To present to the Audit and Governance Committee the External Auditor’s Annual Report 2023/24 for information and discussion. 

The Director of Finance (DOF) expressed her thanks to the Value for Money Manager (VMM) Grant Thornton (GT), for his work over the recent years. The following principal points were noted:

·       The annual auditors report is a review of the arrangements that have been put in place under three key themes, financial sustainability, governance and the three ES - economy, efficiency and effectiveness in the council’s use of resources. The report outlines against each of those criteria the recommendations made, and any weaknesses identified in arrangements.

·       GT had conducted an additional piece of work this year in to the finance arrangements within the children and Young People Directorate. It was noted the review confirmed that there are good arrangements in place with a realistic and robust budget set.

The VMM introduced the report, the following principal points were noted:

·       1 key recommendation with regards to the continuing significant weakness in respect of improvement in children's services was highlighted, however the VMM was keen to note that the direction of travel was positive having reviewed the robust budget arrangements as previously mentioned and reassuring discussions had with the Corporate Director in terms of new approach, change and refocus. The VMM advised that it would be difficult for the classification to be changed whilst Herefordshire still had an Ofsted rating of inadequate.

·       3 Improvement recommendations had been made with regards to;

1.     The Dedicated Schools Grant (DSG) and the increasing deficit due to greater pressures of SEN in schools and the use of having to use out of county places at a significant cost. Closer working with schools, partners and stake holders to reduce expenditure was recommended.

2.     Improvements to risk reporting arrangements to enhance the corporate risk registers by including the corporate objectives and what they relate to was recommended along with quarterly reporting to Cabinet after it was reviewed by the Audit and Governance Committee.

3.     To enhance arrangements where necessary to waive normal tendering arrangements, the council should report tender waivers to the Audit and Governance Committee on a quarterly basis.

·       The Council is found to have reasonable and robust budget setting and good financial reporting processes in place.

In response to committee questions, it was noted:

1.     The DOF assured the committee that the corporate leadership team were aware of the recommendations made and special attention will be given to the areas that are within their individual directorates.

2.     In terms of budget setting the DOF would personally ensure that all these recommendations are considered and from a finance perspective, would be discussing each of the recommendations with her teams. GT would also be following up on these in future years and internal audit as part of their management of the council’s audit recommendations. Some of the recommendations had a direct impact on the revenue budget and forecast and would be considered as part of general financial management arrangements.

3.     As part of the recommendation for the tender of waivers to be reported through the Audit and Governance Committee, the DOF explained that these are monitored but there is not currently a mechanism for reporting to the committee. She would explore the volume with her team to determine an appropriate frequency and report back to the committee.

4.     The DOF assured the committee of the budget setting process and highlighted one of the key priorities and drivers in setting the budget was ensuring there were sufficient funds to deliver priorities of the council plan whilst joining that up with the capital program and making sure consideration is given for revenue pressures and understanding what can be done to contain, mitigate and minimize financial pressures.

RESOLVED

That the committee reviewed the external auditor’s report, noted its findings and recommendations and had considered the management responses.

Action:

2023/24-043 The DOF to explore the volume of tender waivers with her team to determine an appropriate frequency and report back to the committee.