Agenda item

1.       The report was presented by Auditor from Grant Thornton, Ms Lucy Nutley. 

2.       The key points were as follows:

a)       Under Auditing standards, Ms Nutley drew Members’ attention to the fact that Grant Thornton proposed an unqualified Audit opinion and no statutory powers or duties had been exercised during the audit.

b)       Weaknesses had been identified in the Council’s Value for Money Arrangements.

c)       A slight increase in materiality occurred as the figured Grant Thornton assessed at planning was based on the prior year’s gross revenue expenditure (page 33 of report), however the current year was higher and therefore materiality was reassessed. Ms Nutley confirmed that none of the benchmarks that were indicative of risk, had been changed.

d)       For Management Override of Controls, which is a presumed risk, no issues were identified. One recommendation was raised, which was a repeat from the prior year.

e)       No issues were identified around the presumed risk of fraud and error in revenue recognition or valuation of the defined benefit liability.

f)        No significant issues were raised concerning the valuation of land and building Audit work but recommendations had been made and set out within the report.

g)       Page 51 of the audit report indicated that Grant Thornton were awaiting confirmation from NatWest regarding several accounts, however these had now been received.

h)       The three recommendations featured on page 61 had all been accepted by Management.

i)        A classification error of expenditure had been identified in Appendix D (Audit Adjustments). This should have been classed as capital expenditure and has since been corrected.

j)        The Auditors were content with Management’s view in relation to page 68 in that the differences were immaterial projected errors and were content with the decision not to adjust the accounts, however, the Governance and Audit Committee are required to approve this as part of the review of the report.

k)       Page 71 contained the correct Audit fee however the scale fee should be £420, 894.

3.       In answer to the Members questions and comments it was said that:

a)       A ledger update was due to be implemented 2025/2026 which would address the weakness around reviewing and testing journal entries by users.

b)       The Council had carried out a full review of all assets that were leased to ascertain the likely impact of implementation of IFRS16 on the balance sheet, whereas assets which are owned are considered under the significant risk of land and building valuation. Additional work would be carried out by the Finance Team in relation to valuation of right of use assets for which KCC pays Peppercorn Leases and PFI Liabilities and these would be reflected in the 2024/2025 Financial Statements.

c)       In response to a Member’s question the Capital Finance Manager, Ms Julie Samson, commented that the Finance Team were currently undertaking the required work and the PFI Liabilities were being remeasured in line with guidance. In relation to the Peppercorn rents, she commented that if there have been market rent reviews (and the rents are considered to be market rents) then the assets would be measured to match the liability calculated by the future lease payments.

d)       In response to a Member’s question, the Deputy Leader and Cabinet Member for Finance, Corporate and Traded Services, Mr Oakford, commented that in regards to property, the Council took a holistic approach and before a property is declared surplus, a process is applied whereby all the directorates are utilised to see whether that property had another use. The property team this year had raised over £20 Million from revenue sales, against a budget of £12 Million to accelerate the disposable assets before deterioration. Many of the remaining assets are ones which were proving more difficult to sell, for a variety of complex reasons.

e)       In answer to the Chairman’s question, Ms Nutley commented that Kent County Council were less prudent than other Councils when it came to the provision for Adult Social Care Debit and this should be increased.

f)        The Interim Corporate Director of Finance, Mr John Betts, commented that the Finance Team were currently looking at how debt was collected in Adult Social Care and both the mechanisms and capacity to chase and collect bad debt were being considered in the current financial year.

g)       Thanks was given to the Finance Team on behalf of all the Members in view of the hard work carried out in the preparation of accounts.

4.       RESOLVED To note the External Auditor’s Findings Report for Kent County Council for assurance.