Agenda item

The Committee considered the Statutory Accounts and Pension Fund 2021/2022 - External Audit Findings Report.

Mark Stocks and Terry Tobin, representatives of Grant Thornton, the Council’s external auditor introduced the report and made the following points:

·         The audit of the Accounts went well with the paperwork presented to a good standard. The majority of the audit work had now been completed

·         Grants – There had been changes to the accounting arrangements in this complex area. Significant sums were involved but overall, there had been no changes to the Council’s level of resources

·         Infrastructure – It was anticipated that the Statutory Instrument would pass into law on 25 December with a paper from CIPFA expected in the new year. This would allow the Council’s Statement of Account to be signed off in January. It would also allow CIPFA time to find a permanent solution to the infrastructure auditing arrangements

·         There were no significant risks to report. Ideally, the Council might wish to further strengthen its journal controls

·         Pension Fund – The audit went well with good joint working. An unqualified audit opinion would be issued.

In the ensuing debate, the following points were made:

·         When was the Council required to find a permanent solution to the infrastructure auditing arrangements? Mark Stocks responded that the changes would come into effect from the 2024/25 financial year. Michael Hudson emphasised the importance of the guidance which would be included in the CIPFA statement due to be issued in January. An initial assessment of the work required to be done would be reported to the March Committee meeting. It was important that work commenced on addressing this issue now rather than wait until 2024

·         In response to a query raised about the external auditor’s comments about the need to strengthen the Council’s journal controls, Mark Stocks commented that the level of controls varied between councils and depended on each council’s approach to the use of IT. Michael Hudson added that the Council would be working with IT to improve these controls through the E5 system

·         It was queried how the change to the treatment of food waste under the Environment Act would impact on the valuation of the Energy from Waste plant at Hartlebury. Mark Stocks advised that the impact of this change in legislation on the income flows needed to be determined and whether there would be any impact on the value of the plant

·         In response to a query, Chris Bird explained that the external auditor had raised an issue about formatting of Asset Registers rather than any deficiencies in the information stored. This presentation issues had now been addressed and the register had been updated into a workable format

·         In response to a query about weaknesses in general IT controls, Terry Tobin acknowledged that although more work needed to be done to improve IT controls, it was not significant issue. There were timeframes for action which would be revisited. Michael Hudson added that the Council had accepted the external audit findings and had reviewed and would continue to review its mitigating controls. A cost benefit analysis had been undertaken of each recommendation. Mark Stocks indicated that it was a matter for the Council to determine its risk management levels in response to the issues raised by the external auditor

·         It was requested that a report be brought to the meeting of the Committee on 10 March 2023 providing an update on the progress being made on the development of IT systems to improve the management control mechanisms over journals

·         In relation to the Pension Fund, were there any risks associated with pension fund investment in Russia? Michael Hudson advised that the Fund did not have any investment or links in Russia

·         In response to a query, Michael Hudson indicated that the Council’s position in relation to the use of earmarked reserves would be made clear in reports to Cabinet in the new year

·         The Chairman recognised that the Accounts were in a good position for sign-off. He acknowledged the work of Michael Hudson, Chris Bird and the Accounts team and the good working relationship established with representatives of Grant Thornton.

RESOLVED that:

a)    The Audit Findings Report 2021/22 for Worcestershire County Council as set out in Appendix 1 be noted;

b)   The Audit Findings Report 2021/22 for Worcestershire Pension Fund as set out in Appendix 2 be noted;

c)    A report be brought to the meeting of the Committee on 10 March 2023 providing an update on the progress being made on the development of IT systems to improve the management control mechanisms over journals; and

d)   There are no issues arising from the Report to draw to the attention of the Council.