Content

At the Chairman’s invitation, External
Auditor, Grant Thorntonintroduced this report stating the
following:

·      
Headlines were given on page 4 of
the report. 

·      
This audit was always expected to
be a difficult one, particularly in meeting the backstop for
providing assurance.

·      
It was felt that officers had
produced the best set of accounts they could, particularly as they
had produced 3 sets of accounts one after the other. 

·      
This was a unitary authority
pulling together legacy information from several different
councils. 

·      
Officers had been very
co-operative and they had decided to
work on areas of most value to the Council.  Things that most impacted on decision
making. 

·      
The backstop had been discussed in
previous accounts and they had only
provided a disclaimer on the accounts. 
This was standard across the country because it would take a while
to gain assurance.  

·      
Key areas where they had struggled
were highlighted on page 5 of the report.  These included issues with short term credits and
getting information on Section 106 agreements. 

·      
A statement of the current
situation was also provided.

·      
Significant amounts were
highlighted on page 9 of the report where they had struggled to get
information on journals purely because there were a number of systems involved.

·      
Page 10 of the report showed
accounting policies for fees and charges where they had no concerns
and income recognition.

·      
There had been a lot of work
undertaken with income and council tax which they were happy
with.  They had however struggled to get
all the evidence required in relation to grants.

·      
Expenditure had also been
reviewed and the sampled sizes had been
bigger that year.

·      
They had tried to reduce
materiality in the current year.  They
were only partially through testing of credits but had tested 707
items of expenditure. 

·      
They had struggled with internal
recharges but this was the case with
every council they had audited. 
Officers had reasonable recharges but
these needed to be taken out of the accounts when it was all pulled
together or it would lead to a gross expenditure issue.

·      
Work had begun with land and
buildings and investment properties but
this had not been completed because they felt they were better
focussing time on cash and debts because this would have the most
impact on the Council.

·      
The Council’s systems were
very complex because they came from legacy councils so a new benefits system had been
introduced and the external auditors were happy with how it had
been implemented.

·      
They had experienced some issues
with the valuers with regard to council
dwellings. 

·      
Much had been undertaken around
pension liability.

·      
A lot of time had been spent on
cash and there were a number of legacy accounts so it was difficult to reconcile
them. 

·      
There were also a large number of debt balances from time to time
and they had not received all of the information they
required.  There was a lot to
do and they would focus on cash in the
next year’s accounts.

·      
They had got a long way through
testing of employee benefits. 

·      
There was a variance in VAT and
the Council had been in discussions with HMRC for some time
regarding this. 

·      
Information on what they had been
able to test and where they weren’t able to test was provided
from page 20 of the report.  Whilst they
had got through a lot of samples they
had been unable to provide an overall assurance because they still
had some samples outstanding.

·      
The current situation with the
balance sheet was provided on page 22. 
they had made good progress through the year and would focus on
building the assurance in this respect. 

1.     
 

2.     
In answer to queries on the report
the following was confirmed:

·      
It was felt the backstop would
remain for the future.  For the 2024/25
accounts it was 25 February 2025.  After
that it would move to November but it
would take the Council some time to get qualified accounts
issued.

·      
The backstop did not necessarily
draw a line under the previous accounts. As the opening balances
for 2024/2025 were provided by the 2023/2024 accounts so
comparative figures would have to be shown in each until they got
to a position of being happy with the opening balances.  The only way to get assurance on opening balances
was to go back and re-do all of the
audits.

·      
Physical cash seen in services on
paper needed to be supported by cash that could be seen in the bank
accounts.

·      
Balances would have originated
from the starting point of the borough councils.  Assurance would have to be taken from these
balances.   So the problem was in
being able to identify all of the
accounts of the borough councils.  Cash
records showed long term and short term borrowing so that was
difficult to work out. 

·      
Although auditors had identified
areas of concern in the accounts, some comfort could be taken from
the fact that the external auditors also noted all of the hard work of officers and that the
accounts were the best that could be produced in the
circumstances. 

·      
The Council was attempting to get
back to being able to report things in a timely manner.  Someone undertaking a task could leave and the
person who took over did not know the current situation with the
task.  Timely reporting made the Council
more accurate and provided greater assurance and that was the
position they aimed for. 

·      
There were many reasons for the
position the Council was in.  Corby and
East Northants had been a couple of years behind in their audits,
the old County Council was late in being signed off and a previous
external auditor had not been a great help in this
respect.  It had been a difficult
year but the issues were now known and
could be focussed on.  It was also
thought Central Government could make some changes in audit going
forward.

