Agenda item

Recommendations – Appendix I.

Members raised questions regarding PPE reconciliation and review ofvalue outputs. They highlighted concerns about the lack of significant progress over two years on medium risk audit findings and questioned the finance team’s current status and plans for resolution. Auditors responded by explaining the challenges stemming from a prolonged period without proper audits, noting that improvements are ongoing but complex, and that a clean audit opinion is required before issues can be considered fully resolved. The Director of Finance added that a new asset management system has been implemented to enhance record-keeping and valuation processes, which is expected to improve future audit outcomes and support upcoming local government reforms.

Members also inquired about the variable quality of accounts and evidence due to historic issues and delays in audit completion, dating back to the 2019-2020 period. Mathematical errors and inconsistencies had been repeatedly identified, linked to delays in implementing a new asset management system and the extended audit timeline. The Director of Finance advised that the Council is working through these legacy problems, with auditors noting that while errors persist, many are corrections of past issues rather than new ones.

There was a specific focus on MRP, where retrospective changes have been made to correct balances despite breaching legal and regulatory norms, and this situation in not unique to this Council but relatively significant in impact. The quality of working papers remains a concern, largely as a knock-on effect of delayed audits and historic deficiencies, but improvements are underway. The disposal of a major asset project in South Oxhey was also discussed, and the officer clarified that the asset had been disposed of under a development agreement, and valuation issues are tied to changes in accounting treatment, requested by auditors.

Materiality thresholds for audit errors were explained, emphasising the errors below 2% of annual spend are considered not to materially mislead users of the accounts.

Members sought clarification on asset life assumptions. The officer and the auditors explained the technical and professional judgment aspects behind valuation methods and MRP calculations, emphasising the non-material impact on financial statements and the legal prudence requirements. The discussion also touched on procedural accountability and the appropriateness of raising questions during the committee’s meeting.

Concerns about IT backup testing and data loss risks were also addressed, with reassurance provided by the officer regarding ongoing external assessments and internal IT infrastructure testing to ensure data security and backup.

Members expressed concerns about the lack of clear scale and precise timing for reviews, finding the current amber rating somewhat vague and sought clarity on whether conditions would improve in the next audit cycle. Auditors clarified that the RAG ratings serve as a high-level summary snapshot rather than a detailed risk assessment or audit outcome, emphasising that the Council’s financial reporting arrangements are improving over time and that no significant issues warrant a red rating. Members responded by highlighting the need for explanatory text to help the public and Members understand the RAG status better. The conversation also touched on the difference between risk register approaches and the current RAG summary, with suggestions for additional briefings to provide context.

RESOLVED:

The committee noted the recommendations in Appendix I.