To consider the External Auditor’s Annual Governance Report.

The Chairman welcomed the District Auditor, Liz Cave, and the Auditor, Terry Tobin, to the meeting.  The District Auditor presented the Annual Governance Report to the Committee and the following points were made:

·         The Annual Governance Report was a key document giving a formal opinion on the Council’s financial statement and the provision of value for money.

·         It was noted that there were no important weaknesses in internal control.

·         This is the first year the accounts have been prepared under the International Financial Reporting Standards (IFRS), which created substantial additional work along with new ledger requirements. 

·         Contracts containing leases were substantively tested and found to be compliant with IAS17.

·         The ACADEMY cash receipting system was tested with controls operating satisfactorily.

·         In referring to errors in the financial statements, the Committee was advised that the overall net impact of the corrections made was to decrease total comprehensive income and expenditure by approximately £73k, reduce net assets by £592k and reserves by £322k.  There was no impact on the General Fund balance.  The Committee was advised that the figures were not hugely significant when compared against the allowed tolerance levels and would not cause a fundamental error.

·         The Committee’s attention was drawn to the Comprehensive Income and Expenditure Statement and some overheads of the Deputy Chief Executive’s Directorate, which were not recharged to BVACOP headings.  Members noted the District Auditor’s comments. 

·         The Committee went on to discuss pension fund liabilities, redundancy and early retirement payments.  In addition the Committee reviewed the bad debt fund and accounting practises in general.

The Committee agreed:

·         That regular reconciliations between the ISIS system and the general ledger should be carried out.

·         That in future years if any significant early retirement costs arose the actuary is asked to value those liabilities in the year they arise so that they may be reflected in the accounts in that year.

·         That the Authority should establish a basis for calculating a bad debt provision relating to general fund debtors.

·         That in future years consideration is given to whether any items included in provisions should be more accurately shown as creditors.

The District Auditor went on to state that there was a requirement to assess the Authority’s value for money and the arrangements to secure economy, efficiency and effectiveness in the use of resources and financial resilience.  The District Auditor issued an unqualified conclusion stating that the Council had adequate arrangements to secure economy, efficiency and effectiveness in the use of resources. 

The Committee thanked the District Auditor for the report and the explanation of the points raised.  The Committee believed it was a satisfactory report and confirmed that the overspend in the Adult Social Care budget would continue to be monitored.

RESOLVED

          THAT:

          a)           the Committee discussed the content of the Annual Governance Report (AGR) for 2010/11 and approved the proposed action plan;

          b)           the Committee approved the draft Letter of Representation for signature by the Chairman of the Committee and the Chief Officer; and

          c)           the Committee agreed not to adjust the error in the Financial Statements relating to the recharge of overheads.