Agenda and draft minutes

Special Meeting - Statement of Accounts, SWT Audit and Governance Committee
Monday, 7th November, 2022 6.15 pm

Venue: The John Meikle Room - The Deane House. View directions

Contact: Amy Tregellas, Email: a.tregellas@somersetwestandtaunton.gov.uk 

Webcast: View the webcast

Items
No. Item

104.

Apologies

105.

Minutes of the previous meeting of the Audit and Governance Committee pdf icon PDF 402 KB

106.

Declarations of Interest

    To receive and note any declarations of disclosable pecuniary or prejudicial or personal interests in respect of any matters included on the agenda for consideration at this meeting.

    (The personal interests of Councillors and Clerks of Somerset County Council, Town or Parish Councils and other Local Authorities will automatically be recorded in the minutes.)

    Additional documents:

    Minutes:

    Members present at the meeting declared the following personal interests in their capacity as a Councillor or Clerk of a County, Town or Parish Council or any other Local Authority:-

     

    Name

    Minute No.

    Description of Interest

    Reason

    Action Taken

    Cllr L Baker

    All Items

    SCC, Cheddon Fitzpaine & Taunton Charter Trustee

    Personal

    Spoke and Voted

    Cllr S Coles

    All Items

    SCC & Taunton Charter Trustee

    Personal

    Spoke and Voted

    Cllr H Davies

    All Items

    SCC

    Personal

    Spoke and Voted

    Cllr T Deakin

    All Items

    SCC & Taunton Charter Trustee

    Personal

    Spoke and Voted

    Cllr D Johnson

    All Items

    SCC

    Personal

    Spoke and Voted

    Cllr J Lloyd

    All Items

    Wellington & Sampford Arundel

    Personal

    Spoke and Voted

     

    Cllr Janet Lloyd declared a personal interest in that she is a member of the Local Government Pension Scheme.

107.

Public Participation

    The Chair to advise the Committee of any items on which members of the public have requested to speak and advise those members of the public present of the details of the Council’s public participation scheme.

    For those members of the public who have submitted any questions or statements, please note, a three minute time limit applies to each speaker and you will be asked to speak before Councillors debate the issue.

    We are now live webcasting most of our committee meetings and you are welcome to view and listen to the discussion. The link to each webcast will be available on the meeting webpage, but you can also access them on the Somerset West and Taunton webcasting website.

    Additional documents:

    Minutes:

    No members of the public had requested to speak on any item on the agenda.

108.

Audit and Governance Committee Forward Plan pdf icon PDF 241 KB

    To receive items and review the Audit and Governance Committee Forward Plan.

    Additional documents:

    Minutes:

    The Committee were advised that the External Auditors Annual Report for 2021/22 had been moved to the agenda on the 12th December 2022, rather than coming before the Committee at this meeting.

     

    During the debate, discussion took place around:

    ·       When there would be clarification as to the reports listed as SWT and/or possibly Unitary and if they would be coming before the Committee in March 2023.  Officers agreed to provide the Committee with a response at their December meeting.

     

    The Committee resolved that the Audit and Governance Committee Forward Plan be noted.

     

    (proposed Cllr Simon Coles; seconded Cllr Janet Lloyd)

     

109.

Audit & Governance Committee action/recommendation tracker pdf icon PDF 249 KB

    To receive an update on the status and progress of actions and recommendations arising from the Audit and Governance Committee meeting held on 12th September 2022

    Additional documents:

    Minutes:

    Amy Tregellas, Governance Manager and Monitoring Officer introduced the action/recommendation tracker, explaining that it had been introduced to monitor the progress of any items picked up at previous meetings.

     

    Updates were:

    ·       The Audit & Governance Committee Terms of Reference had been approved by Council on 29th September 2022

    ·       The queries arising from the Local Government Ombudsman summary of complaints report had been answered, and the information had been circulated to all Councillors on 23rd September 2022

    ·       The Display Screen Equipment information was circulated to all Councillors on Friday 4th November 2022

    ·       Further information on personal safety was to be circulated to all Councillors by 11th November 2022, through the next edition of the Ethical Newsletter

     

    Cllr Lee Baker thanked the officer on behalf of the Committee for following up the items in an efficient way.