·      
Grant Thornton had plenty of
capacity and had deliberately downsized the number of audits
undertaken to ensure they kept this capacity.

·      
Timelines, practices and systems
were set up to ensure an audit could be delivered.  Whilst they did not have every piece of evidence
in the way they wanted it and when they wanted it the Council had a
good team who the External Auditors would continue to work
with.

·      
Disaggregation was an issue that
would no longer exist in the following year and they were confident of meeting the
deadlines.

·      
The Council had several legacy
bank accounts and in the past these had
been kept to keep things simple. 
However, this had posed some problems in reconciling some of the
transactions. 

·      
The IT Audit Results Report for
2023/2024 showed all of the IT systems
in scope.   A lot of this work went
back to the harmonisation of the legacy systems and new cash system
had been implemented that year.  A new
system for council tax had also been implemented.  Once all of the legacy
systems were fed into the new system it would be
reviewed.  For this reason the assurance
was shown in yellow but the external
auditors had no concerns in this respect. 

·      
A number
of systems had not
been looked at that year including Care First and Revenue and
Benefits.  The revenue and benefits
system were now on one system and the legacy financial systems
could now be turned off.  They should
all be shut down by the end of June with a short time of
overlapping between the old and new system to ensure all benefits
were received. 

3.     
 

4.     
The report was proposed by
Councillor Paul Marks, seconded by Councillor Bert

5.     
Jackson and unanimously accepted
by all.

6.     
 

7.     
In relation to the Auditors Annual
Report the external auditor stated the following:

·    
The Council was in a similar
position to most councils.  Issues were
shown in the Council’s Medium Term Financial Plan and by
2025/2028 the gap could be as much as £28million.  This was an area of focus with the Council
delivering savings plans but still requiring some of the
reserves.  At some point the Council
should be able to get back into financial balance without the need
to use reserves.

·    
It could also be seen from the
dedicated schools grant that some schools were beginning to go into
deficit.  This had to be
resolved.  The Council had started to
work with the Department for Education (DfE) but there was no magic
formula to correct this issue. 

·    
Another key challenge was the
Northamptonshire Children’s Trust.  Whilst a lot of work had been undertaken to get
this out of deficit it did continue to be in deficit.  There was a need therefore to look at more
transformational work in greater detail. 

·    
Page 203 set out their view of
governance around housing.  There had
been an improvement in getting accounts to the External Auditors
and that needed to continue.  Other
aspects of governance and risk management were all there and it was
felt they were working effectively. 

·    
Page 205 showed how the Council
was managing KPI’s and there were no issues
there. 

·    
There was a need to focus on
housing.  The key recommendation needed
to

8.  
discuss a stock condition survey
and form a realistic action plan.  There
was still a lot to be undertaken to ensure there were no unsuitable
homes in

9.  
Northamptonshire.  Maybe private providers of homes could be given
greater

10.        
prominence as it posed a key risk
in the organisation.

·    
Educational healthcare plans
was something for the Council to focus
on as well.

·    
Finances still presented a
challenge and transformation plans needed to be worked on to ensure
governance was effective. 

·    
A performance board had been set
up to look at this as part of a transformation plan.  It was not just necessarily the Council’s
issue but shared amongst everyone in the Council.  They were making good progress in the
Northamptonshire Children’s Trust, were regularly monitoring
this and reducing some of the deficits they had been
seeing.  More funding was something they
needed to lobby for.  Some things they
did not have control over but there were some action plans that
would come through the Medium Term Financial Plan
process.  

·    
An improvement board had been set
up to address some the issues that had been seen in the housing
stock.  Some of the queries they did not
have the ability to resolve but these would be seen in future
reports.  There were many areas that
were moving in the right direction, just not in time to be included
in this report. 

·    
Whilst it was correct to look at
statutory and non-statutory services when making savings, the
Council did also have some discretion in providing those
services.  Some things could be done
differently to currently.

·    
It was also noted that lobbying
Central Government on behalf of schools was the only way to make
changes to the Dedicated Schools Grant as the Council had no
control over this.

11. 
 

12. 
This report was proposed by
Councillor Mark Jelley, seconded by Councillor Paul Marks and
unanimously accepted by all.

 

RESOLVED that:  the Audit &
Governance Committee Receives:

1)   
the draft Audit Findings Report
for the financial year 2023/24 and draft Disclaimer Opinion
(Appendix A to the report);

2)   
the IT Audit Results Report 2023
(Appendix B to the report); and

3)   
the Auditors Annual report
2023/2024 (Appendix C to the report)