Issue - meetings

To note the final report from the external auditors (ISA 260) on the 2018/19 audit and the published version of the Statement of Accounts.

The final report from the External Auditors on the 2018/19 Financial Accounts (ISA 260 Report) was considered by the Committee.

The Portfolio Holder for Finance, Councillor T. Schofield, gave an overview of the final report from External Auditors, Deloitte, and their conclusions. It was a challenging and thorough audit but overall the Council received an unqualified audit opinion. The approved statement of accounts, including Deloitte’s audit opinion was published on the statutory publication deadline of 30 September 2019. As this was Deloitte’s first year as Reigate and Banstead Borough Council’s external auditors, it invariably brought new perspectives on the Council’s approach to preparing accounts and the auditors had set out some areas for development on valuation of property assets and drafting the Statement of Accounts. An action plan for the 2019/20 accounts has been drawn up to address these points.

Members had a number of questions and comments in the discussion that followed:

·       Audit completion – Members noted that the accounts had been published on the statutory deadline day for signing off the accounts which they felt did not leave time to consider the final report fully. It was identified that it took significant time to work through many of the new auditors’ questions, for example, regarding information from third party suppliers on asset valuations. Challenges for Deloitte included working to new audit specifications at a time of a shortfall in experienced public sector auditors. It was reported that Reigate and Banstead was in a better position than many other local authorities in Surrey.

Members asked for assurances that there would be more time built into the reporting process for the 2019/20 Statement of Accounts.

·       Balances on Trust Funds – the Council acts as a trustee for a number of Trust Funds of specific areas of land and other facilities for use by the public such as Reigate Baths Trust which were earning interest. Members asked for a written answer about the background of each fund to understand any restrictions on how the capital could be used for the benefit of residents.

·       Pension deficit – it was noted that the net pension liability administered by Surrey Pension Scheme had increased from £71.1m at 31 March 2018 to £79.2m at 31 March 2019. This was in line with the slight increase in discount rates, movements in asset values and impact of the McCloud legal judgement.

·       Short Term Borrowing – there was a short term borrowing requirement of £12m at the end of the financial year. This was in line with the treasury management strategy and was fully repaid in early 2019/20. Members asked for a written answer on the interest rate that was paid on the loan.

·       Valuation of property assets – Members noted that the auditors identified a number of errors in the valuations of property assets which had been amended. These corrected misstatements were included in the audit adjustments in the ISA260 report. Members asked what changes would be made to learn from this next year.

The Head of  ...  view the full minutes text for item 4

To consider the External Auditors report on the 2018/19 Financial Year.

RESOLVED that:

(i)            The report from the external auditors (ISA 260), set out at Annex 1 to the report presented, on the 2018/19 audit be noted.

(ii)          The Management Representation Letter, set out at Annex 2 to the report presented, be agreed and signed by the Leader of the Council.  

Councillor T. Schofield, Deputy Leader and Executive Member for Finance, presented the ISA 260 report from Deloitte following their audit of the Council’s 2018/19 accounts. It was noted that the ISA 260 and Management Representation Letter had been published via an addendum to the agenda as soon as possible following completion of the audit.

Councillor Schofield highlighted that Deloitte, in their first year as the Council’s external auditors, had undertaken a very thorough audit. The Executive was informed that, in comparison to many other local authorities, the Council was in a relatively strong position. However it was also recognised, as set out in the addendum, that there were a number of areas for development and improvement.

Ben Sheriff and Maltiti Al-Hassan from Deloitte presented key findings from their report on the Council’s 2018/19 accounts, including recommendations raised, and reiterated their unqualified opinion on the accounts.

During the discussion a number of matters were highlighted and it was explained that the final version of the ISA 260 would be considered at the September 2019 meeting of the Overview and Scrutiny Committee, along with a copy of the signed Statement of Accounts.

In conclusion, Councillor Schofield referred to the Management Representation Letter which the Executive had been requested to agree for signature by the Leader of the Council. It was confirmed that this letter formed part of the usual audit process that provided assurances on matters required by auditing standards.

The Executive congratulated all involved for a positive report and thanked representatives from Deloitte’s Audit Team for attending the meeting, presenting their report and the conclusions of the audit.

RESOLVED that:

(i)            The report from the external auditors (ISA 260), set out at Annex 1 to the report presented, on the 2018/19 audit be noted.

(ii)          The Management Representation Letter, set out at Annex 2 to the report presented, be agreed and signed by the Leader of the Council.

Reason for decision: The Executive is responsible for corporate governance. How the Council utilises and accounts for resources is intrinsic to good governance.

Alternative options: To amend or reject Deloitte’s ISA 260 report.