To present to the audit and governance committee the auditor’s Annual Report 2020-21 for information and discussion.

The Key Audit Partner introduced the Auditor’s Annual Report, the principal points included:

i.             Narrative content had increased, reflecting the National Audit Office Code of Audit Practice 2020.

ii.            The final version was dated 11 April 2022, noting a national issue with the delivery of local authority audits.

iii.          The report was for 2020/21 but it was recognised that the council was making progress on various initiatives, with attention drawn to the changes and service improvements highlighted in the executive summary.

iv.          There were three key recommendations, in relation to Children’s Social Care Services (one) and Contract Management (two).  In terms of contract appointment and management arrangements with a dormant company, it was reported that Balfour Beatty Living Places Limited (BBLP) had been transparent with the council but the council itself had not constructed its contractual arrangements in such a way that reflected how BBLP and Balfour Beatty operated.

v.           There were fourteen improvement recommendations, in relation to improving economy, efficiency and effectiveness (five), governance (two), and financial sustainability (seven).

The responses of the Key Audit Partner to questions from committee members included:

1.           It was understood that the Audit Commission had been the external auditor when the contract was made with BBLP.

2.           In terms of improvement recommendation 8 and increasing the financial planning timeframe, it was commented that three years was a common period for a Medium Term Financial Strategy.

3.           There had been matters identified in Children’s Social Care Services in previous years and assurances received but the severity of the issue and the court judgement in 2021 had not been anticipated.  It was emphasised that this was an area of professional practice and auditors had to draw upon the work of specialised regulators in terms of the quality of the care arrangements in place.

The responses to other questions included:

4.           The Director for Resources and Assurance outlined the process for the consideration of recommendations by officers, the inclusion of management comments, the consideration of the arrangements by the Corporate Leadership Team and the allocation of work, reports being made to the executive where appropriate, and for external audit to check on delivery and to report back to the committee if necessary.

5.           The Public Sector Assurance VfM Specialist considered that a management comment, ‘The Council will review and improve the self-assessment document itself and ensure that it complies with the Council’s definition of a significant partnership.  The Council will also revisit the guidance issued for the reviewing of the self-assessment document.’, should address the improvement recommendation.  It was noted that there was an opportunity for officers to include narrative to explain the value of the significant partnerships.

6.           The Key Audit Partner noted that the committee may wish to seek further assurance in terms of the management responses to certain recommendations.  A committee member suggested an action in relation to major contracts.

7.           The Director for Resources and Assurance, declaring their position as a director of the company on behalf of the council currently, confirmed that the way in which the council managed its relationships with Hoople Limited was being looked at and recommendations would be made to Cabinet in due course; it was noted that the company had its own internal audit arrangements. 

The Vice-Chairperson suggested an action to clarify the governance and oversight arrangements for the various boards referenced in the report.

8.           The Key Audit Partner confirmed that note 25 of the annual financial statements dealt with disclosures around settlement agreements.  The Interim Head of Legal Services provided advice on data protection and exempt information, and commented that the information that needed to be in the public domain was in the public domain.

John Roberts was thanked for the due diligence and service provided to the council during their tenure.

Resolved:

That the auditor’s report has been reviewed, the findings and recommendations have been noted, and the management responses have been considered.

Action(s):

Action 152:     That management be asked to comment further on the key recommendation made by the external auditor on major contracts and how the council intends to ensure improvement going forwards.

Action 153:     That further details be provided on the governance and oversight arrangements for the boards referenced in the report, with an indication of a timeline for any updated arrangements.