Agenda item

Members considered a report on the results of the external audit of the 2017-18 Statement of Accounts, which highlighted the changes since they were initially published at the end of June 2018 and sought their formal adoption as required by the Accounts and Audit (Wales) Regulations 2014.

The Accounts were published at the end of June 2018 by the Head of Finance and added to the Council’s website at that time.  The Accounts were available for public scrutiny, as required by the Accounts and Audit (Wales) regulations 2014, for a 20 working day period ending 10 August 2018.  The Council received no requests to review the Accounts from the public during the public scrutiny period.

Auditors had reviewed the 2017/18 Statement of Accounts in detail, and a number of required changes had been identified.  The Wales Audit Office’s (WAO) accompanying report showed a summary of the agreed changes.  Appendix A presented the revised Accounts which members were invited to review and subsequently approve in accordance with the Council’s standing orders.

The accounts had been completely audited and the Wales Audit Office ISA260 report was included in the reports pack.  Whilst there were a number of amendments made to the accounts following audit, no changes were made to the reported outturn of reserves held by the Council. 

There had also been a quality assurance exercise of the financial statements prior to presentation at the Audit Committee.  It was acknowledged that WAO had highlighted a number of issues within their ISA260 report, which would be reviewed by the Council and actions put in place to ensure that procedures and processes were in place to address the issues raised.

The report detailed the agreed changes applied to the Statement of Accounts from the original publication through to completion of the audit review.  The majority of these related to presentational changes, disclosure notes, some amendments to lines across the comprehensive income and expenditure account, corrections of classification in the nature of expenses note and items relating to Property, Plant and Equipment, all of which had no impact on the bottom line.

There was only one uncorrected misstatement included in the ISA260 report which was the same misstatement which was included in the ISA260 report in 2016/17 – value of Newport Transport Ltd Depot being understated by £376,000. The reason was related to the accounting treatment used by Newport Transport Ltd and those required to be used as per the accounting policy for the group.  Due to the small value and complex nature of the transactions that would need to be put through the accounts it had been decided an adjustment would not be made for this.

The Audit had been undertaken earlier this year - the deadline for the 2018/19 draft Accounts was 15 June (signed) and final accounts by 15 September.  In 2020/21 the draft accounts would need to be signed by 31 May.  Newport Transport had been notified of the earlier deadlines.

Discussions included the following issues:-

·         With regards Tredegar House (Page 64/150) does the Council own it?  - The Senior Finance Business Partner responded that the Council leased Tredegar House.  The Council had a number of collections in heritage, paintings, books but the property was on lease.

·         The introduction appeared to be written as spoken not a statement – The Head of Finance responded that it was written in the sense of his personal message which was why it was in that style.

·          It was felt there is a lack of consistency with in house style, for example referring to thousands in ks and then 1000s.

·         It was felt the wording in Page 92 third bullet point was quite long and confusing – The Assistant Head of Finance noted that this was the wording direct from the joint agreement that went to Cabinet.  It was factually correctly but could be written differently.

·         Page 95 in relation to impact of pension deficit on reserves the passage stating ‘the deficit and liability would not arise in any single year’ was queried.  The reality was appreciated but was it technically correct and should it not read ‘in normal circumstances the deficit and liability would not arise in any single year’? – The Head of Finance commented that as it was an ongoing scheme it would not crystallise and that was why it was in there. If Newport City Council were to stop and a successor did not take over it could happen but it was felt national government would then pick up the liabilities in the sector.

·         There was still confusion on Friars Walk (page 97 Point 2) ‘at 31/3/2018, following the sale, the Council’s own borrowing was repaid, thereby reducing the short term borrowing value on the balance sheet from c£56.5m to c£5.4m’ – If the report was saying borrowing was repaid the implication was that it would go from £65m to nothing? -  The Head of Finance noted that the figures on the balance sheet did not refer to Friars Walk in isolation.  It explained Friars Walk in relation to the balance sheet.  It did reduce the short term borrowing in relation to Friars Walk but the Council had additional short term borrowing.  However it was noted the heading was debtors and borrowing (Friars Walk).

·         In relation to Page 137/223 ‘The Group Statement of Accounts and associated notes have been prepared using unaudited draft accounts provided by Newport Transport.  The final version of this document will be updated for the final published accounts’ – The final version of this document would be published for the final accounts. 

The Wales Audit Office introduced the ISA 260 report.  The proposed audit report was scheduled to be signed off by the Auditor General.

The accounts were unqualified or clean opinion – the accounts were true and fair and properly prepared for accounting purposes.  It was noted that there had been a good working relationship with Finance with any requested papers supplied on time.  Members’ declarations were incomplete or not returned in time for Audit.  This did not affect the work of audit.

There was just one uncorrected misstatement – the value of Newport Transport which was the same as in last year’s accounts.  It became more complex to amend so it was not worth amending and leaving uncorrected aligning in future years.

Appendix 3 – summary of the higher level amendments made as a result of the audit of accounts was raised for the Committee’s attention.  One of the amendments was to bring in the Newport share of the Cardiff Deal.

The faster closing deadlines for the Council were mentioned.  Over a couple of years the timeline would come forward by 6 weeks.

Discussions included the following:

·         The issue with Newport Depot had been ongoing for two years.  It was not understood why the policy was not being aligned – Newport Transport had been notified of the dates next year with the expectation that policy will be aligned by April 2019.

·         Thanks to the Finance team for a good job and congratulations to Laura Campbell and her colleagues for excellent work.

Agreed

1.    To note the contents of the 2017/18 Accounts and the WAO’s Financial Statements (ISA260) report on the 2017/18 Accounts and comments.

2.    To authorise the Chairman to adopt the Accounts 2017/18 in accordance with the Accounts and Audit (Wales) regulations 2014 and to sign the letter of representation.