Agenda item

Further to Minute Nos. 98 and 21 of 7^th June and 26^th September, 2023, respectively, Rob Mahon, Assistant Director, and Gareth Mills, 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 2023, for the financial year 2022/23, 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.

For the first time since International Financial Reporting Standards have been adopted by the public sector the Council had to consider a net asset position on the IAS19 valuation report.  This was an assessment of the Council’s current and future liabilities generated by its participation in the Local Government Pension Scheme.

Since the publication of the Draft Statement of Accounts further clarification had been provided via CIPFA Bulletin 15.  This was in response to auditors’ request (nationally) to provide guidance on the application of IFRIC 14 for Local Authority Local Government Pension Scheme (LGPS) plans in accordance with the Code.

The bulletin supported the requirement for the calculation of the asset ceiling and that authorities should consult their actuaries for this purpose.  Prior to the official clarification the Council had worked with Grant Thornton to agree the recommended disclosure in the Final Statement of Accounts.

The actuary reported a revised net surplus/asset position and this had been recognised in the final Statement of Accounts.  It should be noted that this did not impact on the Council’s usable reserves and would not alter the Council’s employer contributions to the pension fund. 

The detailed changes to the Statement of Accounts as a result of the change were set out in the ISA 260.  In addition, there were a number of minor corrections and presentational changes that have been agreed.

The Committee asked several questions on the key findings and on the Council’s current and future liabilities generated by its participation in the Local Government Pension Scheme and the significant impact this was having on South Yorkshire.  Prior to the official clarification the Council worked with Grant Thornton to agree the recommended disclosure in the Final Statement of Accounts and was appropriately reflected.

Gareth Mills, on behalf of Grant Thornton, presented the ISA 260 report setting out the overall conclusions from their 2022/23 audit, key findings and other matters arising from the statutory audit and preparation of the Council’s financial statements and in doing so drew attention to Rotherham being in the minority of Councils managing to achieve the draft accounts deadline.

The key points were set out in detail as part of Appendix 4.  The work was nearing completion and no audit adjustments were identified impacting on the Council’s outturn position and useable reserves.  However, there was one material adjustment to primary financial statements in relation to the valuation of the Council’s share of the defined benefit pension scheme.  Management agreed to update the financial statements to amend for these adjustments and changes.

There were no matters that would require modification of the proposed audit opinion as work neared completion, subject to several outstanding matters relating to completion of the remaining elements of work, responses to equal pay claims and subsequent work, completion of internal quality review processes, reviewing the final signed version of the financial statements, obtaining/reviewing the signed letter of representation and updating the post balance sheet events review.

It was noted the Value For Money work was not yet complete and so the Annual Auditor Report could not yet be issued.  It was hoped this could be discussed and agreed with management by the end of January, 2024 and presented back to the Audit Committee in March, 2024.

The Committee in receiving the information noted this was the first time that the defined benefit pension scheme had been recognised and this could be reflected differently in future years given the complexities of the new standards and the impact on useable reserves.

The Committee also sought assurances about the equal pay liabilities and if they needed to be reflected in the financial statements and were advised that due to a substantial amount of work already completed in tackling equal pay, no liability needed to be recognised.

The Committee also noted the detail within the Financial Statements relating to the other communication requirements and matters communicated to those charged with governance.

Management were satisfied that despite the many challenges Rotherham was in a much better position that some other Local Authorities.

The Committee thanked all those involved in the preparation of the Audited Final Statement of Accounts 2022/23.

Resolved:-  That, having taken due regard of the external audit findings detailed within the ISA 260 report, the 2022/23 Statement of Accounts attached as Appendix 1 be approved for publication as final along with the 2022/23 Narrative Report attached as Appendix 2.