AG042

AUDIT AND GOVERNANCE COMMITTEE

REPORT Title: PLANNING FOR THE ACCOUNTS 2020/21 4 march 2021 REPORT OF CABINET MEMBER: CLLR NEIL CUTLER, DEPUTY LEADER AND CABINET MEMBER FOR FINANCE AND RISK Contact Officer: Liz Keys Tel No: Extension 2226 Email Lkeys@winchester.gov.uk WARD(S): all

PURPOSE The purpose of this report is to update the committee on the actions taken to ensure that the Statement of Accounts for 2020/21 is fully compliant with statutory requirements and to make the committee aware of changes impacting on the statements.

RECOMMENDATIONS: That the committee notes this report in respect of the Council’s Statement of Accounts for 2020/21.

IMPLICATIONS:

COUNCIL PLAN OUTCOME

Your Services, Your Voice - The preparation of the annual accounts is fundamental to open and transparent accountability for public finances. Ensuring strong financial reporting and transparent stewardship of public funds underpins the council’s ability to deliver all its outcomes but in particular the priority to ensure stable council finances.

FINANCIAL IMPLICATIONS

The planned fee for the audit of the 2020/21 accounts has not yet been agreed and published by Public Sector Audit Appointments (PSAA) who are the appointing body on behalf of the council. The final proposed fee for the equivalent audit of the 2019/20 accounts is £69,573 (this includes an additional cost of £14,670 rebasing the fee and a scale fee variation of £11,524).

LEGAL AND PROCUREMENT IMPLICATIONS

Local authorities in the UK are required to prepare their accounts in accordance with ‘proper (accounting) practices’ as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2019/20 (the Code). The Code specifies the principles and practices of accounting, required to prepare financial statements that give a true and fair view of the financial position and transactions of a local authority.

The Audit and Accounts Regulations 2015 require an authority to conduct a review, at least once a year, of the effectiveness of its system of internal control and include a statement reporting on the review alongside the Statement of Accounts.

The necessity to conform to these Regulations and the Code is recognised accurately in this report.

There are no direct legal implications.

WORKFORCE IMPLICATIONS

None.

PROPERTY AND ASSET IMPLICATIONS

None.

CONSULTATION AND COMMUNICATION

A public notice is published to inform interested parties of their rights to inspect the statement of accounts and records relating to them. The public notice also details how to access this information and how to ask questions of and make objections to the council’s external auditor. This is published the day following publication of the unaudited Annual Financial Report.

ENVIRONMENTAL CONSIDERATIONS

None.

EQUALITY IMPACT ASSESSEMENT

None arising from the content of the report. However, officers have regard to the considerations as set out in the Equalities Act 2010 when deciding whether an Equality Impact Assessment will be required following any specific recommendations or future decisions.

DATA PROTECTION IMPACT ASSESSMENT

Not required.

RISK MANAGEMENT

Risk	Mitigation	Opportunities
Legal Failure to meet the statutory deadline for publication of the financial statements.	A project plan for the delivery of the accounts closedown is used to ensure the Statement of Accounts and Annual Financial Report are produced by the statutory and audit deadlines. A comprehensive set of working papers was produced in advance of the external audit and an effective plan for the efficient transfer of information and update meetings was agreed with the audit team.
Reputation The financial statements receive an adverse external audit opinion	The statements are prepared in accordance with the CIPFA code of practice. Accounts staff attend regular public sector accounting workshops delivered by EY and CIPFA. Regular engagement with external audit on potential issues identified.

SUPPORTING INFORMATION:

Background

The Statement of Accounts is prepared in accordance with proper practices as set out in the CIPFA Code of Practice on Local Authority Accounting in the United Kingdom (the Code) and any subsequent Local Authority Accounting Panel (LAAP) recommendations. The purpose of this report is to inform the committee of significant Code and other changes applicable to the 2020/21 financial year that will impact on the council’s financial statements.

The Council’s Accounting Policies

There are no proposed changes to the council’s accounting policies in 2020/21.

Changes to the Council’s Financial Statements

There are no accounting changes within the 2020/21 Code that will have a significant impact on the council’s 2020/21 Statement of Accounts.

Increases to the 2019/20 Audit Fee

The external auditors Ernst & Young LLP (EY) have submitted a proposal to PSAA (Public Sector Audit Appointments) to rebase the audit fee, arguing that the existing scale fee paid by local authorities no longer reflects the risk profile or the audit work required. The EY proposal increases the original 2019/20 fee by £14,670 from £43,379 to £58,049.

In addition the auditors have proposed a scale fee variation of £11,524 predominantly for additional audit costs related to the COVID-19 pandemic. This included additional work they performed around the valuation of property and the review of the council as a going concern.

Accounts Preparation Materiality

The identified users of the council’s Statement of Accounts primarily refer to the balance sheet for high level information about the council’s assets and liabilities, but have a closer interest in the council’s expenditure on and funding of services included within the comprehensive income and expenditure statement.

It is proposed to maintain the materiality levels set in the previous financial year; a £1 million materiality level for the balance sheet; and £0.125 million materiality level for the comprehensive income and expenditure statement.

Changes to the Timetable

In 2019/20 the Accounts and Audit Regulations (2015) were amended because of the pandemic, the deadline for the publishing the unaudited financial statements was extended to 30th September and the deadline for publishing the audited statements was moved to 30th November 2020.

Changes to the publication deadlines for 2020/21 and 2021/22 are currently being consulted on by MHCLG. It is proposed for both years that the draft accounts publication deadline be delayed from the 31 May to 1st August; with the audited accounts publication delayed from 31 July to 30 September. It is our current expectation that the proposals will be adopted and the legislation amended accordingly.

OTHER OPTIONS CONSIDERED AND REJECTED

None.

BACKGROUND DOCUMENTS:-

Previous Committee Reports:-

None.

Other Background Documents:-

CIPFA Code of Practice on Local Authority Accounting in the United Kingdom 2020/21.

APPENDICES:

None