Agenda item

To receive a report by the Head of Finance and Property on the approval of the Statement of Accounts and ensure that it complies with approved accounting standards (copy enclosed).

The Head of Finance and Property presented The Statement of Accounts 2021/22 (previously circulated) for approval the council has a statutory duty to produce a statement of accounts that complies with approved accounting standards. The audited accounts have to be formally approved by elected members on behalf of the council.

The financial statements for 2021/22 were approved, subject to audit, by the Head of Finance and Property on 27 June 2022. The draft accounts were presented to Corporate Governance Committee on 27 July 2022 and were open to public inspection from 15 July to 11 August 2022. The approval of the audited accounts had been delegated to the Governance and Audit Committee.

He reminded Members of the number of issues the department had encountered with the completion of the accounts. The three main issues that had been raised were:

·         Audit Wales had resource difficulties with delayed the beginning of the audit.

·         Infrastructure assets, waiting for confirmation of inclusion of assets in the Statement of accounts had caused a delay.

·         Audit Wales raised a specific concern with Denbighshire around the way it accounted for council house assets.

The Head of Finance and Property was pleased work had reached this point and thanked the working of Audit Wales officers for the support and communication throughout the process.

Mike Whiteley, Audit Wales representative guided members through the Audit Wales report attached to the agenda item. He offered his thanks to the finance team within Denbighshire County Council.  

Some of the key findings included in the report were discussed. Including details of the significant issue as noted above. Details of the Audit Wales finding were included. It was also highlighted the delays were likely to impact on the final audit fee charged for the work.

Members were guided through the four appendices attached to the Audit report which included the Final Letter of Representation. The was a request for the letter to be provided along with the financial statements following approval from Governance and Audit Committee today.  

On behalf of the Committee the Chair offered his thanks for the work that had been made to produce the Statement of Accounts to both Audit Wales and Finance Officers. He also thanked the finance department for the communication with Governance and Audit on the progress during the delay.

Further to the introduction the following areas were discussed in greater detail:

·         Capacity within Audit Wales was a challenging area to recruit too. A newly Audit Lead and Senior Auditor had recently been appointed in North Wales. The position across Wales was challenging. Further rounds of recruitment were scheduled to take place at the end of 2023.

·         Officers didn’t have the figures to share of the difference in council housing stock assets. The difference was not as big as first anticipated by officers. It was a significant change that needed to be amended. The work had to be completed to ensure the figure was not a material error.

·         There were two issues raised in relation to council dwelling, one being a national issue which covered reviewing asset value at year end to ensure they were not materials misstated. The other concern was more specific to Denbighshire County Council. Similar issues at other authorities had been identified previously. Communication on issue trends found in Wales are communicated with finance officers to make authorities aware.  

·         Members raised the importance of timely completion of audits.

·         The Chair and Members thanked the officers for the information that had been circulated to Members on the Statement of Accounts.

·         The level of materiality had to be set as a guide as to how auditors directed testing and report findings. The benchmark used to set the figure was 1% of gross expenditure of the council. Historically finance officers had endeavoured to amend all errors, as the deadlines for completion of accounts has moved forward in the year the only way the accounts could meet those deadlines was to not complete some of the corrections identified.

·         Officers felt that by completing the necessary work on the issues, it out the authority in a better position going forward. It was hoped processes and future systems in place would add benefit to the work of officers.

·         Housing assets were valued on a 5 year rolling process. Due to the increase in inflation, that was no longer acceptable and 5 years it was too long.

·         Core asset evaluations were relied from the valuation team within property who also do the surveying work. A number of specialisms across the authority had a vital input into the Statement of Accounts.

·         Finance officers confirmed they were still on plan to implement phase one of the new ledger in April 2024. It was hoped work would start on implementing phase 2 in the summer.

Members,

RESOLVED that the Governance and Audit Committee note the contents of the report and approve the Statement of Accounts financial year 2021/22.