Agenda item

Ernst & Young, the Council’s External Auditors will present the Annual Audit Letter for year ended 31 March 2015.

Mr R Murray, Ernst and Young presented the Annual Audit Letter for the year ended 31 March 2015.

Mr R Murray explained that the purpose of the Annual Audit Letter was to communicate the key issues arising from the External Auditor’s work to the Members and external stakeholders, including members of the public.

It was explained that matters reported in the Annual Audit Letter were those Ernst and Young considered most significant for the Borough Council of King’s Lynn and West Norfolk.

Members’ attention was drawn to the following sections of the Annual Audit Letter:

·         Executive Summary – on 29 September 2015, unqualified audit opinion on Council's financial statements/unqualified value for money issued.

·         Key Findings.

·         Control Themes and Observations.

·         Looking Ahead.

·         Fees – the overall additional fee for 2014/15 was £4,800, the majority of this additional fee related to the additional work required regarding the preparation of group accounts for the first time.

Councillor Collop referred to section 2.2 value for money conclusion – the financial plan currently placed reliance on £3.3 million of funding from New Homes Bonus in 2016/17 and 2017/18 and asked the importance of including this income to fund the base budget.  In response, Mr Murray explained that a number of Councils were concerned about the future of the New Homes Bonus and the External Auditors had raised this point as any reduction in Government funding in future years, together with an increased use of reserves represented a risk to the achievement of the Council’s future budgets.

The Assistant Director commented that the Comprehensive Spending Review announcement was expected on 25 November 2015 and that currently the New Homes Bonus income had been included in the Council’s budget.  With regard to use of reserves, the Council had a planned approach in place to utilise the General Fund Reserve and the Cost Reduction Programme (which had been implemented in 2009 and had achieved significant savings).

The Chairman, Councillor Humphrey reminded the Committee that the Council had put a three year programme in place to address the budget gap and that the Council has also undertaken a cost reduction exercise to achieve savings.

In response to questions from the Chairman, Councillor Humphrey on Highways Network Asset (formerly Transport Assets), the Assistant Director explained that the this was a change from the existing requirement to account for those assets under Depreciated Historic Cost which would be effective from 1 April 2016.  This would present a bigger challenge for Norfolk County Council.  However, the Borough Council did have a number of highway assets, for example, bridges at various locations, etc and would need to be re-evaluated.

Councillor Collop referred to the earlier deadlines for production and audit of the financial statements 2017/18 and asked if this would present a resource issue for the Council.  In response, the Assistant Director explained that a key change in the regulations was that from the 2017/18 financial year the timetable for the preparation and approval of accounts would be brought forward as set out below:

·         Current Arrangement:  Close down of accounts 30 June, audit of accounts 30 September.

·         New Arrangement:  close down of accounts 31 May, audit of accounts 31 July.

The Council was taking a planned approach and for the Financial Year 2015/16 the timetable had been scheduled for close down of accounts on 31 May 2016 and it was therefore anticipated that Ernst and Young would start the audit in early July 2016.

In response to questions from Councillor Devereux on the group accounts for Alive Management and Alive Leisure, the Assistant Director explained that Alive Management accounts would be prepared in line with the Borough Council as it was a requirement to publish them as group accounts.  However, with regard to Alive Leisure it was noted that the deadlines were different, but initial discussions had taken place to try and align them with the Borough Council’s deadlines.

RESOLVED:  The Annual Audit Letter for the year ended 31 March 2015 be noted.