Report to follow.

At the Chair's invitation, Andrew Sayers, Engagement Partner, KPMG presented the Annual External Auditors Report 2014/15. This summarised the results of the work carried out by KPMG on the Council's 2014/15 grant claims and returns

Mr Sayers highlighted relevant matters from the section “Summary of Certification Work Outcomes”.

The Committee was informed that:

Completion of the audit had been delayed by the investigation carried out under the Secretary of State’s instruction by PWC.  This audit fieldwork could now be completed and the report signed after the resolution of a complaint from the public regarding LOBO.  Mr Sayers:

·       submitted that the Committee approved this ISA260 report subject to the resolution of this complaint after which KPMG expected to issue an unqualified auditors statement

·       noted that there were no significant adjustments required to the figures but some minor presentational matters had been addressed

·       noted that the audit had identified one key risk, this related to plant.

·       noted it was necessary to identify grants to be issued through commissioners’ and testing done to ensure that payments were properly discharged (there had been one illegal grant payment of a small value)

·       noted that value for money (VFM) issues relating to Brady Youth would be kept under audit

·       noted that Section 106 arrangements were tested and no issues identified

·       noted that the Grant Thornton delay related to the VFM aspects of the Section 106 monies

·       noted that KPMG’s VFM position continued from 2013/14 therefore the auditors opinion had been made accordingly and was being kept under review

·       noted that Section 11 conditions still remained at present; however auditors had noted the actions that had been taken to address these Section 11 notice was issued in November 2015

Responding to Members’ questions the following information was provided:

Councillor Woods was dissatisfied with the CIL value that had been set; in his view the CIL values had been underestimated.  The rates did not give value for money causing potential loss to the Council in this area.  The Committee noted the complaint and it was agreed that this matter would be pursued outside of the meeting.  Mr Sayers noted that the Auditor’s remit in this matter was not to consider whether the appropriate values had been achieved, but that the appropriate processes for setting theCIL levels had been carried out.

A number of objections had been received. Two related to parking on private land.  Since these don't give rise to material adjustments to the account, Mr Sayers was happy to sign these off.  A third objection related to PCLP charged by DCLG and was not material to the accounts.  The objection relating to LOBOS would be material to the accounts; the objection being that such loans were illegal therefore and could not be entered into by local authorities.   It was argued that those which had approved the loan on behalf of the authority did not understand the arrangement fully therefore leading to an illegal act.  The value of these loans were material to the accounts and if this matter was determined, then KPMG would take action and share the auditors view with the objector.  Should this occur, KPMG would also need to consider whether a public interest report was required.  If this situation were to come to pass, then the auditors would be unable to issue an opinion and would be required to present the accounts again at a future meeting; therefore the auditors aimed to discharge the complaint as soon as possible.  It was noted that Hammersmith and Fulham Council had set a precedent; however the determination for each circumstance was individual and dependent on the pattern of facts.  It was noted that there were 250 councils in England and Wales that had entered into LOBOS arrangements.

RESOLVED

1.       That the Auditor’s ISA 260 report be approved subject to the satisfactory resolution of the LOBO complaint.

2.       That the headline messages in Section 2 of the report be noted

3.       That the Auditor’s findings and comments in relation to financial statements be noted

4.       That the VFM conclusion be noted

5.       That the specific VFM risks reported be noted

6.       That the follow-up actions of previous year recommendations be noted