Agenda item

Audit of Financial Statements Report 2022/23


1.1.  The Audit Manager for Audit Wales presented the report which summarised the key findings from the audit of Newport City Council, during 2022/23.

1.2.  Audit Wales had now substantially completed this year’s audit work.


1.3.  In their professional view, Audit Wales complied with the ethical standards that applied to their work, remained independent of Newport City Council, and their objectivity was not compromised in any way. There were no relationships between Audit Wales and Newport City Council that could undermine Audit Wales’ objectivity and independence.


1.4.  Audit Wales intended to issue an unqualified, or clean, audit opinion on this year’s accounts as confirmed in the Letter of Representation set out in Appendix 1.



1.5.  There was one misstatement identified in the draft Statement of Accounts, which remained uncorrected. The Council normally valued its property asset portfolio every five years on a rolling basis, in line with CIPFA’s Code (the Code). However, the Code also required Councils to verify that there were no material movements in the value of assets between valuations.


1.6.  Given recent inflationary pressures, assets valued under the depreciated replacement cost method would likely be subject to material increases in value during 2022-23. Consequently, the Council (in line with many other Councils in Wales) had undertaken an exercise to uplift the value of affected assets in 2022-23 using appropriate industry indices.


1.7.  Audit Wales was satisfied that the Council’s approach to calculate these uplifts in value was reasonable and in line with Code requirements. However, some incorrect figures were included in working papers which led to the calculations being overstated by £1.7 million this year. The Council opted not to correct this misstatement given the volume and complexity of accounting entries required and the resulting impacts on supporting notes to the accounts.


1.8.  This amount was comfortably below the materiality threshold and so the audit opinion was unaffected. As this was currently an annual exercise, this misstatement should also be corrected once uplifts for 2023-24 were calculated. Furthermore, the misstatement did not affect the general Council Fund balance as it related only to an estimate of asset balances at year-end.


1.9.  There were other misstatements in the draft Statement of Accounts that had been corrected by management. However, it was believed that these should be drawn to the Committee’s attention, and they were set out with explanations in Appendix 3.


1.10.  Audit Wales thanked the finance team and all those involved in the work.


Comments of Committee Members:


1.11.  Councillor Cocks referred to good governance of the Council and referred to p.29 pie chart which showed slippage in the Capital programme and queried whether the slippage caused any significant issues, and how this was being managed.


1.12.In the Chair’s opinion, these questions needed to be posed in a different forum and not under this item. The Committee agreed that the questions were for Cabinet and Scrutiny.  The Head of Finance confirmed that this was a regular item on the Senior Management Team agenda and a group had been convened to look at the capital programme to implement additional measures for increased assurance regarding this issue.


1.13.  The Chair thanked the finance team for working on the accounts and noted that there were lessons to be learned. The Chair thanked colleagues from Audit Wales and appreciated that the statement of accounts being completed in November was earlier than most local authorities. 




·         The Governance and Audit Committee noted the report.

Supporting documents: