Agenda item

** Appendix 1 to follow as it is currently being finalised**

Report of the Chief Financial Officer and Head of Finance and Procurement

Summary

To allow Members to consider the Auditors’ Annual Governance Report which includes comments on the audit of the 2011/12 Statement of Accounts.

Recommendations

The Accounts, Audit and Risk Committee is recommended:

(1)               to consider the matters raised in the report before approving the 2011/12 financial statements and recommending to Council (pages 7 to 8);

(2)               to take note of the adjustments to the financial statements set out in this report

(3)               to approve the letter of representation on behalf of the Council as set out in the appendix.

(4)               To agree the response to the proposed action plan as set out in the appendix.

The District Auditor submitted the External Audit Annual Governance Report.

The Committee heard that due to outstanding work from the Audit Commission, it had not been possible to publish the Annual Governance Report with the agenda and it was tabled in hard-copy for consideration at the meeting.

The Committee was advised that during the Audit, the Audit Manager assigned to the Council by the Audit Commission, Nicola Jackson, applied for and was successful in attaining the position of Corporate Finance Manager for Cherwell District Council and South Northamptonshire Council. In order to safeguard the independence of the audit, Nicola Jackson was replaced as Audit Manager by Alan Witty to complete the audit. Alan Witty undertook a full file review of the work completed by the team during the audit to ensure the report had been independently checked.

The District Auditor reported that the Council’s draft financial statements were approved by the Committee on 27 June 2012 and certified by the Council’s Director of Resources on 29 June 2012. However, the Accounts and Audit (England) Regulations 2011 required that the Committee approve the final version of the Accounts on behalf of the Council by 30 September 2012.

The Committee heard that the District Auditor had concluded that the Council had made proper arrangements to secure economy, efficiency and effectiveness in its use of resources.

The District Auditor had originally identified an error of £46,000 relating to the rental income from Castle Quays, which had subsequently been corrected.

The Committee was advised that the District Auditor had identified significant risks in relation to recovering funds from Icelandic banks and the failure of the Council’s cash collection arrangements to comply with Payment Card Industry data security standards. It was reported that the District Auditor was satisfied that appropriate action on these issues had been agreed with the Council.

The Committee heard that the implementation of joint working arrangements with South Northamptonshire Council had resulted in a number of redundancies during 2011 – 2012. The District Auditor had concluded that the rationale and approval for the redundancies was generally satisfactory, but that the Council had not retained robust evidence to support some of the key decisions made.

In relation to any future severance arrangements, the Committee was informed that a system would be introduced to ensure supporting documentation was available to evidence all decisions made by the Council.

The Committee was advised that three weaknesses of internal control had been identified and resolved with the Council’s management, specifically:

(a)                 the retention of evidence to support the checking of Capita’s work on Council Tax;

(b)                 the reconciling of Pay and Display car park income from the Council’s machines to its bank account; and

(c)                  the reconciling of the Council’s Co-op bank account.

The Committee heard that the Audit Commission had paid a rebate of £9,147 to the Council to reflect the attainment of internal efficiency saving, which had reduced the Commission’s annual audit fee for 2011 – 2012 to £105,191.

Resolved

(1)               That the matters raised in the draft Annual Governance Report be noted, prior to approval of the 2011 – 2012 financial statements.

(2)               That the adjustments to the financial statements stated in Appendix Three of the Annual Governance Report be noted.

(3)               That the Draft Letter of Management Representation outlined in Appendix Four of the Annual Governance Report be agreed.

(4)               That the Action Plan outlined in Appendix Six of the Annual Governance Report be agreed.