Agenda Item No. 5

 

The Vale of Glamorgan Council

 

Audit Committee: 28th November 2017

 

Report of the Managing Director

 

Earlier Closedown of Accounts

 

Purpose of the Report

  1. To present to those charged with governance details of the changes to the statutory deadlines for the production and audit of the Council's Statement of Accounts.

Recommendation

  1. That Audit Committee note the changes to the statutory deadlines and the approach proposed by the S151 Officer to addressing these changes.

Reason for the Recommendation

  1. To ensure that the members of the Audit Committee, as those charged with governance, are aware of the changes to the statutory deadlines and the steps that the Council and appointed External Auditors are taking to address these changes.

Background

  1. The Account and Audit (Wales) Regulations 2014 (as amended), provides the regulatory regime underpinning the financial reporting and accounting obligations of local government bodies.
  2. Currently, the responsible financial officer of a local authority is required to certify that the Statement of Accounts gives a true and fair view of the financial position of the year to which they relate, no later than 30th June immediately following that year. The statement must then be published no later than 30th September, with the expectation that the audit of the accounts will be concluded before 30th September and the published Statements of Accounts will contain the auditors' opinion and certificate.
  3. The Statement of Accounts for 2016/2017 was prepared by the 30th June 2017, in accordance with the statutory timeframe. The accounts were signed by the External Auditor on 28th September 2017.

Relevant Issues and Options

  1. A number of disadvantages with the current statutory timetable have been identified by Welsh Government (WG) which are :-

- Local government bodies publish their Statements of Accounts later in the year than most other parts of the public sector;

- The accounts of local government bodies constitute a significant component of the UK-wide Whole of Government Accounts and the current local government timetable is considered to be one of the barriers to HM Treasury bringing forward the publication date of those accounts; and

- The equivalent regulations which apply to English local authorities will bring forward the dates for the preparation and publication of statements of accounts for the financial year beginning in April 2017. This will provide further disparity between the timetables for local government bodies in England and Wales.

  1. The Accounts and Audit Regulations (Wales) 2016 amend the timetable so that the final date on which the responsible financial officer must sign and date the statement of accounts will be brought forward from 30th June to 31st May. It also proposes that the date that the local authority must consider, approve and publish an audited Statement of Accounts will be brought forward from 30th September to 31st July. This revised timetable will be implemented for the financial year ending on 31st  March 2021.
  2. Interim arrangements are put in place for the financial years ending on 31st March 2019 and 31st March 2020. For these financial years, the statement of accounts will need to be signed and dated by the responsible financial officer by 15th June, with an audited statement of accounts published by 15th September. This interim approach will provide the flexibility to identify and resolve any issues ahead of full implementation. It also seeks to reduce pressure on the audit process during the transition to the earlier timetable.
  3. Therefore, in preparation for the statutory changes set out above the Council proposes to set a timetable for 2017/18 that brings the completion of the draft Statement of Accounts forward by two weeks to the middle of June. The current draft closure of accounts timetable is attached at Appendix A. The work for the Accountancy section will continue whilst the Audit is ongoing and this will require careful allocation of resources available to ensure that the external auditors have access to systems, working papers and individuals as required during the audit process.
  4. In addition the Accountancy team is working on a number of actions and engaging where appropriate with the Council's External Auditors and the Council's partners to take a number of actions as set out below;
  • Review of deliverables required for External Audit and the preparation of and content of working papers;
  • Increase the level of Accountancy resource engaged in the preparation of the Statement of Accounts to enable more informed quality assurance and improve throughput;
  • Regular meetings with External Auditor to discuss emerging issues;
  • Increase scale of External Audit review at interim audit stage prior to preparation of the final accounts;
  • Review of what calculations can be carried out on a part year basis or closed based on an estimate e.g. depreciation charges.
  • Identification of critical activities and determination of any actions that can be taken to build in additional capacity in the process. For instance in respect of year end valuations which often causes delays in the closure process engaging with the valuers in the next few months with regard to provision of data earlier in the closing process based on estimates and sense checking the results once actuals are known;
  • Review of the profile of asset valuations carried out as part of the Council's rolling 5 year programme of valuation;
  • Early preparation for proposed accountancy code changes in 2018/19 and 2019/20;
  • Engagement with internal departments to prioritise the provision of information as part of the closing process, e.g. Human Resources, Council Tax, NNDR, Housing Benefits, Property, Schools to ensure that data is provided in a timely manner to feed into the final accounts;
  • Engagement with partners e.g. Cardiff and Vale Pension Fund, other Joint Committee host authorities, External Valuers to ensure that they received the data that they require and that the information we require is received in the correct format in a timely fashion to feed into the Council's accounts; and
  • Early preparation for substantial change to the content of the Statement of Accounts when the proposed Local Authority Trading Company for Catering takes effect in 2018/19 which will require a move to Group Accounts.
  • The section continues to learn about this new process and best practice through the attendance of appropriate officers at meetings such as the Society of Welsh Treasurers and WAO Good Practice Exchange events
  1. The Accountancy structure and interrelationships with regard to closure of accounts is set out at Appendix B.

Resource Implications (Financial and Employment)

  1. The statement of accounts will be produced by using existing staff resources in a different way and therefore efficient working and planning will be crucial. It is important that all departments across the Council give the required priority to the process in order to meet the statutory deadlines.

Sustainability and Climate Change implications

  1. None 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 2014 (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