Agenda item

Grant Thornton (to note)

Peter Barber of Grant Thornton introduced the report as circulated with the agenda and confirmed that progress had been made against the areas identified as being ‘yet to be finalised’ in the executive summary of the report.  He advised that Grant Thornton anticipated being able to provide an unqualified opinion.  The report, which was submitted on the 11 September, stated that no material misstatements had been identified during the audit, however, the council had identified one material misstatement relating to Property, Plant and Equipment and as such, Grant Thornton had issued an addendum on the 17 September, which provided a brief description of the errors, which were offset by another error which meant that the net impact on the Council’s Balance Sheet for both years was no material.  Details had been included in the accounts which were scheduled next on the agenda.  The accounts were very long, more than 100 pages and therefore errors inevitably did occur, but members were assured that this was a positive message.  The other area of work for Grant Thornton was the Value for Money conclusion and he was pleased to report that Grant Thornton had reached the view that CBC had satisfactory arrangements in place, with all six risk areas being assessed as ‘Green’.  He noted that one control issue that had been flagged was the fact that the Section 151 Officer was able to post journals and this had been addressed by the Director of Resources having relinquished his Section 151 Officer responsibilities. 

Jackson Murray from Grant Thornton then talked members through some of the finer detail of the report, on which the unqualified opinion was based. 

The following responses were given to member questions;

·         The £163k surplus from Ubico had arisen as a result of how they had to account for their pensions liability and this surplus had been reported to council by the Cabinet Member Finance when he had presented the mid-term report. 

·         If an asset within a class was revalued then the code states that you must reassess all assets in that class within that year, but this would not always be possible to achieve so sub-categories are used. 

·         The £2.99m misstatement related to the Wilson which was listed under assets under construction but came operational in 13/14. This was transferred to assets in operation but not taken into account in the revaluation of the asset.   

·         As part of the VFM work Grant Thornton did look at investments and in terms of the AG&M overspend did not feel that anything negative needed to be included.  Peter Barber was of the opinion that in setting any budget there was always a risk that it would not be enough after having embarked on the project.  In his view the income now being generated by the Wilson was helping the council to meet its financial  needs and the fact that the council were taking proactive measures to how they approached projects such as this in the future meant that the overspend did not represent a significant issue in relation to VFM. 

·         The purchase of Delta House would be considered next year and would only be commented upon if it was considered to be warranted. 

·         The £1.5m budget gap represented the budget gap over the totality of the MTFS rather than £400k each year. 

·         Grant Thornton were not intimating that the general reserves of the council were too low, they were simply acknowledging that they were lower than other councils of a similar size and that were initiatives such as 2020 vision not to be taken forward, that the council would not be able to depend on its reserves when setting budgets for as long as some other authorities would. 

The Section 151 Officer confirmed that he and his team were currently working on the MTFS, which would be considered by Council in October.  He assured members that the budget gap did not equate to £400k each year but was instead front loaded at 2016/17.  In setting the reserves the council had adopted a risk based approach and considered what was the optimal minimum and based on that assessment advice was that the council should not allow their reserves to fall below £1.35m and it was currently £1.6m.  His advice going forward would be that any underspend or fortuitous gains in the future should be used to build the council’s reserves.  He was not in a position to say whether the £163k Ubico surplus would be utilised in this way or not.  He stressed that if the council did not agree to 2020 vision the MTFS would be put at risk and members would need to look at cutting non-statutory services. 

Some members of the committee felt strongly that the Wilson did represent good value for money, they felt that the Art Gallery had not been fit for purpose and that the investment that had been made, irrespective of the over-spend, had been an investment for the future.

No decision was required.