Agenda and minutes

To receive any apologies for absence

Apologies were received from Mr Frank Cassidy.

To note any changes to the membership of the Committee

Members were informed that Mr Frank Morgan would be substituting for Mr Frank Cassidy for this meeting only.

There were no disclosures of interest made on this occasion.

There were no items on the agenda which required the exclusion of press and public.

To consider a report from the Chief Legal Officer (Monitoring Officer).

Members considered a report from the Chief Legal Officer (Monitoring Officer) which presented the final Annual Governance Statement 2019/2020 (Appendix 2 of the report) which incorporated changes made following the previous meeting of the Audit and Assurance Committee on 23 November 2020.

The External Auditor confirmed, at the meeting on 23 November 2020, that there were no further comments additional to those already provided to the Monitoring Officer which had been addressed in the Annual Governance Statement presented to Committee on that date.

As agreed at that meeting the section of the Annual Governance Statement headed ‘Assessment of financial impacts of coronavirus’ had been revised to add clarification that the Council had received £30.5 million in general grants to mitigate the impacts of the coronavirus pandemic, which had brought about new Council responsibilities, additional expenditure, losses of income and delays in transformation activities. The revision also clarified that the Council had also received an additional £7.950 million of ring fenced funding for specific purposes related to the pandemic, some of which was to support specific additional responsibilities placed upon the Council such as the Test and Trace programme but the majority of which was provided for transfer to third parties such as the Infection Control Fund which was transferred to adult social care providers.

RESOLVED that,    

1)    Members approve the final Annual Governance Statement of Cumbria County Council for 2019/2020 before its publication on the Council’s website.

2)    Members note that the Leader of the Council and the Chief Executive would sign the Annual Governance Statement prior to publication.

To consider a report from the Director of Finance (s151 Officer) (To Follow)

Members considered a report from the Director of Finance (s151 Officer) which provided an overview of the Accounts for the Council 2019/20. The Director of Finance (s151 Officer) reminded members that the unaudited accounts had been published on 31 July 2020, a month ahead of the deadline in the Accounts and Audit (Coronavirus) (Amendment) Regulations 2020.

Grant Thornton had now substantially completed their audit work on the Council’s 2019/20 Accounts and would present their Audit Findings Report as Agenda Items 7a of the meeting.

The External Auditor had already completed their audit work for the Cumbria LGPS and had presented their Audit Findings Report to the 23 November meeting. It was explained to members that as part of the Audit Findings Reports Grant Thornton stated that they intended to issue an unqualified audit opinion on both the Cumbria County Council and the Cumbria Local Government Pension Fund (LGPS) 2019/20 Accounts. The External Audit Findings report – Cumbria County Council 2019/20 would be considered in full at Minute 103.

The Senior Manager - Accountancy (Deputy s151 Officer) provided a detailed explanation of the County Council accounts 2019/20 and summarised Grant Thornton’s  External Audit Findings report which had concluded that the Council had achieved a very high quality of financial reporting, with working papers being to a good standard.

The Senior Manager - Accountancy (Deputy s151 Officer) highlighted the amendment made to the unaudited accounts following the change in Cumbria LGPS asset values in August 2020. This had given rise to an increase in the Council’s net pension liabilities of £12.490m which was then amended in the primary statements. It was also highlighted that no changes other than minor changes to the narrative statement had been made to the Accounts since the Committee viewed them at the meeting of 23 November.

The Senior Manager - Accountancy (Deputy s151 Officer) brought members attention to the recommendations made in the Audit Findings report with reference to land and buildings. These were, that the Council request a formal valuation report from the valuer and integrate a review of the depreciated costs valuation model into close down procedures. It was confirmed that these recommendations would enhance current process and would be implemented from 2020/21.

RESOLVED that,

1)    the contents of the report be noted;

2)    the matters set out by Grant Thornton in the Audit Findings Report in relation to Cumbria County Council (Agenda Item 7a) be considered and noted. In particular:

                               I.        The headlines (Pages 311 and 312)

                             II.         Significant Findings (Pages 318 to 323)

3)    management’s decision not to adjust for the item raised in the unadjusted misstatement section of the Audit Findings Report (page 28) be approved.

4)    the Letter of Representation on behalf of the Council in respect of the Council’s accounts be agreed to enable Grant Thornton to issue their audit opinions on the accounts and the Director of Finance, as the Council’s Section 151 (Local Government Act 1972) Officer and the Chief Executive be approved to sign the letters  ...  view the full minutes text for item 99.

The Committee considered the Letter of Representation to the Engagement Lead at Grant Thornton. This gave the external auditor the assurance that their audit had been based upon the complete financial picture of the Council, up to the date of the signing of the accounts, and that the accounts were in full compliance  with statutory requirements and was provided in connection with the audit of the group financial statements of Cumbria County Council and its subsidiary undertakings for the year ended 31 March 2020.

The Director of Finance (s151 Officer) asked that members consider the contents of the Letter of Representation and approve the signing of the letter by the Director of Finance (s151 Officer) and Chief Executive.

Approval of this item is recoded at Minute 99.

Members received the audited Statement of the Accounts for the year 2019/20.

Discussion relating to this item and the approval of the Council’s Audited Statement of Accounts 2019/20 is recorded at Minute 99.

Members considered the External Audit Findings Report for Cumbria County Council for the year ended 31 March 2020.

The Engagement Lead confirmed that Grant Thornton anticipated issuing an unmodified and unqualified audit opinion and commented on the effective response time to their audit queries. Overall, the very small number and the nature of the adjustments reflected the continuing and sustained improvement and substantial progress the Council has made in strengthening the accounts process over recent years.

The Auditor emphasised the concerns regarding material uncertainty nationwide which called into question the accuracy of property valuations and impacted the Property, Plant and Equipment area of the Council’s accounts as well as the direct and indirect property investments held as part of the Cumbria LGPS fund.

The Engagement Lead – Grant Thornton was pleased to report that regarding the Value for Money opinion the Council did have proper arrangements in place to ensure economy, efficiency and effectiveness in its use of resources. Members heard that the key recommendation from the Findings Report reflected the need for the Council to continue to carry out detailed sensitivity analysis around key uncertainties and assumptions in budget outturn reporting and as part of the Medium-Term Financial Plan (MTFP).

The report also highlighted the importance of those charged with governance to continue to challenge proposals to close the Council’s budget gap to ensure that targets are manageable and realistic.

The Engagement Lead – Grant Thornton was also pleased to announce that no statutory powers were to be exercised in relation to the audit meaning that the External Auditor would be in the position to certify closure of the audit for 2019/20 at the same time as providing the opinion on the accounts and the Value for Money conclusion.

The Engagement Lead – Grant Thornton concluded by providing the rationale for the increase in audit fees of up to £16,000 due in the most part to the challenge of completing an audit entirely remotely.

The next meeting will be held on

The next meeting of the Audit and Assurance Committee will take place on 18 January 2020 via Microsoft Teams.