The meeting was held to approve the accounts for the financial years ending 31 March 2022 and 31 March 2023. The external auditors, Ernst & Young, reported that they anticipated issuing a disclaimed audit opinion on the accounts for both years as they were unable to complete the audit in the time available due to the requirements of the local government audit reset. The committee received an update on the financial risk to the Council relating to the High Needs Block deficit of the Dedicated Schools Grant in respect of Special Education Needs provision, a treasury management report for the first 6 months of 2024/25 and a progress update on the work being carried out by the Internal Audit team for the current financial year.

High Needs Block Deficit

The committee received a briefing on the risks and governance arrangements in place to mitigate the Deficit balance on the High Needs Block of the Dedicated Schools Grant in respect of Special Education Needs provision. The draft Annual Governance Statement (AGS) for 2023/24 identified the deficit as a governance risk. Calderdale Council is working with the Department for Education and the Education and Skills Funding Agency to recover the deficit.

The proportion of children and young people in Calderdale with special educational needs and disabilities (SEND) who require an Education Health and Care Plan (EHCP) has risen sharply in recent years. This, combined with a lack of local places, is driving an increase in the number of children being placed in expensive out-of-borough specialist independent provision. Without action, the projected overspend is forecast to be over £13m by the end of 2024/25.

The Council has formed a High Needs Deficit Reference Group, including representatives from schools, post-16 provision, Family Voice Calderdale and health services to oversee the recovery plan. The plan includes:

• Strengthening the assurance and commissioning framework for out of area and independent placements.
• Increasing availability of specialist SEND and alternative learning provision in mainstream schools.
• Transforming children’s support and learning in mainstream schools through the Mainstream Inclusion Calderdale framework.

The Chancellor’s Autumn Budget in October 2024 included an additional £1bn for SEND High Needs DSG but further reform will be needed as part of the Spending Review 2025.

Treasury Management

The committee received an update on Treasury Management activity for the first 6 months of the 2024-25 financial year.

Short term borrowing cost the Council £91,355 during the 6 months to 30 September 2024. The Council borrowed £8m from the Public Works Loans Board (PWLB) at fixed interest rates to support capital projects. The total amount of long-term debt outstanding at 30 September 2024 was £135,590,309. The council has an investment of £5 million with the CCLA Local Authority Property Fund to generate additional income. This has earned £110,357 in the 6 months to 30 September 2024. As at 30 September 2024, the Council had £36.3m of short term investments, which have earned £844,489 in interest in the first 6 months of the year.

Internal Audit Update

The Committee received an update on internal audit activity. Two audits, on Bus Service Operators Grant and Blue Badges & Disabled Passes, have been closed and a new audit was undertaken on Flutter Bites café at Manor Heath Park. Two further grant claims for Bus Service Operators Grant and Heritage Action Zone were certified.

Draft reports are being prepared for work on Travel & Expenses Claims and the Budget Setting and Monitoring and Project Management Governance Arrangements. Three new audits, on SEND Transport, the Capital Strategy & the Medium-Term Financial Plan and Health & Safety are being scoped. The committee reviewed changes to the Internal Audit plan.

It was noted that the team is behind schedule due to a lack of resources. Members were invited to comment on the proposed removal of some lower-priority audits from the plan due to capacity issues. These included:

• Talent Management, Retention & Succession Planning
• Cost of Living Support- actions being taken to support residents
• Deferred Payments
• Business Planning and KPI Reporting
• Social Media

External Audit

The committee noted the external auditor's Audit Completion Report 2021-22 and 2022-23. The report included:

• An interim commentary on the Value for Money arrangements for Calderdale Metropolitan Borough Council covering 2021/22 and 2022/23.
• A report on progress in delivering their responsibilities as external auditors for the year ending 31 March 2024.

Ernst & Young stated that they anticipate issuing a disclaimed audit report for the financial years ending 31 March 2022 and 31 March 2023.

Taking the above into account, for the years ended 31 March 2022 and 31 March 2023 we have determined that we cannot meet the objectives of the ISAs(UK) and we anticipate issuing a disclaimed audit report.

Ernst & Young

The disclaimed opinion is due to time constraints imposed by the audit reset backstop date of 13 December 2024.

Forvis Mazars, the appointed auditors for 2023/24, also submitted a report. They confirmed that they would not be able to complete the audit for 2023/24 by the backstop date of 28 February 2025, which was 3 months earlier than anticipated, and would therefore have to issue an unqualified opinion.

Charity Commission

The Committee received a report detailing the action being taken to respond to an official warning issued by the Charity Commission relating to the late filing of annual returns for thirteen charities where the sole trustee was Calderdale Metropolitan Borough Council. A submission made to the Commission in October 2023 was accepted for the Heath Charity but rejected for the remaining charities. The council has until the end of January 2025 to complete this process.

The Chair, Councillor Martin Hey, requested the Head of Legal and Democratic Services to complete the process of filing the necessary returns to the Charity Commission before 31 January 2025 and to begin working towards maximising the use of these assets.

"RESOLVED that the Head of Legal and Democratic Services be requested to provide an update to the Audit Committee upon resolution of the filing requirements, to include updates on:

a) work done towards mapping and maximising the use of the parcels of land for which Calderdale Council was a sole trustee; and

b) work done towards ensuring there were no statutory or regulatory reporting requirements being overlooked across Calderdale Council."

Minutes, Item 29, Charity Commission