Agenda and minutes

To receive apologies for absence.

Apologies for absence were received from Councillors Briggs and Salamat*.

* Councillor Salamat attended the meeting from 6.05pm.

There were no public questions received.

The Minutes of the previous meeting held on 29^th June 2021 are attached for approval.

RESOLVED – That the minutes of the previous meeting held on 29^th June 2021 be approved as a correct record.

The present to the Audit Committee, the proposed Reserves Policy of the Council for the financial years 2020/21 to 2021/22 and to incorporate any views into the final policy.

Consideration was given to a report submitted to the Committee presenting the proposed Reserves Policy of the Council for the financial years 2020/21 to 2021/22 and to incorporate any views into the final policy.

The Committee was reminded that the Council had developed a strategic approach to the creation and maintenance of reserves through the development of a Reserves Policy and the presentation of the Policy to the Audit Committee.  The aim is to improve the transparency of the level of and the use of reserves.

It was reported that because resources were becoming even more scarce, any money set aside needed to both support the priorities of the Council and prevent unforeseen expenditure/events impacting on year-on-year budgets wherever possible.  The Committee was advised that the following needed to be considered in relation to decision making around reserves

•           Undertaking an annual review to ensure reserves align with Medium Term Financial Strategies; and

•           Having clarity about what earmarked reserves are for; and

•           Ensuring earmarked reserves held to mitigate financial risk reflected an up-to-date assessment of risk; and

•           Monitoring the level and use of reserves over recent years and comparing the Council’s approach to other organisations facing similar circumstances; and

•           Budget monitoring and forecasting to give Elected Members greater awareness of likely year-end movements on reserves; and

•           Ensuring significant or unexpected variations to budget are dealt with.

The Committee was assured that the Council meets the criteria as detailed above through the regular review of reserves, the Revenue Budget Monitoring reports presented to Cabinet, the Statement of the Chief Financial Officer on Reserves, Robustness of Estimates and Affordability and Prudent of Capital Investment Reports presented alongside the Revenue Budget Report to Council and the production of the Annual Reserves Policy.

It was reported in the second CIPFA Resilience Index published in February 2021 (presenting information in relation to the financial year 2019/20), that none of the Oldham indicators were considered as extremely high risk or a cause for immediate concern.  However, there is a challenge in that the Index is a backward look and that consequently the information contained in the Index as at the end of 2020/21 was likely to be out of date by the time it was published and would also be greatly impacted by the issues arising from Covid in 2020/21. 

The future impact of the pandemic is unclear.  The reserves of the Authority were therefore important in providing support for the financial position giving time for any required budgetary adjustments to be made. 

The Committee was advised that the 2020/21 to 2021/22 reserves policy, which was attached to the report at Appendix 2, had been prepared, following the finalisation of the financial outturn position at the end of 2020/21 and after a risk-based review by the Director of Finance, having regard to Corporate Priorities.  Fourteen major Earmarked Reserves had been included in the Policy which were detailed in Appendix 1 as attached to the report.  Details pertaining to the 14 major  ...  view the full minutes text for item 6.

Consideration was given to the Council’s Audit Completion Report (ARC) which was attached to the report at Appendix 1 for the year ending 31st March 2021 as prepared by the Council’s External Auditor, (Mazars LLP). The ARC advised of the key issues in relation to the audit of the 2020/21 Statement of Accounts.

The ARC advised that the impact of the Covid-19 pandemic on the audit had been significant for a second audit year.  It was reported that although the Council’s finance team and management had co-operated fully throughout the audit, the requirement for the Mazars Audit team and Council staff to work remotely had meant that the audit work had taken longer to complete and finalise than would ordinarily be the case.  The Council’ finance and audit teams were thanked by the External Auditor for their support during the process.

The Committee was advised that work was nearing completion.  Details of outstanding matters in relation to the audit were highlighted in section 2 of the Audit report (Status of the Audit).

The Committee was reminded that details of the intended audit approach in Mazars Audit Strategy Memorandum had been presented to the meeting of the Audit Committee in June 2021 and that no changes to the approach had been made following this.  Details of the approach were highlighted in section 3 of the Audit report (Audit approach).

Findings on individual key audit matters, along with how the audit had addressed the key audit matters were highlighted in the Audit Report in section 4 (Significant Findings). 

One recommendation was made in relation to internal controls in section 5 of the Audit Report (Internal control recommendations) at level 3 (low level) in relation to the Housing Benefit to General Ledger reconciliations.

