Agenda and minutes

Apologies were received from Councillor Chunga and Councillor M Markham, who was substituted by Councillor Flavell.

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The Minutes of the meeting held on the 11^th September 2017 were confirmed and signed by the Chair as a true record.

There were none.

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The External Auditor submitted and circulated the report, and apologised to the Committee Members for the delay in the delivery of the report. As the audit had been high risk, more work had to be undertaken in order for it to be completed. It was explained that a previous report had been discussed on the interim work presented in the External Audit Interim Report in July 2017; an additional and significant risk had been identified, which was the valuation of ‘other land and buildings’ and investment properties. It was explained that significant work was still ongoing most notably in relation to the Authority’s fixed assets, which had caused delays to the valuation process and issues found in relation to the valuation exercise.

The External Auditor advised that the change from a low risk to high risk audit was due to the ongoing issues relating to the loan to Northampton Town Football Club which had reduced the materiality level for the audit work. It was noted that they had adopted a risk-based workplan to consider whether in all significant respects the Authority had proper arrangements in place to ensure it had taken properly informed decisions and deployed resources to achieve planned and sustainable outcomes for taxpayers and local people. They concluded that the Authority had not made proper arrangements to secure economy, efficiency and effectiveness in its use of resources and they would therefore anticipate issuing an adverse value for money opinion.

It was noted that for the year ending 31^st March 2017, the Authority reported under the provision of services total income of £290 million against expenditure of £261 million which had resulted in a net surplus of the provision of services of £29 million. It was explained that a large balance of this related to the change in social housing discount factor, although from the information that they had been provided with, this could not be quantified.

The External Auditors identified the ’Valuation of Council Dwellings’ as a significant audit risk. It was explained that the authority had engaged an external valuer to undertake a comprehensive review of 20% of the beacon assets used within the valuation of the Authority’s housing stock. However, it was noted that those beacon assets may not be representative of the housing stock and this could result in them being over or under valued on the balance sheet. They further identified risks involving the capacity within the Estates Team and the subsequent use of three external teams of valuers, the results of which were queried by the External Auditors. It was reported that the desktop Beacon review and valuation that had been undertaken was not sufficiently robust. It was further noted that no report had been provided to the Auditors for some of the valuations as per Code requirements; the requirements for a clear valuation report had been specifically highlighted in the KPMG ISA 260 recommendations reported in the previous year.

In further reference to the ‘Valuation of Council Dwellings’ it  ...  view the full minutes text for item 6.

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The Chief Finance Officer submitted a report and noted that the recommendations of from the External Auditors would be taken extremely seriously and therefore recommendations may need to be changed as a consequence. It was noted that the Statement of Accounts (SoA) had been produced in line with the statutory timescales and had been subject to external audit by KPMG. It was noted that the biggest change was in relation to the value of Council dwellings and the social housing discount factor that had been applied. The original discount rate applied to the draft SoA was 33%, this was now changed to 42% in line with DCLG Guidance, resulting in an increase of value of £85 million, and there had also been movements in unusable reserves and the CIES statement resulting from this.

With regards to Property, Plant and Equipment (PPE) it was reported that the impact of changes were not just evident on the balance sheet; there was a knock on effect on other parts of the accounts including the Group Accounts and the Housing Revenue Accounts (HRA). It was explained that in unless further adjustments came out of the recommendations of KMPGs ongoing work, the updated report that was presented to the Committee was considered final.

The Committee were advised that when the full valuation was done on site (in person) for the 20% of the beacon properties the outcome was the same as the desktop exercise previously completed.

It was explained that when the Council’s External Valuers had selected a number of more appropriate beacon properties the resulting decrease in valuation of the 20 % population was only 2.2% and it was not possible to decipher if this was due to changing beacons and/or change in the valuers. It was further explained that the valuation was an estimation process and was considered to be very clear and transparent.

In response to a question asked relating to the real effects of the adjustment. Responding to further questions, it was confirmed there was no cash adjustment and that it was solely for accountancy balance sheet purposes, with no effect of Council tax or Housing rent levels. The valutations obtained for council dwellings were used in preparing the year-end accounts and were not used for individual council house right to buy sales

The Section 151 Officer explained in respect of Council right to buy sales there was a stringent code that the Council adhered to and that guidance was followed from CIPFA & DCLG.

RESOLVED:

1.     That the draft Statement of Accounts 2016/17 be approved

2.     That the AGS signed by the Leader and Borough Secretary, acting on behalf of the Chief Executive, be acknowledged

3.     That, in the event of further changes being required following finalisation of the External Auditors work, authority be delegated to the Chair of the Audit Committee, in consultation with The Section 151 Officer and Deputy Chair to sign a revised set of the accounts. Any further changes will be reported back to  ...  view the full minutes text for item 7.