Agenda item

Report from Grant Thornton, External Auditors.

5.1       The Committee received a report from the Council’s external Auditors, Grant Thornton, on the key findings arising from their audit of the Council’s 2016-2017 financial statements (Council and Pension Fund).

5.2       The chairman announced that the publication of the papers did not meet the statutory deadline.  These were circulated to the committee at the earliest opportunity once Grant Thornton had completed the necessary work to be able to report to members the findings from the audit of the accounts.  He agreed to accept the report and its appendices as a matter of urgency.

5.3       Paul Dossett summarised the findings for the City Council’s financial statements while Elizabeth Jackson summarised the findings for the City of Westminster Pension Fund.  The Auditors expected to issue unqualified audit opinions on both sets of financial statements.

5.4       The Auditors had identified no adjustments affecting the Council’s reported financial position. 

5.5       The auditors considered that the Council prepared a good quality set of de-cluttered draft accounts for audit, and the supporting working papers were of a high quality.  The Auditors highlighted that a small number of key working papers were not available on the agreed to-date so samples could not be picked in advance of the on-site visit commencing.  Minor improvements and enhancements were recommended to improve the presentation of the financial statements. 

5.6       The committee was informed that in the conduct of its audits Grant Thornton did not have to alter or change its audit approach in respect of the Council’s financial statements which it communicated to the committee in its Audit Plan dated 9 February 2017.  However, it did refocus the significant risk for the Managed Services Partnership to focus on the control environment for posting journals and completeness of the General Ledger through the operation of journals across the tri-borough.  In respect of the Pension Fund, upon receipt of the draft financial statements it had identified changes to its planned approach around the Managed Services Partnership as referenced previously and identified a new risk in relation to Level 3 Investment Valuation. 

5.7       The auditors drew attention to a small number of control issues in both the Council and Pension Fund financial statements that included accruals and creditors for the Council being posted during 2016-2017 (Council accounts) and a backlog in processing changes to Members data in the pensions administration system (Pension Fund).

5.8       The Auditors concluded that in all significant aspects the Council had proper arrangements in place to secure value for money in the use of its resources.

5.9       To date the auditors had not received any objections from members of the public on the accounts.

5.10    In respect of the significant risk around the appeals provision for National Non-domestic Rates (Business Rates) the audit findings highlighted that the provision has reduced significantly in 2016/17 and that the auditors were satisfied with management’s judgements for the movement in the year after challenging the assumptions made.  Members asked about the possible impact should a larger than expected volume of appeals come forward.  The City Treasurer explained that he had met with representatives of the Valuation Office Agency and the Valuation Office Tribunal and had encouraged them to speed up the determination of appeals.  He had also raised the particular risks for the City Council with the Department for Communities and Local Government.

5.11    With regard to the financial outturn, members asked the auditors for their views on the level of Council reserves.  Mr Dossett commented that he considered that the current level of reserves were not excessive, that local authorities will face significant challenges over the next 4 years and reserves are necessary to support the Council’s financial resilience.

5.12    RESOLVED: That the audit findings and subsequent recommendations from Grant Thornton be noted