To review the external auditors progress report and sector update. External audit have issued an unqualified certificate on the council’s annual housing benefit subsidy claim of £41m. External audit have also certified the council’s annual teachers’ pensions return in accordance with procedures agreed with teachers’ pensions.

The chief finance officer presented the progress report from Grant Thornton in connection with the council’s accounts for 2019/20. 

Grant Thornton highlighted the following points:

·         An unqualified annual housing benefit subsidy certificate had been issued.  This was a technical piece of work which required a lot of auditing and in order to get no errors and an unqualified certificate indicated a high standard of work by the council’s team.  The committee commended the revenues and benefits team for their work. 

·         It was a quiet period time for the external auditors and progress was where they would expect to be. 

·         The Redman review was continuing and as part of that review there was a consensus that council accounts were highly complex and difficult to understand.   It had also been recognised that the statutory deadline of 31 July was unrealistic but it was acknowledged that the Herefordshire Council’s audit did work well within this timeframe.

·         As part of the National Audit Office report which had been published the previous week, the value for money statement would be a holistic narrative report rather than a pass or fail as from next year.  

As part of the discussion on the item, the following points were raised. 

·         The change in International Financial Reporting Standards (IFRS) treatment of S16 leases [page 30 of the agenda pack] did not appear to have recognised in the corporate or directorate risk registers.     It was also noted that this point did not appear to be reflected in the medium term financial strategy risk register which had been published as part of the agenda for cabinet on 30 January 2020 so there was uncertainty as to how any cross referencing took place in the risk registers. 

·         As part of the work on the value for money statement, Grant Thornton confirmed they would be looking at the decision from the Marches Local Enterprise Partnership (LEP) to terminate the funding agreement between the LEP and the council in connection with the South Wye Transport Package and to commence the clawback of £3.8m. [Decision taken by the LEP on 27 January 2020]. 

RESOLVED:

That the external audit progress report and sector update was reviewed.