Agenda item

To receive and consider a summary of the key findings arising from the work of Grant Thornton, auditors for Westminster City Council and its subsidiaries, joint ventures and associates for the year ended 31 March 2020 in line with the auditors’ Audit Findings Reports of 10 September 2020 and 2 December 2020. To consider the auditors’ assessment of the Council’s financial statements and arrangements to secure value for money (VFM) in its use of resources.

3.1       The Committee received a report from its external auditors, Grant Thornton, on the Annual Audit Letter. The Committee heard that, as per the November 2020 audit report, all local authorities had experienced similar issues in respect of valuations and the COVID-19 pandemic. However, the Committee was advised that there were no issues in respect of use of statutory powers and that the audit was now certified as closed.

3.2       The Committee heard that the action plan would be agreed with the audit authority for 2021 regarding improving record-keeping on valuations and that the City’s overall financial position and recognition of upcoming challenges was rated as “very strong”. The Committee heard that the fee process, subject to agreement with the Public Sector Audit Appointments, was yet to be determined.

3.5       The Committee heard that Paul Dossett for Grant Thornton had spent the maximum five years permitted as external auditors’ engagement lead for the City of Westminster, and noted that the City had a strong financial management culture. Paul Dossett introduced the Committee to his successor at Grant Thornton, Sarah Ironmonger.

3.6       The Committee discussed various key themes, including slippage on the capital programme; valuations; the use of remote technology; and providing timely data to the valuer. The Committee queried when slippage on a Capital Programme scheme was considered to have adverse impact. The Committee was advised that this depended upon context, the Local Authority’s understanding of reasons for slippage, mitigation arrangements, and plans for review. It was noted that there were no serious issues with the Council’s approach.

3.7       The Committee raised issues with respect to values of land and buildings seeming to be related to processes and systems rather than market fluctuations. The Committee queried whether annual valuation was necessary, given small variation in property values generally each year, and whether having annual valuations was a decision for the Council. The Committee was advised that the Council would be developing an action plan to address such process and system issues. Further, the Committee heard that, regarding regularity of valuations, this was complex as the CIPFA code demanded investments be valued annually, and assets valued on a five-yearly basis. The Committee was advised that, for the ease of meeting the five-yearly requirements, annual valuations might be most useful though this might not necessarily be considered the best use of council funds.

3.8       The Committee queried whether the use of remote technology to gather audit evidence during COVID-19 was sufficient. The Committee raised concerns about record-keeping and queries about benchmarks or comparators to help improve the Council’s understanding and approach. The Committee was advised that a mixed approach had been taken whereby the external auditors, Grant Thornton, in the proximity of sites had carried out physical visits and had used resources such as Google Maps where this could not be done. Regarding record-keeping, the Committee heard that the City had a complex portfolio and was aware that the classification of assets could be an issue, therefore improvements to the process would form part of the action plan. The Committee noted the clear need to provide timely and accurate data to the valuer and suggested that valuation guidance should be produced for the Council to aid this process.

3.9       RESOLVED: that the Committee note the report.