Agenda item

To receive the Wokingham Borough Council Audit results report Year ended 31 March 2021.

The Committee received the Wokingham Borough Council Audit results report year ended 31 March 2021.

During the discussion of this item, the following points were made:

·       The report outlined EY’s findings against each of the risks reported to the Committee in November as part of the Audit Planning report and highlighted any issues arising with the audit.  The report included the known adjustments to date, and those sections would be updated with results worked through e.g., in relation to Elms Field.

·       Helen Thompson, EY advised Members that the audit work was largely complete.  There were two outstanding issues which were outside of the Council and EY’s control.

·       Members were updated on the outstanding areas referenced on page 9 of the agenda. 

·       With regards to Capital Receipts in advance, the additional testing advance which had been required, had been completed.  There were no matters to report. 

·       For the revaluation of land and buildings, work was completed subject to final review. 

·       The adjustments required for the accounting for Elms Field were being worked through the ledger.  Final checks were required for this, and the report would be updated.

·       In relation to the Group Consolidation, the work that had been outstanding was clarifications and ensuring that everything tied through, and there was nothing significant outstanding in this area.  Responses received were being reviewed but no further issues were anticipated.

·       The remaining outstanding issues referencing conclusion procedures could not be undertaken until the end of the audit.  The first issue related to Pensions.  When the assurance letter had been received from Deloitte, a caveat had been included stating that work was ongoing because their audit was not complete.  This work was not expected to be completed until later this year.  EY had been advised that this material caveat could not be disregarded.  Work relating to the Pensions element could not be completed until caveat was removed.  Further clarification had been sought from Deloitte as to the anticipated timetable.  The second area was a largely national issue.  An issue regarding infrastructure assets had been identified.  A large number of councils had been adding expenditure to infrastructure assets without derecognising the asset that it was replacing, so the balance was effectively increasing year on year without recognition.  CIPFA had established a Task and Finish Group to agree a way forward.  Until an approach had been agreed it was not known what work was required. 

·       A final Audit Results report would be provided once all issues had been resolved.

·       Members noted the fee table and the fact that the Public Sector Audit Appointments had not yet determined for the fee for 2019/20.  It was hoped that this would be resolved in the near future.

·       Councillor Gee asked for clarification of the reference to the Annual Governance Statement and the WGA Data Collection Tool.  Helen Thompson explained that it was the data collection exercise undertaken by Government each year.  It would have also been reported on previously.  However, this year there had been a delay by Treasury in providing the information to the Council to be able to pull together the information, which had also led to a delay in the issue of group instructions by the National Audit Office to auditors as to what work was required.  She went on to explain how the Tool operated.

·       Councillor Gee asked about the consultation on the Minimum Revenue Provision.  She noted that other auditors had commented that councils using similar accounting to the Council, were imprudent in not providing for the MRP.  Helen Thompson stated that the circumstances of each council would be different.  EY had reviewed the MRP in light of the Council’s own policy and had concluded that the Council had calculated MRP in line with its policy.  The Policy was not out of line with current regulations.  It would be sensible for the Council to keep this under review.  The Interim Assistant Director Finance commented that there were areas of the consultation which were unclear.  It was difficult to judge the impact until this clarification was received.  The Council was acting in line with the law and the regulations.

·       In response to a question from Councillor Loyes, Helen Thompson explained that one of the judgemental differences related to Carnival Pool multi storey car park and the other related to the Wickes Retail Unit property valuation.  She went on to explain how the work relating to this was undertaken.

·       Councillor Gee expressed concern regarding the staffing levels in the Finance team and indicated that she had raised this in previous years.   She sought assurance that this was not leading to any specific risks in the preparation of the accounts and complying with the Audit.  The Interim Assistant Director commented that the Council had invested in boosting the resources in the Finance team to ensure the provision of a robust service.  This resource was still coming in and people took time to be onboarded.  The timing of the Audit and the impact of Covid had exacerbated the difficulty.  The Council should be in an even stronger position next year.  Councillor Gee indicated that she had been previously assured that all of the necessary staffing was in place and that the Finance team could not employ any more staff because it would lead to surplus capacity.  The Finance team should also be resourced to cope with ups and downs and to make sure that risks were minimised when preparing the accounts and looking at internal control.

·       Councillor Shepherd-DuBey commented that delays continued to be around Pensions and asked what could be done to stop this from happening again.  Helen Thompson commented that she felt that there was not anything that the Council could do.  It had been very active in trying to follow up and understand the reasons for the delays, through the Berkshire Treasurers Group.  It was a factor of the wider challenge in the public sector audit market.

·       In response to a question from Councillor Shepherd-Dubey regarding revaluation properties, the Interim Assistant Director Finance commented that property valuation potentially became an issue when the asset was to be sold and there was a need to realise the value.  MRP was allowed for 10% and the valuation was closely monitored.  The Chief Accountant added that properties purchased under the Property Investment Group, these were assessed every year and revalued them.  They were assessed against how much had been paid for the asset and a policy of making sure that 10% MRP was set aside, was applied.  If the value of the asset dropped below 90% an additional contribution to debt repayment would be made.   The assets were continually under review and there were currently no plans to sell them.  The rental income was currently covering the debt and interest costs.

·       Councillor Younis about real time monitoring.  The Interim Assistant Director Finance referred to the reports presented throughout the year to the Audit Committee.  Officers undertook more detailed monitoring on a daily basis.

·       Councillor Gee sought clarification whether the inclusion of a project in the Medium Term Financial Plan meant that it was committed to.  The Interim Assistant Director Finance the Medium Term Financial Plan detailed planned expenditure for the financial year.  Some projects would require further consideration and sign off.

RESOLVED:  That the Wokingham Borough Council Audit result report year ended 31 March 2021 be noted.