention would be necessary to address this.

On the Pension Fund, the Committee was advised that, while an unqualified option was being issued, an emphasis of matter paragraph was being included on the incorrect valuations of pooled property funds. In addition, the recent Pension Committee had received a recommendation to address concerns regarding quality of personal data of Fund members, (a national issue, not limited to Hillingdon), and officers confirmed that actions were ongoing to address this recommendation.

The auditors and officers were commended for their efforts in compiling the reports and addressing the Committee’s queries, and the Statement of Accounts were approved.

RESOLVED:  That the audited Statement of Accounts for 2019/20 be approved.