Agenda item

The Committee is asked to consider the updated and final 2020/21 Audit Results Report and the draft 2020/21 Auditor’s Annual Report from the External Auditor Ernst & Young (EY).

26.1     The Committee considered the Final Audit Results Report from the External Auditors EY, and also a draft copy of the 2020/21 Auditor's Annual Report (copies appended to the signed minutes).

26.2     Mrs Thompson (EY) introduced the Final Audit Results report and reported that an unqualified opinion had been issued and that there were no value for money issues to report.  Property Plant and Equipment and Pension Liability work had been previously outstanding, but these areas were now satisfactorily complete.  The final certificate had not been issued due to the outstanding delay in the release of the data collection tool for whole of government accounts.  It was hoped that the information would be issued in December to allow the relevant assurance work to be completed.

26.3     Mr Mathers (EY) gave an update on the areas that had been considered since the September meeting.  There had been a change in valuation techniques used by the County Council which EY had looked into.  EY were satisfied that the change in approach to valuations were a reflection of the valuer’s techniques and confirmed that an external valuer had concluded that assets had been recorded correctly.  EY had commented that the Horsham Enterprise Park should have a more granular approach taken for its valuation for increased accuracy.  On the Pensions Liability, it was confirmed that EY had tested the actuary’s model work and were satisfied that it was correct.

26.4     The Committee made comments including those that follow.

•    Queried when the Horsham Enterprise Park would be revalued and if the value was impacted by the market.  – Mr Mathers explained that the valuation would be done annually and that a new figure would be expected in the next statement.  Mr Hunt explained that work was still ongoing for the park and that negotiations were taking place.  It was recognised that the value of the park would change as the usage was developed.

•    Sought clarity on the £7.8m adjustment for pension liability.  – Mr Mathers confirmed that the asset values had increased in the audited accounts and that the original figure was based on estimated asset data.

•    Noted the change in valuer and the techniques used, and asked if this made it difficult to monitor valuation changes.  – Mr Mathers explained that EY were satisfied with the approach taken, but had asked for a disclosure to be included in the statements to add an explanation.  The technique change occurred in instances where a school’s rebuild value was considered differently.  The previous valuer would value the cost to rebuild the school the same, whereas the new valuer would use a value to build a new school based on anticipated pupil numbers.

•    Queried if the Department of Education looked into the County Council’s figures.  – Ms Eberhart, Director of Finance and Support Services, confirmed there was no requirement for this.

26.5     Mrs Thompson introduced the draft copy of the 2020/21 Auditor's Annual Report and explained that a new format had been used.  There were no significant risks or additional value for money work identified.  Information on fees would be added to the final version.

26.6     Mr Mathers commented that the two previous years had a qualified value for money conclusion due to the Fire and Children Services inspections.  The Auditor’s Annual Report would add commentary that reflected the positive steps for governance in these areas in response to the inspections.  Compensation payments had been looked into as they were felt material due to public interest.  EY were content that they were lawful and that all processes had been followed and disclosed. There were areas that could be improved, but it was reflected that Covid-19 would have had a negative impact.  The Teachers Pension Scheme had been looked into and the Council had disclosed the contingent liability and EY recommended that issues needed to be captured in a timely manner.  The recommended areas for improvements had been accepted by officers.

26.7     The Committee made comments including those that follow.

•       Queried the going concern considerations and if the quality of County Council services had been considered.  – Mrs Thompson explained that a going concern opinion had been added to the Financial Statements, but explained that consideration of the quality of services was not within EY’s remit.

•       Asked if contingent liabilities should be included within the Corporate Risk Register.  – Mrs Thompson said this was for officers to consider, but personally felt that this was something that did not need to be included within the Corporate Risk Register.  Ms Eberhart confirmed that the work on Teacher Pensions was a complex piece of work that was still in progress.  The final impact would be reflected within the balance sheet.

•       Queried how other local authorities were handling Teacher pensions.  – Ms Eberhart reported that the County Council were more progressed than other authorities.

•       Sought clarity on impacts to fees.  – Mr Mathers explained that some impact was due to areas such as travel costs.  It was noted that there had been a minimal Covid-19 impact, but this had led to other areas being considered which would previously not have been.

•       Noted the section for financial sustainability in the value for money commentary and proposed that full council approval should be added.  – Mrs Thompson agreed to add this.

•       Asked if the revenue usage dialogue could be quantified.  – Ms Eberhart confirmed that officers had looked into the outturn report and that this reserve included grants and the previous A27 reserve and was therefore a moving number.  Mrs Thompson agreed to add wording to the section to improve clarity.

26.8     Resolved – That the Committee notes the West Sussex County Council 2020/21 Final Audit Results Report and the Draft 2020/21 Auditor's Annual Report.