Agenda item

To have due regard of the external audit findings, detailed within the ISA 260 report and formally approve the 2023/24 Statement of Accounts (Appendix 1) for publication as final and the 2023/24 Narrative Report (Appendix 2) for publication as final.

Further to Minute Nos. 7 and 32 of 25^th June and 26^th September, 2024, respectively, Natalia Govorukhina, Head of Corporate Finance, and Michael Green, on behalf of Grant Thornton, presented the Audited Final Statement of Accounts and the ISA 260 report.

The Committee noted that under the Accounts and Audit (amendment) Regulations 2022, local authorities were required to publish their unaudited accounts no later than 31st May 2024, for the financial year 2023/24, accompanied by a Narrative Report and draft Annual Governance Statement.

At present, as part of the draft ISA 260, the following changes have been recommended by Grant Thornton and accepted by the Council, with adjustments made to the Council’s accounts:-

-        A balance of £5.991M was held as Assets Under Construction in the Note 19 (PPE) for Century Business Park Phase 2.  As this asset was an investment property, this balance should have been included in Note 20 (Investment Property).  Opening balances for 2022/23 and additions in 2022/23 had been amended so that this balance was shown under investment properties in Note 20 rather than Note 19 (PPE) in the 2023/24 opening balance;

-        An overstatement of £3.18M had been corrected on the land and buildings revaluations.  This related to the valuations of Riverside House £2M and Bramley Sunnyside Primary School £1.18M.  The balance of Other Land and Buildings in the Note 19 and the Revaluation reserve had been corrected.  Other notes in the accounts had been amended as appropriate;

-        S75 funding (population health funding) of £13.905M had been misclassified as Grants Received in advance.  This has been reclassified as creditors under receipts in advance.  The change did not impact the Council’s financial position or balance sheet as both fell under creditors.  It was a categorisation issue.

Grant Thornton intended to issue an unqualified opinion on the Statement of Accounts subject to formal completion of their audit.  The Value for Money work had not concluded as yet and as such was not able to confirm an unqualified opinion in respect of the Council’s Value for Money arrangements.

Michael Green stated that the work was substantially complete and Grant Thornton expected to issue an unqualified opinion on the financial statements before Christmas.  Once again, Rotherham would join a small number of authorities to receive an opinion in 2024 which reflected the hard work of Rotherham’s Finance Team and the engagement with Grant Thornton.

A number of small of disclosure/classification adjustments had been recommended and accepted by the Council with adjustments made to the Council’s accounts but had no impact on the Council’s available useable resources. 

Work was taking place on finalising the findings of the Value for Money work.  It was expected to identify 2 significant weaknesses in the Authority’s arrangements for improving economy, efficiency and effectiveness.  These were in relation to arrangements around health and safety and compliance relating to the Housing Revenue Account and wider asset management and compliance arrangements.  These were issues that were not unknown to the Council.

Thilina de Zoysa, Grant Thornton, presented the ISA 260 report setting out the overall conclusions from the 2023/24 audit, key findings and other matters arising from the statutory audit and preparation of the Council’s financial.

The key points were set out in detail as part of Appendix 4 with attention drawn to the following:-

-        Materiality was reconsidered on receipt and review of the 2023/24 draft accounts.  It had been included that the most appropriate benchmark/criteria was gross expenditure in surplus/deficit on the provision of services rather than gross expenditure on the cost of services.  This resulted in a minor change to the set materiality figures

-        The 3 significant risks identified had not changed i.e. management override of controls, value of land and buildings and valuation of defined benefit pension scheme

-        IFRS16 implementation.  A recommendation had been made that the Council should accelerate the progress of identifying such assets as a priority and ensure full impact was determined well before the 2024-25 closedown.  This had no impact on the 2023-24 audit

-        Non-significant deficiencies identified during the Information Technology assessment but would further strengthen the Council’s IT control environment when implemented

-        Sufficient appropriate audit evidence to enable conclusion that a material uncertainty related to going concern had not been identified and that management’s use of the going concern basis of accounting in the preparation of the financial statements was appropriate

Resolved:-  That, having taken due regard of the external audit findings detailed within the ISA 260 report, the 2023/24 Statement of Accounts, attached as Appendix 1, be approved for publication as final along with the 2023/24 Narrative Report attached as Appendix 2.