Agenda item

The Wales Audit Officer introduced the ISA 260 report which provides the results of the 2017/18 financial statements.  The report is required by auditing standards.  The audit is complete and the Council was praised for meeting the earlier deadline. The Auditor General is intending to issue an unqualified audit report.

It was brought to the Committee’s attention that some uncorrected misstatements were found in the financial statement which must be corrected or reasons provided why they are not corrected.  A decision to not amend will not affect the outcome as the amounts concerned are not material to the overall outcome.

There were no concerns about the financial reporting and the information provided was of good quality.  It was reported that there were a significant amount of rounding errors found in the accounts.  Otherwise, there were no significant difficulties encountered during the audit process.

There are some areas for improvement in accounts preparation and auditing processes and WAO will continue to work with officers to improve processes in the future.  One significant matter discussed with management was identified as not derecognising existing infrastructure assets as they are replaced or improved.  However, it was noted that the net book value is not materially misstated in the accounts as a result.

A Member referred to faster closing suggesting that this would be problematic to Finance teams.  The Member also queried how important it is to derecognise assets and it was responded that it is good practice but a matter for the Finance Officers to consider.  The Assistant Head of Finance explained that infrastructure assets are highways and roads mainly. CIPFA is proposing changes in valuing such assets and we await further information.  It was explained that the Finance Team brought forward the accounts process by three weeks this year and it is intended to work closely with WAO to make good use of best practice.  For example there may be opportunity for the WAO to take snapshot samples at the yearend outside of the normal cycle.  There may also be an opportunity to revise notes and make the accounts more transparent.  Additionally, it was explained that there is reliance on other sources for information and the use of estimates is possible to prevent delays in accounts preparation.

It was explained that the reason for this move is to harmonise closing periods from all of the public sector and the use of estimates will be limited and not of significance.

It was added that the move is causing problems for WAO as well and different ways of working are being explored.

A Member asked if there was opportunity for automation and it was confirmed that this is an area of development.

County Councillor A. Easson declared a personal, non-prejudicial interest as a governor of  Ysgol Gymraeg Y Ffin and Dewstow Primary School.  He questioned the increase in deficit balances in schools and noted significant change in the total surplus budgets.  The WAO Officers noted the trend and the matter has been raised with performance audit colleagues.  This is now for the Auditor General to decide whether to investigate this matter further.  It was confirmed that interaction would be with the council not individual schools.

The Committee was informed of a change to the financial control arrangements in schools with deficit balances that will bring forward governors consideration of a recovery plan.  WAO Officers agreed to look at the rest of Wales to see if there is a similar trend.  The Statement of Accounts and the ISA 260 response report was endorsed by the Audit Committee for presentation to full council.