Agenda item
Progress update on the completion of the accounts and an update on the Finance Improvement Programme
Minutes:
Mr Kevin Bartle, Interim Corporate Director for Resources and Section 151 Officer, and Ms Marion Kelly, Programme Director for the Finance Improvement Team presented an update in relation to the Accounts and the Improvement Plan.
Mr Bartle reminded Members that the Finance team was working to restate the accounts for 2018-19 and 2019-20, with the hope of bringing the accounts to this meeting. Mr Bartle said this had not been possible due to the number of significant queries still outstanding. He said good progress had been made but it had been relatively slow as some of the issues related to historic records. He said the finance team were hopeful that we could bring the restated and signed off accounts to the next meeting of the Committee and presently, they were on track for this to happen, although nothing could be guaranteed. Mr Bartle continued saying he hoped that all three sets of accounts, including the 2020-21 accounts, could be presented to the Committee. Mr Bartle also clarified the next meeting would be in October as advertised on the Council’s website rather than September as agreed by Full Council at the AGM meeting, in May 2021.
Mr Bartle then referred to the audit certificates outstanding from the financial years 2016-17 and 2017-18, which the previous auditors, KPMG, were to issue. He said that whilst KMPG had provided their opinions, they had not issued the final certificates. Mr Bartle explained that once certificates have been issued nothing further can be done in terms of amendments to those accounts. He said however if the auditors have material matters drawn to their attention before the final certificate is issued then they would be obliged to consider those matters, He said that there were issues of a material nature emerging from the 2018-19 and 2019-20 accounts that would affect the previous years of accounts and as such the Finance Team had liaised with KPMG and had met with them to resolve the matters. He said this was uncharted territory for both the Council and the former auditors who were now taking this matter seriously. Mr Bartle said KPMG and the Council were taking advice on the two options available (1) to treat the adjustments as prior year adjustments for 2018-19 or (2) to restate the accounts for both 2016-17 and 2017-18. Mr Bartle said any decision regarding these accounts would be brought back to the Committee, especially knowing the enormity of the challenge of working on 5 years’ sets of accounts at one time and also trying to produce the accounts when staff from that time no longer work for the organisation.
In response to questions and comments from members the following was noted:
- It was uncertain if Deloitte’s would issue their opinions at the next Audit Committee. No final decision had yet been reached given the audits are on-going. Ideally, if the KMPG issue is resolved, there is a possibility of getting an opinion from Deloitte’s by October. Mr Bartle said not having the two certificates from KPMG was a significant hurdle.
- Councillor Edgar stated at the moment he’d veer towards the first option regarding the 16-17 and 17-18 accounts but would not form a firm opinion until conclusions had been reached.
- Councillor Wood expressed preference for option 2, saying that no solution would be ideal, but he’d certainly look over past accounts and opinions. Mr Bartle thanked the Councillors for their views and said at this time he was undecided from a professional perspective of the most appropriate option, he said there were pros and cons to both.
- In reference to what the difference is between an opinion and a certificate, Mr Bartle explained the opinion is issued once the accounts have been audited by the external auditor. It confirms that the accounts represent a true and fair view of the financial position of the Council. He said there then is a period of consultation with stakeholders, who could raise an objection which would require investigation by the auditor, before a final Certificate can be issued by the auditor.
- Regarding the Certificates for 2016-17 and 2017-18, Mr Bartle said he discovered quite early on in his time with the Council, that these had not been issued. He said it had taken several emails and reminders and ultimately an escalation to the PSAA to get KMPG to engage on why certificates had not been issued. He said one reason maybe that KPMG no longer worked in the local government audit market and as such their attention is on other matters.
- ACTION: Ms Webster asked for the Audit Committee to be kept up to date regarding decisions relating to the issue of the certificates.
- In response to if one of the reasons not to restate the previous years’ accounts was due to staff no longer being employed at the Council, Mr Bartle said this was a factor but by no means the only one. He said other factors included obtaining information from schools that had become academies, schools that had closed and retrieving and accessing very old data were significant challenges.
The Chair thanked Mr Bartle for his update in relation to the Accounts.
The Committee then heard from Ms Marion Kelly, the Programme Director for the Finance Improvement Team. Ms Kelly provided a detailed update in relation to the Finance Improvement Plan. She said most of Phase 1 of the plan had been completed, with a few items carried forward to Phase 2.
Ms Kelly stated that the Budget Realignment work in Phase 2 of the plan would examine each cost centre and budget. She said that budgets would be re-aligned; this would improve budget management and ensure that all the council’s budget and internal recharge processes were robust and performing how they should be. Ms Kelly said this is a big workstream and as such CLT had agreed to support the funding for four interims to do the work, one of each directorate. She said the reviews would be led by the DLT’s to ensure budget holders were on board with the Finance Team supporting them.
Ms Kelly said another key area was to bring enhancements to the Tech Forge system (Fixed Assets Register - we plan to implement the much needed finance module); we will review journals, control accounts and reconciliations as well as undertake a review of the VAT and Payroll systems. She said the Resources Directorate were also looking at the possibility of acquiring an ERP (Enterprise Resources Planning) system, as suggested by the Worth report, to see if this was a better option for the Council to adopt, rather than having separate systems with interfaces. However due to capacity and resources issues, research into this had been deferred. Ms Kelly said an independent review of the Agresso system would be done in preparation of the wider review. She said no date had yet been set for this work and the primary focus for now was to complete the accounts and audits for the outstanding years.
In response to questions and comments from Members the following was noted:
- Members acknowledged a considerable amount of work had been undertaken as summarised at paragraph 2.8. In terms of when Phase 2 would be completed, Ms Kelly stated that the planned deadline for completion was November 2021. However, there was a lot of work that needed to be achieved by that date and that it was already clear now that some workstreams would need to be carried forward to a potential Phase 3.
- In respect of the ERP system, Mr Bartle confirmed such a system would take a minimum of two years to implement. He said he hoped the review could start in October/November 2021 to see if this was a viable option for the Council. He said in the meantime the Agresso system had been updated, with the latest version now being used by officers of the Council.
- Councillor Perry, the Chair of the Pensions Committee, stated that a considerable amount of work had been undertaken by the Pensions Team looking at Pension Administration, which had its own workstream and which reported to the Pensions Committee. She commended the team for their hard work.
- Mr Bartle and Ms Kelly concurred they had sufficient staff to undertake the improvement work which was required.
The Audit Committee RESOLVED to:
- Note the progress with the 2018/19 and 2019/20 Accounts’ Audit
- Review the actions set out in the detailed IP for Phase 1 of the IP; and,
- Note the content and timelines of Phase 2;
Supporting documents:
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Audit Committee Finance Improvement Plan FINALZ, item 5.1
PDF 513 KB
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Audit Committee App A FINALZ, item 5.1
PDF 188 KB