     

    The Committee resolved that the Audit & Governance Committee action tracker be noted.

     

    (proposed Cllr Simon Coles; seconded Cllr Tom Deakin)

110.

External Auditors 2020/2021 Key Recommendations Update pdf icon PDF 277 KB

    This matter is the responsibility of the Portfolio Holder for Communications and Corporate Resources, Cllr Benet Allen.

     

    Report Author: Paul Fitzgerald, Assistant Director – Finance and Section 151 Officer

     

    To consider and note the arrangements in place to mitigate risks, and the further actions taken in response to the auditor’s key recommendation.

     

     

    Additional documents:

    Minutes:

    Paul Fitzgerald, Assistant Director Finance and Section 151 Officer introduced the report:

     

    ·       This is an update on a key recommendation that Grant Thornton made in respect of the 2020/21 set of accounts, which related to the level of risk in respect of commercial investment, in particular the total level of investment and our total level of borrowing requirement.    

    ·       Following the recommendation, we’ve had two reviews undertaken by our Internal Auditors (SWAP) relating to the Council’s Commercial investment strategy. The first focused on the governance arrangements that the Council put into place to manage this activity.  Secondly, there was a follow up audit to test the actual implementation of the agreed strategy and making sure decisions being made in line with the agreed strategy and process. In both cases the Internal Auditor gave a substantial opinion which is the highest level of assurance they can give. There were only two recommendations across the reports and both of those were fully implemented.

    ·       Page 23 provides a summary of the risk management factors that are already in place as well as the additional measures that have been put in place to strengthen those measures and to reduce the level of risk.

    ·       Instead of borrowing money, we’ve used £3.5m of the Council’s revenue reserves to finance the purchase of investments.  We’ve also accelerated the debt repayment where we have previously used borrowing to buy assets. Therefore, we have reduced the level of debt that was required to support that particular strategy.

    ·       By the end of this financial year the Council will be down to 92.5% residual borrowing compared with the original £99m total investment.

    ·       The Council holds around £4.8m in our Ear Marked Reserves (EMR) which are specific reserves held to manage and mitigate risk in respect of this activity. If income was to fall there is some cushioning to reduce the impact if a property was void for a period of time.

    ·       The Council currently holds £6m in general reserves which are there to support the budget generally and to help to withstand any unforeseen or unexpected financial risk that may emerge during the course of business.

    ·       The Council has done well with Treasury Management. We have a borrowing requirement which is a lot bigger than we held previously, and we secured loans at a lower interest rate compared to the changes in the market in the last two or three months. We took good action to secure the loans we needed for this financial year which has helped to manage that and reduce the risk in that area.

    ·       As part of the wider management of the capital programme, the Council agreed to remove £35m worth of previously agreed spend from the capital programme which would have been additional borrowing requirement on top of that needed for the commercial investment strategy.

    ·       In summary, we’ve reduced the level of debt and we’ve reduced the future need to borrow for the capital programme, which reduces the level of future borrowing.  This in turn reduces the  ...  view the full minutes text for item 110.

111.

Annual Governance Statement (Audited) 2021/2022 pdf icon PDF 303 KB

    This matter is the responsibility of the Leader of the Council, Cllr Federica Smith-Roberts.

     

    Report Author: Amy Tregellas, Governance Manager and Monitoring Officer

     

    To consider the audited Annual Governance Statement for 2021/22.

    Additional documents:

    Minutes:

    Amy Tregellas, Governance Manager and Monitoring Officer introduced the report:

     

    ·       This is the Annual Governance Statement (AGS) for the 2021/22 financial year which has now been through the external audit process

    ·       The AGS hasn’t changed since it came before the Committee in June 2022. 

    ·       The statement is prepared following the statutory guidance which comes from the Chartered Institute of Public Finance and Accountancy (CIPFA) and the Society of Local Authority Chief Executives (SOLACE) and the framework principles are in paragraph 4.5 of the report on page 86.

