Agenda item

The External Auditor KPMG submits the ISO 260 Report to those charged with governance, a report that summarises the key findings of the 2017/18 audit of Leicester City Council, the Auditors’ assessment of the Council’s arrangements to secure value for money (VFM), and the requirement for Members to authorise the Director of Finance to sign the letter of representation to KPMG from the Council.

The Committee will be asked to note the report and approve the letter of representation.

Details of the Annual Governance Report will be circulated to Members of the Committee as soon as they are available.

Second Despatch

Additional information relating to the External Audit ISA260 Report 2017/18 is now attached.

Councillor Bajaj joined the meeting.

The External Auditor KPMG submitted the Annual Governance Report, known as the ISA 260 Report to Those Charged with Governance. This included the key findings arising from the audit of Leicester City Council’s financial statements for the year ended 31^st March 2018 together with the Auditors assessment of the council’s arrangements to secure value for money (VFM) in its use of resources.

Members were reminded of the requirement for the Chair of Audit and Risk to sign the letter of representation to KPMG from the council in connection with the audit of the council’s financial statements.

KPMG anticipated issuing an unqualified audit opinion on the Authority’s financial statements by 31^st July 2018, this being the date by which the statements should be finalised, signed and published.

Members’ attention was drawn to the following:

·         Four risks were highlighted at the last meeting: Valuation of property, plant and equipment (PPE), Pensions Liabilities, Faster Close and New Payroll system;

·         There were a number of elements of work outstanding as listed at page 3 of the report, it was noted this was normal practice but that work would continue to the end of the week and included final disclosures regarding the Pension fund and work around the Collection Fund (Council Tax and Business Rates income);

·         Valuation of PPE – it was determined that the valuation of land and buildings recognised in 2017/18 was appropriate;

·         As referred to at the last meeting the change to the payroll system had given rise to a significant amount of extra work especially in relation to concerns over super user access. Members were assured nothing untoward was done to the system however due to the risk there was a recommendation arising from that in terms of the project management;

·         Prior year Journal controls recommendation was reiterated – as reported previously it was noted that a work flow based system of authorisation would be introduced once the new finance ledger system was fully implemented.

In terms of Value for Money (VFM) arrangements KPMG anticipated that an unqualified VFM opinion would be issued on 31^st July 2018. Financial resilience across the local authority sector was noted as a significant VFM audit risk and the challenge remained albeit work had been done at the council around financial resilience and the processes in place were fit for purpose.

It was confirmed that one related party disclosure remained outstanding and the Director of Finance had asked that members’ attention be drawn to the fact that Councillor Porter had again failed to complete his annual related party disclosure. Members noted that the disclosure was an annual requirement when producing the Statement of Accounts and that Councillor Porter had not complied for a number of years. Members expressed concern that Councillor Porter continually failed to complete his annual related party disclosure and discussed sanctions. Officers confirmed that numerous attempts had been made this year and in previous years to encourage compliance. Members also noted that following the closure of the 2016/17 accounts, the former Chair to the Committee had written to Councillor Porter.

The Chair indicated that the sanctions and powers of Full Council should be further explored and agreed to liaise with the Monitoring officer and Director of Finance outside of this meeting.

The Chair thanked the external auditor (KPMG) for their work and the report.

RESOLVED:

1.    That the ISA 260 Report to Those Charged with Governance be received and noted,

2.    That the Director of Finance be authorised to sign the letter of representation to KPMG from the council in connection with the audit of the Authority’s financial statements,

3.    That sanctions and powers of Full Council be further explored by the Monitoring Officer in relation to non-completion of related party disclosures.