Agenda item

This report presents the London Borough of Hammersmith & Fulham’s 2020/21 Statement of Accounts, including the Pension Fund Accounts and Annual Governance Statement for approval.

Emily Hill, Director of Finance, presented the report on the Council’s Statement of Accounts for 2020/21, including the Pension Fund Accounts and Annual Governance Statement. She noted that it was an unusual year due to the Covid pandemic which had led to a large number of variances.

Paul Dossett, Partner at Grant Thornton, talked members through the detail of the accounts. He noted the significant amount of additional work that had to be done because of the pandemic and the complicated grants regime.

The Chair asked if the delays obtaining information from the Council was an issue specific to H&F or if it was due to Covid and working from home arrangements. Paul Dossett said it was an issue Grant Thornton had found everywhere. It was partly due to working arrangements. Auditing remotely had been a challenge for both auditors and council officers, but the delays at H&F were relatively minor when compared with other authorities.

The Chair asked if the issue raised on page 149 regarding access to the pension administration system hosted by Surrey County Council has been resolved. Paul Dossett said there had been challenges but they had been resolved.

Councillor Alex Karmel noted the discussion about the difficulties of doing an audit remotely and asked if there were any assurance tests that couldn’t be done remotely. Paul Dossett said doing an entire audit remotely was not ideal. The intention for the 2021/22 audit was to have a mix of on site and remote work. But he said he was confident the remote audits had been robust in the previous 2 years.

Councillor Rowan Ree asked if there was anything the auditor hadn’t been able to check or verify due to the remote nature of the audit. Paul Dossett said there hadn’t been any restrictions on their audit procedures.

Councillor Karmel asked about the impact of the potentially huge capital liabilities related to Hammersmith Bridge on the accounts. Emily Hill explained that any future repair costs associated with the bridge weren’t liabilities in accounting terms. As money was spent on the bridge it would be added to the historic cost of the asset.

Councillor Jonathan Caleb-Landy asked for updates on the following issues raised in the action plan:

·         Issues with the employee leaver process leading to employees getting paid more than they should because the leaving date hadn’t been properly communicated.

·         Issues with debtors and creditors due to a new system.

Emily Hill said regarding debtors and creditors, there was a difference in the way IBC (the Council’s HR and finance system) reported control account debtor and creditor balances. Officers and the auditors have discussed taking a different approach to take this into account and give greater audit assurance. The new process will be in place for the 2021/22 audit. Regarding employer leaver forms – officers were working with IBC on retrospective pay actions, and with managers to ensure correct information is provided in a timely manner.

Councillor Caleb-Landy noted there were five recommendations in the accounts and felt that was a testament to the great job that the finance team had been doing. He asked how many recommendations there would be in the average council audit report, and if there were any of particular concern. Paul Dossett said five recommendations was low for a complicated authority and was a positive reflection on the control environment. There was also only a small number of adjustments to the accounts. Regarding the issues raised – the issue with the leaver form was very common.

Councillor Karmel noted the headline figure on legacy balances showed a high volume and asked if those were small or large sums, and their rough value. Paul Dossett said they were largely small transactions. Emily Hill added that officers had reviewed a lot of them and many of them were current and didn’t need writing off.

Councillor Ree asked for clarification on the process around the outstanding value for money letter. Paul Dossett said the National Audit Office had effectively decoupled the value for money work from the opinion on the accounts. The procedure is that the value for money work had to be issued within three months of the accounts being signed off. The substantive value for money work will come back to Audit Committee and to Full Council.

The Chair thanked to Emily Hill and her team and Paul Dossett and the auditors for their hard work.

RESOLVED

1.    The Committee noted the content of the external auditor’s ‘Audit Findings Report’ (ISA260), including the auditor’s findings, recommendations, and the Council’s response to those recommendations (Appendix 2).

2.    The Committee approved the 2020/21 Annual Governance Statement, included in the Statement of Accounts (Appendix 1).

3.    The Committee approved the 2020/21 management representation letters (Appendices 3 and 4).

4.    The Committee approved the Statement of Accounts for 2020/21, including the Pension Fund Accounts (Appendix 1).

5.    The Committee approved the Pension Fund Annual Report 2020/21 (Appendix 5).

6.    The Committee noted that the accounts remain ‘unaudited’ until final sign-off by the external auditor.

7.    The Committee delegated authority to the Chair of the Audit Committee, in consultation with the Director of Finance to approve any further adjustments to Appendices 1,3, 4 and 5 which may be required as part of the completion of the audit work.