Meeting documents

To consider this report.

The Chair invited the external auditors to introduce their report and welcomed Mr Morris as he would be the new Engagement Lead to the Council. Mr Morris and Mr Barber, provided an overview of the report, noting Grant Thornton were in the second year of 5-year contract, and reminded the Committee that the Council’s financial statements had received an unqualified opinion and the value for money conclusion had received an except for opinion.

The report also noted that the external auditors were meeting regularly with the Interim Director of Finance and other officers to assess how the Council was addressing its budgetary challenges and the value for money (VFM) conclusions. The good progress made on previous recommendations was noted, including that the base budget for each service area was realistic and achievable and that savings plans though stretched were fully costed and deliverable.

Members heard that in response to a question that asked if the Auditors were confident about available resources to undertake the work required it was noted that planning and risk assessments undertaken would help determine if any additional capacity was required. Based on the audit plan it was stated the auditors were confident to deliver the work set out and maintain continuity and they provided reassurance that it would be a priority to ensure the audit findings report and VfM conclusion were delivered by 31 July next year.

Regarding the additional VFM work undertaken regarding Adults and Children’s Services base budgets it was confirmed that this work was specific to the Council, but Somerset was not alone in that aspect to ascertain robustness. It was noted that there was a pending 5 yearly review of the VFM criteria/code and it was anticipated that work on financial resilience and budget setting might form a greater part of the auditor’s role in future.

On the issue of additional work and the associated/increased fees, Members heard that additional work was only suggested when necessary and after agreement and the motivation for auditors was not to make super profits. It was also noted that around 10 years ago the audit fee was much higher, and the work required to complete it was less onerous. However changes to financial legislation meant audits had greatly increased in complexity and the Public Sector Audit Appointments Limited (PSAA) were writing to Council’s to gather views before setting a scale of future fees.

There was a brief discussion about the potential of delivering social value through commercial activity and it was noted that this followed a report from the Local Government Association (LGA) titled ‘Profit with a purpose’. It was noted that the auditors were highlighting this area and it was stated that officers did look at all relevant information. On the question of the cost of audits and if this might be an indicator of the Council’s financial health it was noted that audit work was retrospective, and it could be that additional work and investigation were required due to unforeseen complexity.

The Chair thanked Mr Barber for his work over the last few years, on account of it being the last meeting he would attend in his capacity as the engagement lead to the Council, noting his clear and concise explanations of often complex issues.

The Committee accepted the report and the Chair noted the reassurance provided by the auditors that the scheduled work would be delivered.

The Chair invited the external auditors to introduce their report and welcomed Mr Morris as he would be the new Engagement Lead to the Council. Mr Morris and Mr Barber, provided an overview of the report, noting Grant Thornton were in the second year of 5-year contract, and reminded the Committee that the Council’s financial statements had received an unqualified opinion and the value for money conclusion had received an except for opinion.

The report also noted that the external auditors were meeting regularly with the Interim Director of Finance and other officers to assess how the Council was addressing its budgetary challenges and the value for money (VFM) conclusions. The good progress made on previous recommendations was noted, including that the base budget for each service area was realistic and achievable and that savings plans though stretched were fully costed and deliverable.

Members heard that in response to a question that asked if the Auditors were confident about available resources to undertake the work required it was noted that planning and risk assessments undertaken would help determine if any additional capacity was required. Based on the audit plan it was stated the auditors were confident to deliver the work set out and maintain continuity and they provided reassurance that it would be a priority to ensure the audit findings report and VfM conclusion were delivered by 31 July next year.

Regarding the additional VFM work undertaken regarding Adults and Children’s Services base budgets it was confirmed that this work was specific to the Council, but Somerset was not alone in that aspect to ascertain robustness. It was noted that there was a pending 5 yearly review of the VFM criteria/code and it was anticipated that work on financial resilience and budget setting might form a greater part of the auditor’s role in future.

On the issue of additional work and the associated/increased fees, Members heard that additional work was only suggested when necessary and after agreement and the motivation for auditors was not to make super profits. It was also noted that around 10 years ago the audit fee was much higher, and the work required to complete it was less onerous. However changes to financial legislation meant audits had greatly increased in complexity and the Public Sector Audit Appointments Limited (PSAA) were writing to Council’s to gather views before setting a scale of future fees.

There was a brief discussion about the potential of delivering social value through commercial activity and it was noted that this followed a report from the Local Government Association (LGA) titled ‘Profit with a purpose’. It was noted that the auditors were highlighting this area and it was stated that officers did look at all relevant information. On the question of the cost of audits and if this might be an indicator of the Council’s financial health it was noted that audit work was retrospective, and it could be that additional work and investigation were required due to unforeseen complexity.

The Chair thanked Mr Barber for his work over the last few years, on account of it being the last meeting he would attend in his capacity as the engagement lead to the Council, noting his clear and concise explanations of often complex issues.

The Committee accepted the report and the Chair noted the reassurance provided by the auditors that the scheduled work would be delivered.