Mr Kevin Bartle, Interim Corporate Director for Resources and Section 151 Officer presented the update on the progress made with the 2018/19 and 2019/20 accounts and the audit of the accounts. Mr Bartle said the report should be read in conjunction with the update report from Deloitte, the appointed external auditor.

Mr Bartle said he was pleased to bring forth the latest version of the accounts which should be considered as the ‘provisional’ final version but not the final version per se, as there was still work on-going before the accounts could be finalised and signed off. Mr Bartle said the Committee would hear from the Interim Chief Accountants on the changes made to the accounts and said this was an opportunity for the members to  examine the accounts over the next few months before they are presented at the July 2021 meeting. He said the timetable to deliver the changes had slipped however it was the intention of Officers to continue to stick to the plan and prepare the final accounts for 2018/19 and 2019/20.

The Committee then heard from Mr Tim Harlock, Interim Chief Accountant for the account year 2019/20. Mr Harlock highlighted the changes made to this set of accounts and said one of the biggest changes was to the Property, Plant and Equipment (PPE) valuations. He said this did not impact on the bottom line however a lot of work had been undertaken to rectify the errors. He said this related to schools’ floor space measurements which had not been undertaken over the last ten years but had come to light over the past eighteen months.  He said the school buildings had been revalued and as such this was a significant adjustment.

Another area that required reclassification were long-term investments which related to pooled funds of about £50m. Mr Harlock said these had to be reclassified and had been adjusted through profit and loss so would stay in the same place on the balance sheet. The presentation of cash on the balance sheet had also been adjusted, with an increase in cash assets of £20M and an increase in the cash liability of £20M. Mr Harlock said, this being the same amount, results in a net zero impact however it was important to get the presentation correct as it impacted on resources. In addition to this, a considerable amount of work had been done to the Community Infrastructure Levy (CIL) plus errors in accounting for VAT, with a reclaim of £3M from HMRC.

Mr Craig Tucker, Interim Chief Accountant for the account year 2018/19 said the issues highlighted above also effected the 2018/19 accounts and therefore these had been worked through. He added another technical accounting adjustment which related to the 2018/19 accounts was the adjustment to the pensions reserve relating to early repayment. Mr Tucker said this related to spreading the repayment over the different years and as such had a zero impact on the General Fund.

Mr Bartle concluded the presentation and asked members to peruse the accounts and let him know of any questions they had. He said the finance team would continue to aim to meet the July deadline for the accounts and to assist Deloitte with their work.

In response to questions and comments from members the following was noted:

• The Chair, on behalf of the Audit Committee expressed her thanks to the officers involved in the production of the accounts and said the Committee appreciated the huge amount of work that had been undertaken to rectify the accounts and the focus brought to them, under Mr Bartle’s leadership.
• Councillor Wood queried how the accounts were to be presented to residents and the public. He suggested a summary be provided which explained the changes, as the table on pages 7-8, at first glance looked too many but on closer inspection were amendments to the gains and losses relating to timing issues which net off. Mr Bartle concurred a readable summary could be presented to the residents and said he’d be happy to work with members on how this can be achieved.
• Councillor Edgar expressed his thanks for the extraordinary work undertaken by officers and said the report from Deloitte identified things which still needed completing. However, what was clear was the focus to get the accounts over the finish line and the adjustments made were necessary. He said he believed it was good to get to as clear a point as was possible and hoped this could be achieved by the July deadline. Councillor Edgar also stated he would think about how information could be best presented to members of the public and would let Mr Bartle know his thoughts on this.

The Audit Committee RESOLVED to:

1. Note the revised Statements of Accounts for 2018/19 and 2019/20 as presented in the appendices;
2. Note the continuing progress on, and plans for completion of, the audits for both the 2018/19 and the 2019/20 financial years.