Agenda item

The Assistant Head of Finance provided the authority’s response to the ISA 260 Report and reminded the Committee that the authority is trialling a new process this year where the Council Leader will sign off the Audited Statement of Accounts following verification by Audit Committee to assist with the new, shortened timescales.

Referring to uncorrected misstatements, a joint progress document for 2018/19 was presented but it was also explained that:

-       Pension Liabilities:  In 2015, there was a change to public sector pension regulations that required provision of protection to a small group of people approaching retirement (firefighters and judges).  Legal challenges centring on possible age discrimination resulted in further appeals by the government being ruled out. Whilst it is currently unclear where the cost of the additional pension liability will rest, the authority has calculated the possible effect of providing a remedy to eligible staff members accordingly. 

-       Non- consolidation of business and other operations: It was explained that the authority’s accounting policies don’t require consolidation of joint concerns.  The Cardiff City Deal appears in the statement of accounts as an adjusted entry as the figure exceeded the materiality level.  Consideration will be given to the best method of presenting future consolidation of accounts for better clarity.

-       Expenditure overstated by £178,705 as prepayment journal not posted at year-end: This was explained as a consequence of shortening the timescales to finalise accounts.  The process has been reduced by four weeks and work is in progress to remove a further four weeks from the process which will involve more estimation and work with other areas of the Council to meet deadlines for the earlier closure of accounts.

Comments and questions were raised by Committee Members as follows:

·         Regarding the uncorrected misstatements, it was questioned if the language in the report is too negative and complex for a lay person to understand.  It was requested that more thought could be given to this aspect and the inclusion of explanations to avoid misconception.

·         In response to a question, it was clarified that there are in excess of 100 rounding errors in excess of £1000 and commented that this is unclear in the report. 

  Wales Audit Officers confirmed that drawing attention to uncorrected         misstatements is a requirement of auditing standards and they have been presented in a balanced way proportionate to the total being above the         trivial level.  The amount is not material and there is no requirement to address it. 

·         In response to a question, it was confirmed that the level of materiality is £2.9m consistent with all Welsh authorities.  This reflects the level of error that users of the accounts would not be willing to accept.

·         It was queried if adjustments will be necessary due to the activity of the Investment Committee during 2019/20.  It was confirmed that feedback from the previous year accounts will be used to inform and refine process.

·         It was questioned if there was a possibility that the accounts could be materially misstated as a result of fraud. It was confirmed that this is a standard question asked of all authorities and public organisations; the answer was provided that there was nothing of concern to report.  It was added that the authority is consulted on this and reassurance was provided.

The recommendations were noted as:

2.1       That the final Monmouthshire County Council Statement of Accounts for 2018/19 (Appendix 1), be accepted as a True and Fair view of the Council’s Statement of Accounts and approved for publication by the statutory deadline of 15th September 2019.

2.2       That the year-end financial reporting refinements outlined in the Joint progress document (Appendix 2) are accepted and implemented where agreed by the Authority in preparation for the 2019/20 statement of accounts.

The Committee accepted the accounts as presented and expressed gratitude to the Finance Manager, Assistant Head of Finance and the Finance Team for preparing the accounts and concluding the audit successfully.