Agenda item

The Comittee is asked to note the:

•           Audit Findings Report - Council

•           Audit Findings Report - Pension Fund

Alex Walling, Director, Grant Thornton (GT) 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 2022.  It was reported that the audit was largely completed but unfortunately there had been some delay due to staff sickness. 

Members were advised that GT had not completed all of its VFM work and were not in a position to issue their Annual Auditor's Report 2021/22. It was reported there were no issues arising from the VFM work.  GT were currently dealing with an objection under their statutory duties and hoped to complete that work in due course.  It was explained that a detailed letter regarding the definitive map objection had been presented to the previous committee meeting. 

The aim was to issue the Auditor's annual report in line with the National Audit Office's revised deadline, which required the Annual Auditors Report to be issued no more than three months after the date of the opinion on the financial statements. 

The External Audit had not identified any significant matter during the audit.  GT were awaiting further instruction from the National Audit Office (NAO) and explained that working remotely had created issues and the hybrid working arrangements were helping to overcome these issues.  It was reported that GT had substantially completed the audit of the financial statements and they hoped to issue an unqualified opinion on the accounts. 

Roz Apperley, Audit Manager, Grant Thornton informed the Committee of the significant risks involved with the valuation of land and buildings and explained that additional work had been undertaken to corroborate the figure as a result of the migration of the fixed asset register on SAP to the Techforge system.  The system migration had identified some errors in the SAP system and the revaluation reserve in the balance sheet was understated by £961k for previous years.

Members were informed that the valuations on PFI assets were not being appropriately recorded in the accounts and this had resulted in errors in the depreciation and valuation amounts.  This error had occurred when the valuations were entered in to the specialist PFI and PPP models, these errors were significant and were therefore adjusted within the accounts for 2021/22.  It was noted the cumulative effect was £18,325k on the balance sheet.

In terms of the valuations of infrastructure assets within the accounts, members were advised this was a national issue as most councils did not have sufficient data available.  This had resulted in councils inadvertently replacing assets, which had a positive on accounting.  CIPFA had issued an update to the Code in November 2022 and was planning to issue further guidance later in January 2023 in relation to the useful economic lives.  Subject to receiving the updated guidance, GT anticipated being able to conclude on the Council's accounting for Infrastructure assets and issue the 2020/21 certificate. 

The Committee were referred to page 46 of the report which detailed the audit fees, it was noted that the final audit fees were subject to PSAA approval.  Members queried the audit fee given the significant increase compared to the previsou year.  The Director explained that the scale fee did not include the VFM work and this would result in a standard uplift of fees under the new NAO code. 

The Executive Director of Corporate Resources explained that the scale fees were put forward by the PSAA and he felt they were unrealistic.  The LGA and the County Treasurers Group had raised issues and agreed that the accounts were complicated and needed to be simplified for the benefit of the public. 

During the discussion, a request was made that the report format be amended to a searchable format on modern.gov.    

In terms of the Pension Fund Audit, it was noted that it substantially complete, subject to the Letter of Representation, Annual Report and the final opinion.  GT expected to issue an unqualified opinion. 

In terms of materiality for the Pension Fund this was set at £31m, given the value of the fund, it was noted there were no findings to report. 

Resolved

That the reports be noted.