The external auditor, Grant Thornton, presented the report and highlighted the following:

·         A revised version of the findings had been published on Friday 27 July 2018. 

·         The conclusions were positive and the intention was to issue an unqualified audit opinion and unmodified value for money conclusion.

·         The outstanding points were small compared to other councils in the country and it had been a relatively straightforward audit.  

The biggest issue in relation to the audit was set out on page 10 of the supplemental pack and was related to the valuation of property, plant and equipment.   Due to the cyclical approach to valuing assets there was a proportion of assets which would not have been valued recently and the council had needed to demonstrate that there were no material changes.   Grant Thornton had made suggestions on how this could be mitigated in future. 

Following a query from a member of the committee, it was confirmed that Grant Thornton were satisfied with the treatment of the Hoople pension issue.     The issue still remained but now group accounts had been prepared, the liability was visible.   Grant Thornton had welcomed the introduction of group accounts and the audit opinion would now include Hoople.   

The chief finance officer confirmed that there would be lessons learnt in order to consider the follow up recommendations made by Grant Thornton. 

A member of the committee requested information of the changes in valuations between assets valued by the previous valuer and the current valuer and whether the current valuer had taken into account Brexit.     The chief finance officer agreed to provide a written response which would also include how long the previous valuer had been in place.     It was noted that the majority of the council’s investment property was occupied by tenants who were paying rent.    Grant Thornton assured the committee that the council’s approach was appropriate and in accordance with their professional assurance guidance.

Following a query from a member of the committee,   Grant Thornton confirmed that the changes in the valuation and sale of the smallholdings were contained in note 10 of the statement of accounts   It was noted that the sale of freehold properties in connection with the Rotherwas Industrial Estate were exceeding the valuations and that the farms had also exceeded the valuations and it was queried whether the assets were being undervalued.     The chief finance officer explained that the agents instructed to sell the assets were using a guide price and the difference was what the market was willing to pay for the properties. 

Grant Thornton confirmed that in connection with the recording of the capital programme, they had received assurances that recommendations were being followed up.   The value for money conclusion formed a view on the adequacy of the arrangements and they are fit for purpose but there were areas which needed improvement. 

It was noted that it would be helpful if audit firms would give evidence over the sustainability of councils and the examples of Northampton, Somerset and Bristol were used.    Grant Thornton informed the committee that CIPRA were planning on introducing a financial resilience index which will highlight this.  

Following a query from a member of the committee, it was confirmed that there had been no transactions with the LEP during the last financial year.  

The committee thanked Grant Thornton for their work on the audit.

RESOLVED

That the report of the external auditor be noted.