    ·       The statement itself starts on page 89 which explains what the council’s governance arrangements have been for the 2021/22 financial year.

    ·       Accompanying that is an action plan, stating on page 117, which sets out actions to be delivered in this financial year. Updates on progress in the actions have been highlighted in red text.

    ·       Grant Thornton colleagues have confirmed that they don’t have any issues with the statement.

    ·       If the Committee approve the statement, the Chief Executive and the Leader of the Council will sign it as the most senior officer and member, and it will be published with the statement of accounts.

     

    During the debate, discussion took place around:

    ·       Member training and development.  The Executive approved the Member Training and Development Policy but that the Member Working Group proposed to look at Member Training and Development had not met due to the pandemic and then being superseded by Local Government Reorganisation and capacity within the Democratic Services Team

    ·       The Unitary Council and that there is a sub workstream focusing on Member Training and Development. 

    ·       An extensive induction training programme was rolled out for the 110 SCC Councillors following the elections in May 2022

    ·       Members sought assurance that training, particularly for specialist areas such as finance, planning and licensing were being considered and arranged.  The officer agreed to bring an update to the next meeting.

    ·       The fact that the only part of the AGS that had changed was the action plan.  The officer confirmed that updates had been given in red to set out those actions that have been completed or are currently in progress

    ·       The officer gave an example from page 117, confirming that the new Somerset wide Members Code of Conduct was signed off by the Council on 6th September 2022 and would feature in the next ethical newsletter.

     

    The Committee resolved to approve the Annual Governance Statement and Action Plan (Appendix B) for 2021/2022.

     

    (proposed Cllr Simon Coles; seconded Cllr Tom Deakin)

112.

External Audit Findings Report 2021/2022 pdf icon PDF 232 KB

    This matter is the responsibility of the Portfolio Holder for Communications and Corporate Resources, Cllr Benet Allen.

     

    Report Authors: John Dyson - Corporate Finance Manager, Jackson Murray – Key Audit Partner, Grant Thornton and Oliver Durbin – Audit Manager, Grant Thornton.

     

    To consider the annual report of the Council’s external auditor Grant Thornton UK LLP outlining the findings from the audit of the 2021/22 Statement of Accounts for Somerset West and Taunton Council.

    Additional documents:

    Minutes:

    John Dyson, Corporate Finance Manager, introduced the report:

     

    ·       Presenting to Members this evening the final statement of accounts for this authority for the 2021/22 financial year.

    ·       Item 8 is the External Audit Findings Report which dovetails with item 10 the Statement of Accounts. The two items will be taken together as there are clear linkages between the two reports.

    ·       The Statement of Accounts are prepared in accordance with International Financial Reporting Standards and a detailed Code of Practice which is backed up by regulations and professional guidance.

    ·       Many other professional also contribute to the compilation of the accounts including teams across the council, qualified valuers, pension fund actuary and treasury management advisors.

    ·       The draft accounts were published on the Council’s website by the statutory timescale of the 30 June 2022.

    ·       The draft accounts and supporting workings are subject to review and independent scrutiny by our external auditors, Grant Thornton. In recent years there have been growing demands in terms of the audit process and scrutiny and challenge, putting a lot of pressure on finance and the audit teams alike in conducting the work following the compilation of the accounts.

    ·       All of this work culminates in the audit findings report agenda item 8. The statement of accounts set before you this evening in agenda item 10 contains a range of adjustments and corrections and these are highlighted in the audit findings report.

    ·       Since the publication of the agenda, one further correction is needed relating to car parks, and the explanatory note sets out the proposed change

    ·       The changes made to the accounts between the initial draft and those that are in the agenda this evening are technical in nature. None of those changes actually impact on the general fund or HRA balances, and no changes have impacted on the reserves except for those made to unusable reserves of a technical nature and also to the capital grants unapplied account.

    ·       CIPFA, working in tandem with the government and other parties are formulating a statutory override of an accounting treatment relating to infrastructure assets, that sits on the balance sheet under property, plant and equipment. The statutory override is needed to enable local authorities to conclude their accounts for 2021/22. That matter is outside of our control.

