Mr Kevin Bartle, Interim Divisional Director for Finance, Procurement and Audit presented the progress report in relation to the external audit of the Council’s Statement of Accounts 2018/19.

The order of business was changed to take this item first on the agenda, to allow Deloitte, the external auditors, to also comment upon the accounts.

Mr Bartle stated officers within his team were taking matters very seriously and were working tirelessly in order to assist with queries arising from the audit of accounts, with the external auditors Deloitte. He said the original intention had been to bring the accounts to an extraordinary meeting of the Committee planned for the end of September, however with significant audit matters outstanding this meeting had to be cancelled.

Mr Bartle said the report detailed the issues outstanding and said until the significant issues had been resolved, Deloitte were not in a position to sign off the accounts. Mr Bartle expressed regret the issues were taking longer than expected to resolve however he hoped to bring a further report and the revised Statement of Accounts to the Audit Committee’s January 2020 meeting, although he emphasised this could not be guaranteed.

Mr Bartle said the exercise to resolve queries was resource intensive and there were significant areas of challenge. Mr Bartle referred Members to the information tables at paragraphs 3.2 to 3.8 which provided a detailed breakdown of the significant issues outstanding. Mr Bartle provided an explanation concerning each sub-heading and updated Members in relation to the current position.

·         In relation to the valuation of property assets, Mr Bartle said Deloitte were not content with the methodology used by the external valuers and changes would therefore needed to be made to the value of assets on the balance sheet.

·         In respect to the Capital expenditure, no outstanding queries were identified other than an under-accrual of expenditure of £3.4m.

·         Queries in relation to Pension Liabilities and lump-sum payment to Pension Fund were more of a technicality than a substantive error. There was an inconsistency of treatment and an adjustment may need to be made to this year’s accounts.

·         Collection Fund Related items – Mr Bartle explained work was required to establish why a number of previous year entries had been made, which now appear to be erroneous. Mr Bartle said the entries should properly have gone through the Collection Fund but instead were treated as general fund balances. As such this anomaly will be corrected and then be reflected in the revised accounts. 

·         In regard to the low level of provision against Business Rate appeals query, Mr Bartle said the range of appeals provisions across London Boroughs ranged from 2% to 6%, however Tower Hamlets provision had been set at 0.2%. This is clearly too low with the consensus being we should be in the range of 2 - 6%. It is being proposed the rate should be increased to 2% with the expectation this should increase over subsequent years to achieve a 4% level.

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