Agenda item

Report of the Strategic Director Corporate Resources

The Accounts and Audit Regulations 2015 require that the Council’s Statement of Accounts should be approved by a committee. In Gateshead’s governance framework, this is the Accounts Committee. However, best practice guidance outlines that the Audit and Standards Committee should also review the financial statements and external auditor’s opinion. Review by this Committee is an additional step in the process to comply with best practice.

The annual audit of the Council’s Statement of Accounts and use of resources has now been completed for 2015/16 and the Council’s external auditor, Mazars has

issued its report.

The Audit Completion Report covers:

• The Council’s Statement of Accounts including significant findings, internal control recommendations and a summary of misstatements.

• The Council’s arrangements for securing economy, efficiency and effectiveness in its use of resources including a value for money conclusion.

The Committee welcomed the presentation of the Statement of Accounts two months earlier than in 2014/15, acknowledging that this provides an opportunity to trial and prepare for the changes to the statutory deadlines from 2017/18.  The Committee praised the work of all those involved.

The key messages are as follows:

·         Audit Opinion - Mazars has issued an unqualified opinion on the Statement of Accounts, meaning that it is free from material error and has been prepared in accordance with proper practice.

·         Use of resources – the Council has proper arrangements in place to secure economy, efficiency and effectiveness in its use of resources.

The Statement of Accounts is materially consistent with the 2015/16 revenue and capital outturn reports considered by Cabinet on 14 June 2016. The report highlighted minor adjustments and presentational changes to the Statement which have been identified through the audit process.

None of the changes to the Statement of Accounts impact on the revenue and capital outturn positions reported to Cabinet, nor do they affect the position of any usable reserves. Management have agreed to amend the Statement to reflect the adjustments, with the exception of £4.035m balancing figure within the cash flow statement that was note analysed due to the minimal impact on the Statement.

The Committee was asked to note that although Mazars have completed their work, they also place reliance on the work of other auditors. Work by EYE on the Tyne and Wear Pension Fund (TWPF) has been delayed to the end of August and therefore the audit cannot be formally closed until this information is received.

It was commented that the recommendations made in respect of the need to review the disaster recovery plan concerning to mitigate the risk of data loss should be prioritised, as the issues was raised as part of the 2014/15 audit work. It was noted that the findings and recommendations have been agreed with officers and action plans are being produced in order to address the identified control issues within six months.

The Committee was satisfied with the assurance that, the implications of the vote for the United Kingdom to leave the European Union and the potential establishment of a North East Mayoral Combined Authority will be built into financial plans.

The one ‘other’ payment made in 2015/16 (within the £150-200k exit package cost band) was queried. It was reported that the payment formed part of an agreed exit arrangement, in circumstances which were both extreme and sensitive.

It was queried whether audit activities cover the Council’s Companies. It was clarified that there are income targets and that audit will focus on overstatement of income, however, once Companies are of a certain size they require audit. The Gateshead Housing Company, for example, has its own Audit Committee.

RESOLVED:               i) That the contents of the report and review be noted.

ii) That the Committee agreed to receive a further update following completion of the EY work on the TWPF.

iii) That the Accounts Committee be advised that the Audit and Standards Committee has no issues to raise on the outcome and findings of the Council’s Statement of Accounts 2015/16 by Mazars.