Agenda item
Statement of Accounts 2013/14 and External Auditor's Report
This report is intended to identify any changes to the accounts, unadjusted mis-statements or material weaknesses in controls identified during the audit work. It also provides the overall value for money conclusion for the year. The accounts and the ISA260 report, reflecting the current position, are attached as appendices 1 and 2 to this report. Based on the current position KPMG intends to give unqualified opinions on the Council and Pension Fund accounts and a clear value for money conclusion.
Representatives from KPMG will attend the meeting to provide an update on the audit and respond to any matters raised by the Committee.
Minutes:
The Committee considered a report that summarised the key findings arising from the audit work by KPMG (external auditors) of the Authority’s 2013-14 financial statements, Brent Pension Fund Scheme administered under the Local Government Pension Scheme and KPMG’s 2013-14 conclusion on the Authority’s arrangements to secure economy, efficiency and effectiveness in its use of resources (‘VFM conclusion’).
Phil Johnstone, Director of KPMG stated that KPMG anticipated issuing an unqualified audit opinion on the Authority’s financial statements by 30 September 2014 and an unqualified audit opinion in relation to the Pension Fund’s financial statements. KPMG also expected to report that the wording of Authority’s Annual Governance Statement (AGS) accorded with their understanding. He reported that a material adjustment of £28.7 million to the primary financial statements which related to the valuation of additions to Council dwellings was identified. In addition five other non trivial audit adjustments and a small number of trivial presentational adjustments were identified. He emphasised that these did not impact on the General Fund balance.
He informed members that KPMG worked with officers throughout the year to discuss the significant audit risk area identified arising from the triennial valuation of Brent Pension Fund. In his view, the Authority addressed the issues appropriately. The standard audit risk of management override of controls and the audit testing of journal entries, accounting estimates and significant transactions outside the normal course of business or unusual were considered but did not identify any issues. The Director added that the changes by the Authority to the format of the financial statements this year to help make them reader friendly for interested parties was a welcome approach and demonstrated considerable thought. Phil Johnstone found that the financial statements were prepared to a good standard with working papers ready for the start of the audit and that officers dealt efficiently with audit queries. He continued that the Authority’s organisational control environment was effective and that no significant weaknesses in controls over key financial systems were identified.
Phil Johnstone drew members’ attention to two recommendations made in relation to strengthening the Authority’s control environment both relating to Plant, Property and Equipment and clarified them as follows; on the revaluation of Council dwelling additions, the Authority’s surveyor should review the amount spent and calculate the increase in market value of Council dwellings as part of the closedown process for 2014/15; on the valuation of the Civic Centre, the components of the Civic Centre should be separately included in the fixed asset register and depreciated over their respective estimated useful lives. He added that management response to both recommendations was positive with anticipated completion date of March 2015.
A member observed that the statement of accounts did not mention payments to the current Chief Executive and enquired as to the reasons for the non-disclosure. He also enquired as to whether the Council’s Private Finance Initiative (PFI) contracts represented value for money. In responding to the Chief Executive’s salary, the Chief Finance Officer stated that the amount paid was reflected in the accounts, a view that was shared by Phil Johnstone who added that in KPMG’s view, this matter raised no issue of concern in the accounts. In respect of PFI contracts, the Chief Finance Officer clarified with reference to note 29 of the accounts (appendix 2) that amplified the Council’s PFI contracts and service concessions. Phil Johnstone added that the impact of those contracts was not significant on the size of Brent’s accounts and reiterated that in KPMG’s view, those contracts raised no issues of concern.
Phil Johnstone stated that the Authority had the right structure in place for income generation and to deliver changes to service, adding that and in the detail risk assessment undertaken KPMG did not identify issues of concern. The level of reserves was also considered adequate. Conrad Hall (Chief Finance Officer) advised members that the Pension Fund deficit was a long term liability which was planned to be eliminated over the next 21 years through a combination of investment returns and additional payments by Brent Council, in accordance with the triennial actuarial valuation of the Fund, undertaken as at 31 March 2013.
On behalf of the Committee, the Chair expressed appreciation to KPMG, the Chief Finance Officer and his team for an excellent work on the 2013/14 accounts. In welcoming the report and the opinions expressed by the external auditors, members approved the statement of accounts and agreed that the Chair sign them, and he and the Chief Finance Officer sign the letter of representation to KPMG.
RESOLVED:-
(i) that the statement of accounts 2013/14 and external auditor’s report be approved and signed by the Chair as such;
(ii) that the letter of representation to KPMG (external auditor) be approved.
Supporting documents:
- Statement of Accounts v2, item 5. PDF 77 KB
- Appendix 1 - ISA 260 Report 2013-14, item 5. PDF 1 MB
- Appendix 2 Annual Accounts 2013-14 v1.17, item 5. PDF 2 MB
- Appendix 3 Accounts - Draft Letter of Representation, item 5. PDF 85 KB