Agenda item

Purpose: To inform those charged with governance (The Governance and Audit Committee) of the findings from KPMG’s external audit of the financial statements.

(Councillor Keith Lock declared a personal interest in Agenda item 4 by virtue of the fact that a member of his family was employed by KPMG. As his interest was personal and not prejudicial he determined to take part in the debate and vote on the matter).

(Councillor Julian Swift-Hook declared a personal interest in Agenda item 4 by virtue of the fact that he was Chairman of West Berkshire Mencap who were in receipt of funding from West Berkshire Council. As his interest was personal and not prejudicial he determined to take part in the debate and vote on the matter).

The Committee considered a report (Agenda Item 4) concerning the findings from KPMG’s external audit of the financial statements.

Joseph Holmes noted that the draft financial statements had been considered at the Governance and Audit meeting on the 28 June 2010. KPMG had been appointed by the Audit Commission to review the Council’s financial statements and the outcome of that audit had to be reported back to the Governance and Audit Committee.

Joseph reported that the quality of the financial statements had been high and that the auditors had not found any fundamental errors in them. They had requested that a number of non-material changes had been made to the documentation and these would be reflected in the published statements. The auditors had issued an unqualified statement and had also included nine recommendations (as set out in Appendix C) which were designed to strengthen the system of internal control.

Greg McIntosh reiterated that KPMG were required by the Code of Audit Practice to issue a report to the Governance and Audit Committee which summarised the findings of the external audit of the Council’s financial statements. The external auditors had two key responsibilities. The first was to provide an opinion on the Council’s financial statements and the second was to provide a conclusion on the adequacy of the Council’s arrangements in respect of its Use of Resources i.e. was the council securing value for money in its use of resources. The auditors had also considered whether or not the Council’s Annual Governance Statement accorded with relevant legislation and whether the statement was an accurate reflection of the way the Council operated.

Greg confirmed that KPMG would be issuing an unqualified opinion. He thanked officers for the quality of the working papers which he felt had improved year on year. He reported that the Audit process had gone well and that no major adjustments had had to be made to the accounts.

The Use of Resources conclusion had been impacted on by the abolition of the Audit Committee and the Comprehensive Area Assessment (CAA) regime. Previously the Use of Resources had fed into the CAA. Due to the timing of the abolition a lot of the work on the Use of Resources had already been undertaken. Although the Council would not receive score for the year (but as the work had already been carried out) the auditors had still been able to conclude that the Council had maintained the level of performance from the previous year when it had been judged to be performing well. It was not yet clear what would happen in respect of the Use of Resources in future years but as this assessment was still required as part of the existing legislation it had been included in this report.

Councillor Julian Swift-Hook noted that on page 3 of the appendix two Acts were referred to namely the Audit Commission Act 1998 and the 1988 Act. He queried whether this was a typographical error or whether a fuller title of the 1988 Act should be included on the report.

Greg McIntosh noted that no objections had been received in respect of the accounts and an opinion would therefore be issued on the 30 September 2010. No further objections or questions could be raised after this date.

Greg concluded that the results of the audit had been very positive and he thanked officers again for their co-operation in respect of the audit process. Members also commended the work of the Officers.

Members asked the external auditor if there were any areas where difficulties were being experienced. Greg referred them to the recommendations in Appendix C which were designed to strengthen the existing internal control systems. Officers had responded to these minor recommendations as set out in the appendix. Discussions had taken place with officers and the issues had been reviewed. Recommendations which were felt to be invalid had therefore been removed. The auditors would then check that the recommendation shad been followed up during the next financial year.

Members noted that following the abolition of the Audit Commission it was likely that the Governance and Audit Committee would be charged with appointing the external auditor from 2012/13 onwards.

RESOLVED that the report be noted.