Agenda item

This report provides an overview of the issues arising from the audit of the Council’s annual Statement of Accounts for 2009/10, prior to the publication of the Audit Commission’s formal opinion on those accounts.

The covering report sets out the Council’s response to the Audit Commission’s Annual Governance Reports 2009/10, which is attached, along with the revised Statement of Accounts for approval.

Jon Hayes, District Auditor, described the key findings of the audits of the Council’s main accounts and of its Pension Fund accounts. He said that the audit of the main accounts had gone very well, and that he expected to be able to issue a clean opinion on the accounts shortly. He said that there had been more problems with the Pension Fund accounts. He understood that this arose from issues with the London Pension Fund Authority, who, under contract, undertook pensions administration on the Council’s behalf. This manifested itself in the need to reconcile the number of fund members, as the Council and the LPFA’s figures differed, for instance.

Councillor Cartwright noted that there had been recurring issues with the Pension Fund accounts. Jon Hayes said that the audit of the general fund accounts had gone very well, and the papers provided by the LPFA might well be the cause of the problem. He said that while the problems were not critical, they were a hindrance to the Council’s stated aim of an early opinion on the Pension Fund accounts.

Councillor Murphy asked what measures were in place to improve performance the following year. Jane West, Director of Finance and Corporate Services, said that the effects of the retender and actuarial valuation combined with a reduction in staff had meant that resources within the pensions administration team had been stretched. New process and additional staff resource had been agreed to improve the situation.

Councillor Iggulden raised concerns about the treatment of PFI projects in the accounts, feeling that this did not show the full extent of the liabilities, though he noted that the treatment was in line with recommended practice.

Councillor Murphy asked about the size of the earmarked reserves, and whether there was scope for reserves to be smaller. Officers clarified that the reserves were not unusually larger than those held by other, comparable boroughs or an organisation with  similar turnover. Further, elements of the reserves were earmarked to be spent, having been set aside at the initiation of given projects. Officers agreed to provide a breakdown of the Other Funds element of the Reserves to members.

Eugenie White asked why a different value for the Council’s Pension Fund was given in the accounts and in the performance reporting received. Jill Lecznar, Corporate Accountancy Manager, said that this was owing to the different treatment applied under FRS17, the accounting rules that the Council was obliged to apply.

Councillor Ginn asked how officers had arrived at the figures for debt write-off. Jill Lecznar said that the Council applied an analysis of debt age, and wrote off that which it was unlikely to recover. The figure shown was comprised largely of parking debt, for which the Council had not credited itself with income.

RESOLVED THAT

(i)         The content of the Auditor’s Annual Governance Reports (that the accounts will receive an unqualified opinion, are free from material error and that the Council has an adequate internal control environment be noted, and;

(ii)        The Council’s response to those reports be noted, and;

(iii)       The management representation letter be noted, and;

(iv)       The Statement of Accounts be approved.