As the Overview and Scrutiny Management Committee is responsible for co-ordinating the Council's arrangements for holding the Executive to account, which includes undertaking policy development and reviewing performance monitoring and external Scrutiny. Apparently the Council’s accounts have not been signed off for two years
My question is: does the Overview and Scrutiny Management Committee consider that the Borough Council’s Audit Committee is a good enough safeguard for the Borough Council’s finances?
Minutes:
As the Overview and Scrutiny Management Committee is responsible for co-ordinating the Council's arrangements for holding the Executive to account which includes undertaking policy development and review performance monitoring and external Scrutiny.
Apparently, the Council’s accounts have not been signed off for two years.
My question is does the Overview and Scrutiny Committee Management Committee consider that the Borough Council’s audit committee is a good enough safeguard for the Borough Council’s finances.
Answer
Thank you for your question. In short, my answer is yes. Let me explain why.
The Audit Committee is a sub-committee of Council with its members appointed by Council each year. The Audit Committee works assiduously to ensure its remit and processes reflect best practice.
Earlier this year, the Committee undertook a review against the latest (2022) CIPFA guidance which showed good levels of compliance but also identified further areas where practices could be improved. One of these was to update the terms of reference for the Committee which were brought to full Council in March 2023.
Full Council also receives a comprehensive annual report from the Audit Committee which offers the opportunity for any member to raise concerns. I note that this year’s annual report was considered at the March 2023 meeting of full Council at which you were present.
You will have noted that the annual report covered the issue of the Council’s accounts and the reasons for the delay in sign-off. However, I am pleased to note that the Council’s Statement of Accounts for 2020/21 were signed off in July 2023 and work is proceeding on the 2021/22 accounts. If you read the minutes of the Audit Committee you will see that at each meeting of the Committee, members are appraised of the latest position including the opportunity to seek assurances from officers and our external auditors.
The current delays in the signing off of accounts are in the main beyond Wokingham’s control and are problems being experienced nationally. To give context the National Audit Office (NAO) published a report earlier this year found that just 12% of 2021-22 local authority audits were completed at that time.
As well as national matters such as the recent technical issues around infrastructure which required the accounting body to work up “clarifications” to the accounting code, locally whilst our own accounts were complete, we had not been able to close 2020/21 until the Pensions body’s accounts had been audited (The Royal Borough of Windsor and Maidenhead are the administering body for the fund and these delays affect all Berkshire authorities), which as stated previously is now resolved for that year.
Work on 2021/22 Accounts continues in tandem with our External Auditors and progress will be reported to the Audit Committee in the same way as previous years Accounts.
Supplementary Question
As the number of Councils going bankrupt has increased, the LGA and CIPFA have raised serious concerns about the management of Council finances. This is over and above the usual routines we carry out. They point out that not enough attention is paid to the complexity of commercial plans and the risks surrounding them. They also add that the skills and professional capabilities of officers must be balanced by the skills of elected Members who must be engaged and financially literate in order to understand the financial aspects of the issues that come before them. How can that be achieved if, when elected Members challenge decisions, they can be denied the information requested? One example is the Dementia Care Home which has been cancelled, costing the Council £1.14m to date. These costs may or may not be recovered as the project is now cancelled.
The Overview and Scrutiny Management Committee must have a view on the cultural secrecy written into the Council’s Constitution which allows quite large financial decisions to be made without consultation. For example, write-offs up to £25k can be agreed by specific officers. Virements can be £150k to £300k depending on the officer involved. The list of these obscure numbers is endless. With the Constitution written in a manner that encourages secrecy in finance, my question is: beside the £1.14m spent to date at Toutley, what other sums of money has the Council paid out which Members have not been aware of?
Supplementary Answer
Firstly, financial plans are deliverable. Effective monitoring is in place through the Executive and further challenge and assurance is undertaken through the Audit Committee. The Council’s commercial investment performance is reported regularly, with performance against key prudential indicators, as part of the Treasury Management reports through to Council and these remain positive.
The Constitution is set and agreed by Members and balances ensuring the appropriate governance and transparency with providing officers with the opportunity to run services effectively and, where appropriately or required, flexibly. A number of controls are in place to ensure the Constitution is adhered to and Members have sight of key decisions. You will be aware there is currently a process to review the Constitution to ensure it remains fit for purpose and meets the needs. Members will play a key role in reviewing and agreeing any changes.
You have quoted the example of the care home. However, I understand that this scheme is not “cancelled”, but is rightly undergoing further financial and market analysis to ensure the right decision both financially but also in providing key facilities to the community. The spend to date was critical to understand the right approach and, in fact, has already added value in increasing the value of the land should a care home provision not be decided as the best future approach and investment.