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Agenda Item No 7

The Vale of Glamorgan Council

 

Audit Committee: 27th July 2016

 

Report of the Head of Finance as Section 151 Officer

 

Unaudited Statement of Accounts 2015/16

Purpose of the Report

  1. The Statement of Accounts for the Vale of Glamorgan Council and the Shared Regulatory Service for 2015/16 and the Annual Return for the Vale, Valleys and Cardiff Regional Adoption Service are now complete and are brought to the Committee for review and comment prior to the commencement of the external audit.

Recommendations

  1. That the unaudited Vale of Glamorgan Council Statement of Accounts for 2015/16 be reviewed and any comments of the Committee be referred to the Head of Finance as Section 151 Officer for subsequent discussion with the Council's external auditors Wales Audit Office.
  2. That the unaudited Joint Committee Shared Regulatory Statement of Accounts for 2015/16 and the Shared Regulatory Services Annual Governance Statement be reviewed and any comments of the Committee be referred to the Head of Finance as Treasurer of the Joint Committee for subsequent discussion with the external auditors Wales Audit Office.
  3. That the Annual Return for the Vale, Valleys and Cardiff Regional Adoption Service 2015/16 be reviewed and any comments of the Committee be referred to the Head of Finance as Treasurer of the Joint Committee for subsequent discussion with the external auditors Wales Audit Office.
  4. That the actions following the Council's external auditors recommendations for the 2014/15 accounts be noted.

Reasons for the Recommendations

  1. To allow for the initial review of the unaudited Vale of Glamorgan Council Statement of Accounts by those charged with governance.
  2. To allow for the initial review of the unaudited Shared Regulatory Service Statement of Accounts and Annual Governance Statement by those charged with governance.
  3. To allow for the initial review of the unaudited Valleys, Vale and Cardiff Regional Adoption Service Annual Return by those charged with governance.
  4. To keep Audit Committee informed of the Council's progress against the implementation of the External Audit recommendations.

Background

  1. Under the Accounts and Audit (Wales) Regulations 2014 the Statement of Accounts must be certified by the Section 151 Officer before the 30th June as presenting a true and fair view. The 2015/16 Statement of Accounts for the Council and Shared Regulatory Service and also the Annual Return for the Vale, Valleys and Cardiff Regional Adoption Service were certified as such on 30th June 2016.
  2. The 2015/16 Vale of Glamorgan Statement of Accounts will be subject to external audit and the audited accounts will be presented to Audit Committee in September 2016 along with the external auditor's ISA 260 report for review prior to being submitted for approval by Council before 30th September 2016.
  3. The 2015/16 Shared Regulatory Services Joint Committee Statement of Accounts will also be subject to external audit and the audited accounts will be presented to Audit Committee in September 2016 along with the external auditor's report for review prior to being submitted for approval by the Shared Regulatory Service Joint Committee.
  4. The external audit extends to the Annual Governance Statements for both the Vale of Glamorgan Council and the Shared Regulatory Service. The Annual Governance Statement for the Vale of Glamorgan Council is not included in the version attached at Appendix A as it is included under a separate item on the Audit Committee agenda. The Annual Governance Statement for the Shared Regulatory Service is included in Appendix B.
  5. The Vale, Valleys and Cardiff Regional Adoption Service accounts are not subject to a full external audit by Wales Audit Office but an Annual Return has been completed by Accountancy and Internal Audit as at 30th June and is attached at Appendix C. Wales Audit Office will be providing a limited assurance audit for the service.
  6. As part of the 2014/15 Audited Accounts a number of Audit Recommendations were made in the ISA260 document as set out below;

Matter Arising

Priority

Description

Recommendation

1

High

Debtors Evidence

The Authority should retain sufficient evidence to support individual debtor balances disclosed in the Statement of Accounts.

2

High

Creditors Evidence

Management should produce at Year end a report of all outstanding purchase orders. This should be retained for Audit Purposes.

3

Low

Bad Debt Provision

Management should review the bad debt transactions to identify how much they are likely to recover. The provision should then reflect this amount and the old irrecoverable debts written off.

4

Medium

Provisions

Management should review provisions on an annual basis to ensure that items classified as provisions meet the definitions set out in IAS37.

