To consider a report from Ernst & Young LLP which sets out the outcomes from the external audit of the Council’s 2016/17 financial statements and the conclusion of work to review the Council’s arrangements for securing value for money in the use of its resources.  The report also sets out Ernst and Young’s proposed audit opinion, key findings and any recommendations to consider prior to the approval of the 2016/17 accounts.

Members considered a report from Ernst & Young LLP, the Council’s external auditors, which set out the outcomes from the external audit of the Council’s 2016/17 financial statements and the conclusion of work to review the Council’s arrangements for securing value money in its use of resources.  The report also set out Ernst & Young’s proposed audit opinion, findings and any recommendations requiring consideration prior to the approval of the 2016/17 accounts.

Points and comments included:

·         Ernst & Young had discussed the level of indexation applied to the Council’s dwellings with the finance officers.  Following this discussion it had been agreed that the reflection of a 10% indexation would more accurately reflect the movement in the market based on a range of industry data and consultation by the external auditors with the company’s own valuation experts.  This had led to a material change of £40M which was reflected in Note 14 of the financial statements.

·         The Director of Resources explained that the above valuation of the Council’s dwellings was largely academic as the Council had no plans to dispose of its housing stock.  Should this situation change then a valuation and due diligence exercise would be carried out.  He acknowledged that discussion should have taken place earlier to avoid the matter arising as an issue and he undertook to do so in the future.

·         The Director of Resources pointed out that the debate had also led to Ernst & Young taking the issue to consider in a wider context.  In response to a query he added that there had been an impact in the form of increased insurance.

·         Consideration was given to a significant value for money (VFM) risk in the form of the Council’s work with its Sustainability and Transformation Plan (STP) partners.  The Director of Resources reported that the first meeting of finance directors from health and local authorities had recently taken place as part of the attempt to work more closely and exchange information.  The meeting noted that the unique situation that existed as a result of Central Bedfordshire Council’s Chief Executive chairing the local STP.

(Note: At this point in the proceedings Councillor Bowater declared an interest as both a Central Bedfordshire Council appointee to the Council of Governors on the Essex Partnership University NHS Foundation Trust (EPUT) and as a member of an EPUT committee set up to appoint an external auditor to the Trust and which had selected Ernst & Young LLP).

·         The Ernst & Young Manager stated that the company was satisfied with the Council’s arrangements for working with its STP partners and the involvement of the Council’s Chief Executive as the chair of the STP reflected the robustness of these arrangements.  As a result there was nothing to report.  The Director of Resources stated that the Chief Executive continued to perform all his duties for the Council despite the additional responsibilities he had.

·         The Ernst & Young manager expressed her thanks to the Council’s finance staff and to the Council in general for the co-operation and assistance that the company had received and stated that the Council found itself in a positive position for the next financial year.  The Chairman commented that the Council was well served by its finance staff.

·         With regard to the preparation of the 2017/18 unaudited accounts and meeting the associated deadline the Director of Resources acknowledged that, whilst there had been some issues for 2016/17, these had provided a useful learning experience and he was confident that the Council would meet the May 2018 deadline.  In response to a query he stated that no sanction was imposed on those councils who missed the current deadline and they were only ‘named and shamed’.

NOTED

the External Audit Results Report from Ernst & Young LLP which set out the results of its 2016/17 audit.