Agenda item

The Committee considered the Audit of Accounts Report – Newport City Council and Newport City Council Group for the year 2019-20.

The Wales Audit Officers thanked Finance for their hard work and co-operation with the report.

The Head of Finance also was incredibly proud of the finance team under the circumstances and also mentioned in turn, the hard work of Audit Wales team.

The Chair invited the Director of Audit Wales to introduce the report.

The main issues arising from the ISA260 finding were discussed with focus on the non-adjusted misstatements highlighted by Audit Wales.

Discussions included the following:

·         Why was soft loan and loan modification not adjusted for as per the CIPFA practice.  It was explained that the Council had accounted for the soft loan borrowings using their cash value rather than discounting them as required by the CIPFA Code.  The reason being that the accounting entries in both cases required to correct these values in the final accounts would be onerously complex considering the immaterial value involved.  The Audit Wales Officer explained that it was also very technical in nature, the explanation would also be alluded to in the following report on the agenda item but was happy to have a dialogue with Newport City Council Finance Officers regarding the ongoing reporting of the misstatement. The officers would have to form a view but this could be adjusted and put through the accounts as part of next years accounting process.

·         The Committee needed clarity on the information and asked who would sign off the decision in line with company practices.  The Head of Finance confirmed that they would sign off the accounts as well as Audit Wales.  Audit Wales reiterated that this was not a material issue and in order to provide a statement of accounts Audit Wales needed to bring it to the Committee’s attention and that was all.  The accounts could therefore be signed off.

·         Discussion on the corrected misstatements followed and the Chair flagged that there was a number of high value errors, especially regarding the cash and cash equivalents, borrowings and investments figures. The Assistant Head of Finance gave an explanation on a number of the corrected misstatements including the fact that a number of the errors were of a human nature and working in a remote scenario due to Covid, did hamper an environment of collaboration and simple checks.  This would form part of a lessons learned and processes put in place. 

·         The Head of Finance mentioned that there were benefits with working closer together with Audit Wales; person to person when dealing with statement of accounts from an auditing point of view and during lockdown this was not possible.

·         The Chair, after seeking clarification on the timescale in relation to ‘Short Term’ for cash and cash equivalent classification was advised that the time period was deemed as under three months, however this would be subject to looking at each item on a case by case basis.

Agreed:

The Committee noted the actions and issues were within the ISA 260 and authorised the Head of Finance and Chair to approve and sign the Financial Statements as well as the letter of representation under Appendix 2.