Agenda item

The Committee is asked to consider the report from the External Auditor EY.

3.1     The Committee considered the EY reports on the County Council accounts and the West Sussex Pension Fund (copies appended to the signed minutes).

3.2     Mrs Wood, Pension Fund Investment Strategist, advised the Committee that a significant court case, the McCloud and Sargeant judgement, had found that changes to the Pensions Scheme legislation in 2014 had constituted age discrimination. Because of this national change, the County Council had to change its IAS19 accounting approach and an actuary had examined the impact on the West Sussex Local Government Pension Scheme and the Firefighters’ Pension Scheme. This had resulted in an estimated increase in liabilities for the West Sussex Local Government Pension Scheme (LGPS) of £25m, and an estimated increase in West Sussex County Council’s share of its LGPS liabilities of £11m and its Fire Pension Scheme liabilities of £14m. These figures reflected in the Pension Fund and County Council’s accounts and were referred to in EY’s report.

3.3     Mrs Thompson and Mr Mathers (EY) introduced the Pension Fund report and advised that an unqualified opinion would be given. Particular attention has been given in the audit to the risk of manipulation of investment income and valuation and the significant migration of data when the Pension Fund administration was transferred to Hampshire County Council.

3.4     The Committee made comments including those that follow. It:

•    Welcomed the audit findings and the focus on the migration of data to Hampshire County Council.

•    Noted the level of discrepancies appearing in Pensions membership data and was reassured that this issue was not unique to West Sussex Pension Scheme and was generally due to a time lag on employers updating pensions records, which had no financial impact.

3.5     Mrs Thompson and Mr Mathers introduced the County Council report and advised that there would be an unqualified opinion on the financial statements, although there would be an ‘except for informed decision making arrangements’ qualification of the value for money conclusion following the Children’s Services inspection report.  They thanked County Council officers for their help and support during the audit process. Particular checks had been carried out on high risk areas including areas at risk of fraud in terms of inappropriate capitalisation of revenue expenditure; plant, property and equipment valuations and PFI adjustments. The medium term financial strategy was found to be sound, while concern remained about financial resilience in a challenging environment for local government.

3.6     The Committee made comments including those that follow. It:

•    Welcomed the audit work undertaken and noted the concerns about long term financial resilience.

·         Noted that the auditor’s findings were that the problems identified in the Ofsted inspection on Children’s Services should have been identified sooner by the County Council and that the qualification was due to this and the fact that there were problems in statutory delivery of services.

·         Noted that the later timing of the inspection findings on the Fire and Rescue Service, plus the more internal nature of the problems found in the inspection, had meant that no qualification was given in this area. Parallels were found though, that the problems could have been identified sooner by the County Council through its performance management and risk management arrangements.

·         Learned that the County Council had approached EY to possibly undertake work on key performance indicators for Children’s Services, but the Council had not gone ahead with this. The Director of Finance and Support Services was asked to check on what had happened to this area of work.

3.7     Resolved – That the EY reports on the County Council accounts and the West Sussex Pension Fund accounts be noted.