To present for approval the 2013/14 Statement of Accounts for Central Bedfordshire Council and the letter of representation to the external auditors.

The Committee considered a report by the Chief Finance Officer which presented the 2013/14 Statement of Accounts for approval.  An amended copy of the annual accounts (Appendix A to the report) was circulated at the meeting.   The amended version reflected an increased provision in respect of the backdating of business rates appeals.

Members were aware that auditing standards required an authority’s external auditor to obtain appropriate written representation from the council about the financial statements and governance arrangements.  The Committee was also asked, therefore, to approve a draft letter of representation to its external auditor, Ernst & Young LLP.  An amended copy of the draft letter of representation (Appendix B to the report), in which typographical errors had been corrected, was also circulated at the meeting.

Copies of both amended Appendices can be viewed through the following link:

http://www.centralbedfordshire.gov.uk/modgov/documents/b6399/Amended%20Documents%20Circulated%20at%20Meeting%20Item%207%20Monday%2022-Sep-2014%2014.30%20AUDIT%20COMMITTEE.pdf?T=9

Members were reminded that, as required by the 2011 Regulations, the Chief Finance Officer had certified the unaudited 2013/14 annual accounts in June.  A presentation on the annual accounts had been made to the Audit Committee and other Members at its last meeting on 30 June 2014 (minute A/14/6 refers) followed by a period of public inspection which had closed on 1 August.  The annual accounts had also been subject to an external audit validation by Ernst & Young and the resulting Audit Results Report, which formed item 8 on the agenda, was considered in conjunction with the Chief Finance Officer’s report.

The Committee then turned to consider the Audit Results Report from Ernst & Young.  The report summarised the findings from the substantially completed 2013/14 audit.

The Ernst & Young Director worked through the Audit Results Report highlighting various matters of note.  The Committee was aware that the Report outlined non-trivial adjustments to the original version of the accounts.  However, whilst the Chief Finance Officer’s own report had stated that, at the time of writing, no such adjustments had been identified the Audit Results Report had identified that the calculation of the provision for unsettled appeals by business ratepayers was calculated for the current year only and did not include provision for any successful backdated appeals.  As a result the business rates appeals provision of £1.3 m was understated.  Discussion followed during which Members expressed their dissatisfaction with these arrangements which arose as a result of central government requirements.

Whilst further considering the Audit Results Report a Member raised a number of queries regarding the use of a particular contractor. He commented on the absence of any reference in the Report to the concerns which had previously been expressed on this matter and the lack of action in response.  In reply the Ernst & Young Director stated that he was satisfied both that the Council had learned from the experience and with the related investigation and outcomes.

In conclusion the Chief Finance Officer suggested that the signing off of the Statement of Accounts should be deferred until Ernst & Young had issued an unqualified audit opinion on the Statement of Accounts and had formally confirmed that there were no material changes.

RESOLVED

1          that authority be delegated to the Chairman of the Audit Committee to approve the amended 2013/14 Statement of Accounts for Central Bedfordshire Council, as set out at Appendix A to the report of the Chief Finance Officer, subject to there being no material changes;

2          that the amended draft Letter of Representation, as set out at Appendix B to the report of the Chief Finance Officer, be approved for submission to the Council’s external auditor, Ernst & Young LLP, and that the Chairman of the Audit Committee and the Chief Finance Officer be authorised to sign it;

NOTED

the Audit Results Report from Ernst & Young LLP setting out the results of its 2013/14 audit.