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Agenda Item No. 4

 

The Vale of Glamorgan Council

 

Audit Committee: 21st September 2016

 

Report of the Managing Director

 

Audit of the 2015/16 Financial Statements - Reporting to Those Charged with Governance

 

Purpose of the Report

  1. To present to those charged with governance the report of the Auditor General for Wales Huw Vaughan Thomas, following the audit of the Council's Financial Statements for 2015/16.

Recommendation

  1. That the report of the Appointed Auditor on the audit of the Council's Financial Statements for 2015/16 be approved and the Financial Statements including the Final Letter Of Representation be recommended for signature by those authorised.

Reasons for the Recommendations

  1. To ensure that the members of the Audit Committee, as those charged with governance, have considered the results of the audit of the Council's Financial Statements for 2015/16.

Background

  1. The Council is responsible for the preparation of the Financial Statements that present fairly its financial position as at 31st March 2016. Huw Vaughan Thomas of the Wales Audit Office in his capacity as Auditor General for Wales is responsible for reporting whether, in his opinion, this is indeed the case. The audit was undertaken by the Wales Audit Office (WAO), as the Council's Engagement Lead, on behalf of the Appointed Auditor.
  2. The Statement of Accounts for 2015/16 was prepared by the 30th June 2016, in accordance with the statutory timeframe.
  3. With the audit of these Financial Statements now substantially complete, a report detailing the key matters arising from the audit must be reported by the Auditor General for Wales to those charged with governance, in accordance with the International Standard on Auditing (ISA 260). In line with its terms of reference, the Audit Committee represents the appropriate body to which this report must be communicated.

Relevant Issues and Options

  1. The 2015/16 Statement Of Accounts incorporating all agreed amendments and the final Letter Of Representation is attached at Appendix 1 and the Report of the Auditor General for Wales is attached at Appendix 2.
  2. The provisional findings of the WAO on behalf of the Appointed Auditor on the audit of the Financial Statements are that :
  • There are some concerns about the qualitative aspects of the accounting practices and financial reporting which did not impact on the accuracy of the accounts. In this respect, the WAO will compile an additional report, setting out their recommendations arising from the final accounts audit.
  • They did not encounter any significant difficulties during the audit. There were no significant matters discussed and corresponded upon with management which need to be reported.
  • There are no other matters significant to the oversight of the financial reporting process that they need to report on.
  • They did not identify any material weaknesses in the internal controls.
  • There are not any other matters specifically required by auditing standards to be communicated to those charged with governance.
  1. There are a number of audit adjustments that need to be reviewed to ensure that the proposed adjustments are materially correct. As part of the Audit process a number of audit adjustments have been discussed by the WAO and the Section 151 Officer and agreed as follows :
  • IAS19 Pension Fund Actuarial Figures: The IAS19 figures within the draft statements have been updated by the actuary to reflect the transfer of staff from the Council to the Vale, Valleys and Cardiff Regional Adoption Service and the Shared Regulatory Services Joint Committees, and as the revised figures have only very recently been provided by the pension fund actuary to the Council the audit review remains incomplete.
  • Accounting treatment of non-enhancing capital expenditure: The audit identified that the Council had not accounted for this expenditure in accordance with the Code. The Council has agreed to amend the financial statements in regard to this matter and the proposed adjustments are in the process of being reviewed.
  • Reclassification of an asset from Surplus Assets to Assets Held for Sale: A review of the working papers to support a recently agreed reclassification adjustment is currently being undertaken.
  1. There is one non material misstatement identified which has been discussed with management and remains uncorrected. The issue concerns Contractor retentions that have not been treated as Capital Creditors.
  2. It is the intention of the Appointed Auditor to issue an unqualified audit report on the Financial Statements once the relevant Council Officers have provided a signed Final Letter of Representation.

Resource Implications (Financial and Employment)

  1. As stated in the body of the report.

Sustainability and Climate Change implications

  1. Nome as a direct consequence of this report.               

Legal Implications (to Include Human Rights Implications)

  1. The Statement of Accounts is prepared in accordance with the requirements of the Accounts and Audit (Wales) Regulations 2005 (as amended).

Crime and Disorder Implications

  1. None as a direct consequence of this report.

Equal Opportunities Implications (to include Welsh Language issues)

  1. None as a direct consequence of this report.

Corporate/Service Objectives

  1. Reliable Financial Statements assist the Council in managing its assets more efficiently and thereby promotes the achievement of the Council's aims in respect of Community Leadership.

Policy Framework and Budget

  1. The proposals in this report are in accordance with the policy framework and budget.

Consultation (including Ward Member Consultation)

  1. None.

Relevant Scrutiny Committee

  1. Corporate Performance and Resources

Background Papers

None

Contact Officer

Carys Lord, Head of Finance & Section 151 Officer

Directorate of Resources

Officers Consulted

Engagement Lead - Wales Audit Office

Responsible Officer:

Rob Thomas - Managing Director