The Committee is asked to note the report.
Pete Barber, Engagement Lead, Grant Thornton presented the report which informed the Committee of the key matters arising from the audit of Gloucestershire County Council’s financial statements for the year ended 31st March 2018.
The earlier production of the accounts had enabled a smoother audit process and allowed time for officers to provide detailed explanations when applicable. It was noted that there were very few amendments to the accounts, which were deemed to be good and a positive step forward. As such Grant Thornton was in a positive position to sign the accounts.
Members appreciated the expertise, hard work and effort of the finance team in compiling the early accounts and agreed they should be congratulated on their exceptional effort. The Chief Financial Officer explained her team’s position in preparing a complex set of accounts and the effort that had gone into producing the earlier set of accounts. The Chairman reiterated members’ appreciation and also wished to extend thanks to Grant Thornton on behalf of the Committee.
Mr Barber explained that Grant Thornton was still unable to issue a value for money conclusion at this stage until they had concluded an objection relating to the energy from waste scheme from the 2016/17 accounts. Grant Thornton would finalise the Value for Money Opinions for 2016/17 and 2017/18 once the work on the objection had been concluded.
Members were informed that overall materiality was determined to be £17.469m. The Committee discussed the Audit Findings in relation to the significant risks.
It was explained that there were no issues identified that would change the presentation of the local authority statements. Members were advised that Grant Thornton did encounter issues in their testing of revaluations to ensure that they have been input correctly in to the Council’s asset register. This was due to a system limitation not allowing the Council to reproduce a report as at 1st April 2017 when the revaluations were entered into the system. The extrapolated differences identified were below triviality. Grant Thornton made a recommendation for management regarding this to ensure the council was able to maintain a robust audit trail which provided appropriate audit evidence for the revaluation movements.
It was noted that the Council continued to experience significant demand pressures particularly in Children and Families and Adult Services. These areas continued to be a focus for the Council. It was reported that the Children and Families service area had a net overspend of £6.37million in 2017/18, with continued increasing demand for social care and actions required following the Ofsted Inspection placing further strains on the services budget.
It was noted that the cost of implementing the Children’s Improvement Plan totalled £2.68million in 2017/18, of which £1.47million was funded from within the service area using one-off funding and £1.21million funded from the transformation reserve. The Adults service area reported an underspend of £2.63million in 2017/18, with a resulting £0.71million transfer into a new people services reserve given the volatility in demand for both Adults and Children’s social care.
In response to a question, Mr Barber explained that Grant Thornton would continue to monitor and review the situation after the Ofsted Inspection.
The narrative report for the 2017-18 financial statements was comprehensive and met the requirements of the code. The report was deemed to be clear and informative.
The Committee was informed that Internal Audit and Grant Thornton had ongoing dialogue throughout the financial year. Grant Thornton confirmed that the accounts had been prepared in accordance with the accounting code of practice. The total indicative fee for the audit for 2017/18 was £98,010.
In response to a question, it was noted that the Authority had not prevented Grant Thornton from accessing any information they required, in their efforts to investigate the objection to the accounts. The External Auditor explained they were disappointed that they had not been able to conclude the objection at this stage, as further legal advice was required. The Committee noted that Grant Thornton would work tirelessly to conclude the objection. It was noted that the delay was due to the objector’s concern relating to their own access to the information.
Mr Barber informed the Committee that in terms of reserves, every council set their own figures in relation to risk assessment and that there was lots of commonality between councils. As such, Grant Thornton had concluded that the level of reserves for GCC were appropriate.
In response to a question, Mr Barber informed the Committee that business rates were an area of uncertainty and only one form of council funding. Officers explained that the volatility of business rates was included on the Risk Register.
At this point, there was an outburst from a member of the public.
That the report be noted.
AUDIT FINDINGS: PENSION FUND REPORT
Peter Barber, Engagement Lead, Grant Thornton presented the report. The report highlighted the key issues arising from the audit of Gloucestershire Pension Fund financial statements for the year end 31st March 2018.
Members were informed that Grant Thornton had identified no adjustments that affected the Funds reported financial position. It was anticipated that an unqualified opinion would be issued on the funds financial statements. It was noted that the overall materiality for the Pension Fund audit for 2017/18 was £23,799.
The performance of the fund was the responsibility of the Pensions Committee. It was noted that the auditors did not provide a separate value for money conclusion on the Pension Fund.
The Director of Strategic Finance added she had great pride in the Finance and Pensions teams and their ability to achieve the challenge set in producing an earlier set of accounts for the County Council and the Pension Fund. Members also wished to record their appreciation and congratulated the team on their hard work and efforts.
That the report be noted.