5

Low

Employee Emoluments

Management should review the basis for the employee costs charged to the Vale of Glamorgan Council and the other local authorities, to assess the substance of the transaction.

6

Medium

Journals

Management should consider and implement a journal authorisation process to enhance the financial control environment.

       

Relevant Issues and Options

  1. The 2015/16 Vale of Glamorgan Council Statement of Accounts is attached at Appendix A and has been prepared in accordance with the requirements of the International Financial Reporting Standards (IFRS). This is intended to provide for comparable accounts across all accounting boundaries, public and private, national and international. The Shared Regulatory Service Joint Committee 2015/16 unaudited Statement of Accounts is also attached at Appendix B and the Vale, Valleys and Cardiff Joint Committee Annual Return 2015/16 is attached at Appendix C.
  2. It is proposed that any comments of the Committee on the Vale of Glamorgan Council 2015/16 unaudited Statement of Accounts, Shared Regulatory Service Joint Committee 2015/16 unaudited Statement of Accounts or the Vale, Valleys and Cardiff Joint Committee Annual Return 2015/16 be referred to the Head of Finance as Section 151 Officer and Treasurer of the Joint Committee respectively for subsequent discussion with the Council's external auditors, Wales Audit Office.
  3. The actions taken against the 2014/15 matters arising recommendations are set out below;
  4. Matter Arising 1 - Debtors Evidence

Debtors Evidence has been routinely collected as part of the closing process, however, to ensure that supporting evidence was retained over a certain value it was a specified action that document was saved onto a central folder for all individual debtor balances that exceeded £50k as part of the closing process.

  1. Matter Arising 2 - Creditors Evidence

A report of outstanding purchase orders was run as part of the closing process and was circulated to Accountants for review as part of the closing process to enhance the audit trail and evidence that appropriate accruals are made for outstanding purchase orders.

  1. Matter Arising 3 - Bad Debt Provision

A review was carried out in year of all debt collected that related to bills that were more than one year old. This actual debt collection data was used to calculate how much bad or doubtful debt should be provided given the age of the debt. Development work remains ongoing with Internal Audit to produce a corporate procedure.

  1. Matter Arising 4 - Provisions

A review of all provisions has been carried out in year and as a result £787k has been unearmarked as part of the 2015/16 closing process.

  1. Matter Arising 4 - Employee Emoluments

Work on jointly funded staff was carried out as part of the closing process. Where staff were funded 50% or more by the Vale of Glamorgan Council and the employment contract was with the Council the staff were included in the Employee Emoluments calculation as it was considered that the balance of risk was with the Council.

  1. Matter Arising 4 - Journals

An internal audit was carried out in year on the main accounting system and included the financial control arrangements for Journals. The internal audit report made the following evaluation of the current journals process;

The current control framework surrounding the journal process is effective. Although it is noted that without an authorisation control, the Accountancy team should ensure that the existing controls are maintained and there is routine monitoring of the process.

Therefore, given the resources implications of an authorisation control and the above findings the Council has not introduced an authorisation step in the Journals process but will continue to keep this area under review.

Resource Implications (Financial and Employment)

  1. The 2015/16 Vale of Glamorgan Statement of Accounts, Shared Regulatory Service Statement of Accounts and the Vale, Valleys and Cardiff Regional Adoption Service Annual Return have been prepared within existing staff resources.

Sustainability and Climate Change Implications

  1. None as a direct result of this report.

Legal Implications (to Include Human Rights Implications)

  1. The Statement of Accounts is prepared in accordance with the Accounts and Audit (Wales) Regulations.

Crime and Disorder Implications

  1. There are no Crime and Disorder Implications arising out of this report.

Equal Opportunities Implications (to include Welsh Language issues)

  1. There are no Equal Opportunities Implications arising out of this report.

Corporate/Service Objectives

  1. There are no Equal Opportunities Implications arising out of this report.

Policy Framework and Budget

  1. This is a matter for consideration by Audit Committee as those charged with governance.

Consultation (including Ward Member Consultation)

  1. None

Relevant Scrutiny Committee

  1. Corporate Performance and Resources

Background Papers

2015/16 Unaudited Statement of Accounts

Contact Officer

Gemma Jones

Principal Accountant

Resources

Tel: 01446 709152.

Officers Consulted

None

Responsible Officer:

Carys Lord Head of Finance

Section 151 Officer

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