    ·       Once the override and any guidance has been issued it is anticipated that some form of confirmation or explanation will be added to the accounting policies set out in the statement of accounts. This will then be a minor adjustment to those which will be made after this evenings meeting.

    ·       In terms of the report recommendations, the committee is asked to consider the accounts as presented alongside the adjustment for car parks which we advised separately on at the end of last week. Due to the likely delay caused by the statutory override, it is requested that the committee delegate authority for the final approval of the statement of accounts to the committee chair in consultation with the Assistant Director Finance S151 Officer.

    ·       In terms of  ...  view the full minutes text for item 112.

113.

Somerset West and Taunton Council Statement of Accounts 2021/2022 pdf icon PDF 317 KB

    This matter is the responsibility of the Portfolio Holder for Communications and Corporate Resources, Cllr Benet Allen.

     

    Report Author: John Dyson, Corporate Finance Manager

     

    To consider the Somerset West and Taunton Council Statement of Accounts for 2021/22 (Appendix A) and a draft Management Letter of Representation (Appendix B). 

     

    This report also links to and reflects the Audit Findings Report, prepared by the Council’s external auditors – Grant Thornton UK LLP. Through the course of the audit, a range of amendments have been identified for correction within the accounts.  A schedule of these is set out in the Audit Findings Report, which has been tabled earlier in the meeting of this Committee.  

    Additional documents:

    Minutes:

    John Dyson, Corporate Finance Manager introduced the report:

     

    ·       Confirmed that his earlier presentation for agenda item 8 covered the matters relating to the Statement of Accounts.

    ·       I would also like to point out that within the statement of accounts that have been issued the balance sheet assumes that will be signed as of today i.e. 7 November 2022 and the statement of responsibilities likewise, and that when we have gone through the process of applying the statutory override we will be changing the dates of those two statements.

     

    During the debate, discussion took place around:

     

    ·       Page 184 note 15 and whether minus investment property figure of £1,150k in 2020/21 was a loss and whether the figure of minus £5,754k in 2021/22 was a bigger loss than the previous year.  The officer confirmed that a negative represents a credit and therefore in this instance it was positive income.  The figures show that the Council received more rental income in 2021/22 than in 2020/21.

    ·       Page 190 shows a figure of £4,570 listed as short term creditors.  The officer was asked to give an example of who a short term creditor is.  The officer confirmed that a short term creditor arises where the Council owes money to businesses as at the 31March 2022, but where it will be paid in less than twelve months

    ·       What the Council’s standard payment terms are when an invoice is received from a business.  The officer confirmed that our standard payment terms are 30 days unless the arrangement with the business stipulates something different.

    ·       Whether the Council pays businesses quickly to support them during the cost of living crisis.  The officer confirmed that there was a push during the pandemic to pay invoices in the next payment run once the invoice had been confirmed as valid.  We now do one or two payment runs a week to ensure that businesses are paid in a timely manner.  A Councillor confirmed that the Council’s approach had been well received by local businesses during the pandemic.  

     

    The Committee resolved to approve the recommendations in the report plus an addition recommendation (d):

     

    The Committee is recommended to:

    a.    Note the Auditor’s unqualified opinion on the Statement of Accounts (Appendix A) – this remains subject to an update on the matter of a statutory override regarding the accounting treatment of Infrastructure Assets under the CIPFA Code of Practice

    b.    Either approve the 2021/2022 Statements of Accounts as attached to this report (Appendix A – as updated as per recommendation d below) or, if Somerset West and Taunton Council must await conclusion of the statutory override, delegate final approval of the 2021/2022 Statement of Accounts to the Chairman of the Committee, in consultation with the Vice Chairman and the Assistant Director – Finance (S151 Officer)

    c.     Endorse the Chairman of the Committee to sign the Management Letter of Representation (Appendix B) in respect of the financial statements for the year ended 31st March 2022.

    d.    The Balance Sheet (Page 17 of the  ...  view the full minutes text for item 113.