Agenda item

Consideration was given to a report which summarised the findings of the External Auditor on the audit of the 2009/10 Statement of Accounts and the Council’s arrangements for securing economy, efficiency and effectiveness in its use of resources (the Value for Money audit).

Since the approval of the accounts on 28 June 2010, a number of amendments had been identified by both the Corporate Accountancy Team and Audit and the financial statements had been amended to reflect these changes. It had been indicated that the auditor expected to issue unmodified opinion on both the Financial Statements and on the Value for Money audit.

Gus Miah of Deloitte attended the meeting and introduced the report to Members and presented the most significant matters which he wanted to bring to the attention of the Committee.

The key financial audit risk areas were:

Grant income recognition – Reference was made to the specific issue in relation to the Unaccompanied Children’s Asylum grant and the overstatement of income which had been based on the historic success of claiming for the full amount of the Council’s costs for this.

In addition Deloitte had identified a difference of £807k between the housing benefit debtor recorded in the accounts and the debtor recorded on the Council Tax benefit grant claim form.

Pension liability – The asset value included in the pension liability at year end was misstated with an overstatement of £600k.

Property valuations – Reference was made to the insufficient depreciation which had not been built into valuations, in particular relating to schools’ assets which had been valued five years ago.

Bad debt provisions – Evidence suggested that estimates could be either under or over stated.

Valuation of Icelandic investments – The Council had received a better than anticipated receipt and Deloitte were satisfied that the Council had calculated the correct amount.

Accounting for local taxes - only the Council’s share of Council Tax arrears would be shown on the balance sheet.

The audit plan had also identified two risks to the value for money conclusion:

Contract procurement – This was generally robust but reference was made to the Hillingdon House Farm project where there was no formal signed contract in place. Members were informed that the Director of Planning, Environment and Community Services was in the process of reviewing Major Construction Project contracts to address this issue. The Head of Internal Audit and Corporate Governance reported that procurement officers had received an instruction to ensure that all Cabinet or Cabinet Member reports on contracts should seek the advice of Legal Services.  

Partnership working – The Council had demonstrated that it aligned priorities and achieved value for money in its partnership arrangements.

Members were informed of the following other issues which were identified during the course of the audit:

 International Financial Reporting Standards – The Audit     Committee was regularly kept up to date on this.

Faster close down – timetable for producing accounts had been brought forward by a month and this would result in the final accounts being signed off quicker.

Cost reduction plan – The economic downturn and the resultant impact on public spending. The Council had undertaken a comprehensive process of service review which would result in efficiency plans and savings to be made. Reference was made to the Business Improvement Development programme and that Deloitte had been involved in discussions on this.

The announcement regarding the future of the Audit Commission and the demise of the Comprehensive Area Assessment – There would be new audit arrangements for 2012/13 and there would be a new, more targeted and better value approach to the local Value for Money audit. Reference was made to Hillingdon Homes returning back into the Council structure and the implications of this in terms of external auditing.

Members expressed their appreciation at the efforts made by both Deloitte and Finance officers on the production of the accounts and the good joint working which had taken place.     

 Resolved -    

1.        That the Committee notes the following:

(i) The audit adjustments as detailed in the report and in Appendix 1 to the report;

(ii) The internal control recommendations as set out in the report and

(iii) The progress made and actions being taken to continue to improve the quality and accuracy of the information contained within the accounts.