Agenda item

To consider the report.

The Audit Committee:

The Interim Chief Finance Officer (Section 151 Officer) was invited to speak.  In turn delegated to the external auditors to first present their audit findings report.

The report set out the final set of 2022/23 financial statements (accounts) for South Somerset District Council and the completion of the subsequent external audit.

The financial statements and letter of management representation required Audit Committee approval, to be finalised.  Along with this, the audit findings report and the auditors draft opinion were presented for noting and provided assurance for the Committee in their approval role.

It was estimated the cost of the external audit would be in the region of £236K.

The Audit Committee asked some questions and made several comments which were responded to at the meeting, as follows:

·       The Committee thanked the staff for completing the audit.  The Council had underestimated the ability of externals it would take to produce accounts and complete the audit. Lessons had been learned.  The Committee would recommend it would have been more cost effective if audits of this type had been done in-house by the Council. 

·       It was an unusual audit in terms of how many adjustments had been reported on.

·       Members noted that a number of key staff had left the Council and this had caused delays.

·       Members queried the computer systems used to produce the South Somerset District Council accounts.  The Committee had discussed the computer systems at previous meetings. This was confirmed as E5 the South Somerset Legacy finance system and not D365.

·       The external audit looked back at legacy council accounts.  The Value for Money report included all the legacy councils who the external auditors acted for and gave recommendations for the new unitary authority.  This had previously been reported to the Committee.

·       The Lead Officer said some final consistency checks had been carried out by the auditors and these were tabled on the day. Subsequently they have been published on the internet.

·       Members were disappointed to see that some assets had been counted twice.

·       The auditors were asked about the level of assurance that could be gained given the number of findings. The external auditors had had to prioritise issues so they could give the greatest level of reasonable assurance possible to the public on the accounts.  The priorities had been set according to levels of risk. The audit opinion therefore gives assurance the accounts are materially correct, now including the adjustments highlighted have been made.

·       Members noted the Council had planned to over-provide to cover the financing of some of its debts (known as Minimum Revenue Provision).

·       There was concern about the number of errors which the legacy council had made in its accounting.  The external auditors explained the use of the unusable and useable reserves which had added up to £9.5m, in response to a focused question from Members. 

·       The reclassification of Huish Park was not the sole cause of the delay in this audit.  Members queried how the classification had been made.  This had been human error which happened because some of the purchase costs had been taken as construction costs. 

·       It was noted that some projects which had been started by the South Somerset District Council such as the Marlborough project had not had chance to come to fruition.  Cllr Sue Osborne requested the figures to know if this project had broken even.  Members said it was important that exit policies always be used.

·       The Officer confirmed the Marlborough buildings had been sold.

·       Members thanked the Chair of the Audit Committee for taking the Council through the enormous task of auditing the legacy council accounts. 

·       Members suggested that a lessons learned action plan be prepared to help other councils.  

·       One of the lessons to be learned was the risk involved in using short-term borrowing for investments.

·       With regard to the accounts, the external auditors said they were reporting to Somerset Council and this should be made clear in the accounts. 

·       Members suggested the report be tidied up before the document was published to the public.  Officers agreed to add an introductory paragraph to the Statement of Accounts for the 2023/24 document to add context, so the public are clear. 

·       Members requested regular updates with regard to the accounts of the Council.  They wished to be assured that the auditing of accounts would not take so long again.

Councillor Simon Coles proposed the recommendations in the report be approved.  Councillor Habib seconded the proposal.

The proposal was carried by 7 votes to 0 votes and 1 abstention.

The Audit Committee: