To provide the audit and governance committee with an update on the external audit plan, audit risk assessment for 2015/16 and progress.

The Committee received a report from external auditors, Grant Thornton.

The main issues emerging from the report were:

·         Autumn statement and financial health

·         Devolution

·         Integration with the health sector

·         Earlier close down of accounts

It was the opinion of the auditors that these issues would have an impact on the council although it was accepted that the devolution agenda had yet to gain traction within the county.

Attention was drawn to key developments within the sector and in particular fair value accounting with the assertion that this would have an impact on the valuation of surplus assets. It was also confirmed that from 2016/17 highways network assets will also be included in this process.

Other areas addressed by the auditors were:

·         Materiality

·         Significant risks

·         Other risks - operating expenses

·         Value for Money

·         Key audit dates

In response to members concerns regarding planning related risks the auditors stated that the report does not preclude the consideration of other risks as they arise.

A member noted that in regard to Ofsted inspections the resources required to support the regime were not inconsiderable and queried whether this was an area of concern with the response being that a better idea of the impact will be had once the work had been completed.

A member raised a point that at a recent meeting it was revealed that although the LEP (Local Enterprise Partnership) had been operational for five years, only now have accounts been made available. It appears that there had been a lack of accountability available to the public. The member expressed dismay that the chairman of the LEP was not aware that accounts had not been audited.  The member believed that Herefordshire council’s role in terms of the LEP included governance, however, no documents relating to the LEP have come before the committee. He also believed that the LEP accounts were to be made available on the Shropshire council website but were not available at this time.

The chairman requested Grant Thornton to enquire with senior managers what arrangements were in place to protect the council in terms of partnership working and expressed concern that the committee was unsighted in this area.

Grant Thornton confirmed that they would provide clarity on this area but added that it would be unlikely that assurances could be made on every partnership in place.

The chairman confirmed that he would discuss the matter with the leader.

The chairman noted that the recent care home case had been awarded in favour of the council. He congratulated the legal team on the case and commended the care home staff and council officers in their efforts in relocating vulnerable residents.

A member highlighted the issue of the five year land supply believing that there were inherent financial risks to the authority unless the land supply issue was resolved. With a further comment stating that the situation undermines parish councils and the neighbourhood planning system.

Grant Thornton confirmed that the matter would be pursued with officers.

In respect of unlodged non domestic rate appeals it was confirmed that a letter had been sent outlining reasons for disagreement with adjudications.

Grant Thornton drew the committee’s attention to the requirement of local authorities to have their local auditors appointed by 31 December 2017 in order for them to begin their engagement on 1 April 2018.

It was suggested that a benchmarking exercise with neighbouring authorities be explored to determine the best way forward on this matter.

RESOLVED:

a)    The external audit plan at appendix A of the report be considered for any potential additional areas of focus;

b)    Comments be provided on the external auditors assessment of risk at appendix B of the report, whether the management response to that assessment is consistent with the understanding of the committee and the impact of the core strategy and land supply;

c)    The external auditors update on progress at appendix C to this report be reviewed and any areas of concern identified.