Outlined in the Audit Report at section 6 (Summary of misstatements) were the misstatements that had been identified during the course of the audit and details of misstatements that had been adjusted by management during the course of the audit.  It was reported that based on the work completed to date, there were no significant adjusted misstatements to bring to the attention of the Committee.

In response to an issue that had been highlighted in section 5 of the Audit Completion Report, in relation to Housing Benefit to General Ledger reconciliations, it was suggested and agreed that an update report be presented to a future meeting of the Committee, in relation to the matter.

In response to clarification sought around an error as detailed in Section 6 of the Audit Report, “testing of income received after the year end identified one government grant for £228k which related to a 2020/21 grant but had been received in May 2021” it was clarified that when the grant was received, the Council had already passed its cut-off date for the inclusion of transactions in the 2020/21 accounts and had recognised this income in 2021/22.  The Committee was advised that by applying the audit methodology, the £228k error had been extrapolated, and if the  ...  view the full minutes text for item 7.

Consideration was given to a report presenting the 2020/21 Draft Statement of Accounts which was attached to the report at Appendix 1.

The Committee was advised that the Council had submitted its draft financial statements to the External Auditors, Mazars LLP, on 6th June 2021 which had been a little later than anticipated due to the impact of the pandemic.  To facilitate the audit process, the Council had made working papers available to the auditors prior to the handover of the Statement of Accounts.  The public inspection had commenced on 17th June 2021 and had concluded on 28th July 2021.  No objections were received.

The Committee was reminded that the draft Statement of Accounts had been presented, with a covering report outlining key issues to the meeting of the Committee on 29th June 2021.  This had provided members of the Audit Committee the opportunity to consider the key issues and ask officers and the External Auditor any relevant questions.  All matters that had been raised had been addressed at that meeting to the satisfaction of the Committee.

The reported highlighted the following:

•           The overall revenue outturn position for 2020/21 was a surplus of £2.153m

•           The year-end variances that are attributable to each Portfolio

•           The level of Grants received in relation to the COVID-19 Pandemic

•           School balances as 31st March 2021 were £9.306m

•           The Dedicated Schools Grant (DSG) deficit was £3.560m which is now held in an unusable reserve rather than being netted off the Schools balances (as presented in the accounts in previous years)

•           The final Housing Revenue Account (HRA) balance was £21.370m

•           The balance on the Collection Fund was a deficit of £27.213m

•           The revenue account earmarked reserves at £113.512m, other earmarked reserves at £29.452m (Revenue Grant Reserves of £20.145m plus School Balances as above) and an increase in the General Fund balance of £2.153m to £17.263m, reflective of the revenue outturn position

•           Expenditure on the Council’s Capital Programme for 2020/21 was £73.22m which is an increase on the month 9 forecast expenditure of £71.012m.  The increase in expenditure required funding allocated to future years to be re-profiled to fully finance the Capital Programme in 2020/21

•           The significant items in each of the primary financial statements

•           The preparation of Group Accounts incorporating the Council’s two wholly owned companies – the Unity Partnership Ltd. And MioCare Community Interest Company

•           The Annual Governance Statement

•           The performance of the Finance Team in closing the accounts.

It was reported that the audit of the Accounts was now substantially complete with a few significant outstanding items, which were outlined within the report, along with some other small items that needed to be completed.

As the outstanding matters had not been resolved, The External Auditor was content with a recommendation that the Committee considered the accounts but delegated the final approval of the Council’s Statement of Accounts, on resolution of the outstanding items, to the Vice-Chair of the Audit Committee having regard  ...  view the full minutes text for item 8.

That, in accordance with Section 100A(4) of the Local Government Act 1972, the press and public be excluded from the meeting for the following items of business on the grounds that they contain exempt information under paragraph(s) 3 of Part 1 of Schedule 12A of the Act, and it would not, on balance, be in the public interest to disclose the reports.

RESOLVED that, in accordance with Section 100A(4) of the Local Government Act 1972, the press and public be excluded from the meeting for the following items of business on the grounds that they contain exempt information under paragraphs 3 of Part 1 of Schedule 12A of the Act, and it would not, on balance, be in the public interest to disclose the reports.

To report to the Audit Committee that as part of the quality assurance arrangements for external audit in the public sector the Financial Reporting Council (FRC) undertake a selection of reviews on the quality of external undertaken. For the audit undertaken for the financial year 2019/20 the external audit for Oldham Council was selected for review

A report was submitted to present the findings of the independent review of the external auditor which were detailed in Appendix 1, as attached to the report. 

RESOLVED – That the Audit Committee note the findings of the Independent Review undertaken by the FRC into the work of our external auditor.

The meeting started at 6pm and ended at 7.15pm.