Agenda item

1.     The item was presented by Mr Paul Dossett. The paper was taken as read and the key points were highlighted for Members’ attention.

2.     In answer to Member questions, the following was said:

        a)     The amount of money Kent County Council lent to the local authority owned companies was immaterial in total and related more to working capital. Kent County Council companies provided a range of services and were relatively small in scale.  Mr Dossett confirmed that the external auditors examined the accounts and confirmed they did not present a concern, due to their size. It was confirmed that the companies owned by the local authority had their own independent auditors who would highlight any growing concerns.

        b)     Mr Watts commented that a briefing on Governance Structure, as part of the new Member medium-term induction plan could be arranged. It was clarified that the shareholder board, a sub-committee of the Council’s Cabinet Committee, was due to meet before the end of the year and calendar invites would be circulated.  Mr Watts also explained to Members that information about the performance of outside companies came to the Committee on an annual basis.

        c)     Mr Watts confirmed that the performance and asset value of the outside companies was such that they generated a net contribution to the Council on an annual basis. It was explained that the Authority had a single holding company and the majority of the wholly owned companies were arranged under this.

        d)     It was explained to Members that they would have the opportunity to participate in a site visit of the wholly owned companies and receive a detailed briefing which set out how the companies operated and their structure.

        e)     Mr Dossett confirmed that a commentary would be contained in their external auditor’s findings report covering the implementation of the Oracle Cloud Programme and assured the Committee that ongoing work was being performed by Grant Thornton’s IT Team, who focused on the quality of the control environment and whether they had been appropriately developed.

        f)      It was explained that the external auditors would not focus on operating effectiveness because their audit approach was a substantive one and did not focus or rely on controls, instead the focus was on year- end substantive testing.

        g)     Mr Dossett explained that the external auditors had regular dialogue with officers and if concerns were raised, then follow up visits from IT specialists would be arranged to investigate the issues.  It was pointed out that internal audit would have a role if any operational effectiveness concerns were identified.

        h)     It was confirmed that Kent County Council was not under the Exceptional Financial Support Programme (EFS) and did not have general permission to sell assets and charge them to revenue. The Section 151 Officer oversaw the disposal of all assets, and the Authority needed to demonstrate best value in the disposal. Mr Dossett confirmed that assets disposal was examined as part of the audit process and if anything looked irregular after scrutiny, it would prompt a formal audit question.  It was confirmed that the Authority was not in a position whereby there was a need to sell assets for revenue purposes.

        i)      Mr Betts clarified that in some limited circumstances the local Authority could use capital receipts to fund some elements of revenue, where that revenue funding is designed to produce a saving later, as the  Authority had done when setting this year’s  budget.

        j)      Mr Betts explained that the Authority was working with external auditors in respect of IFRS 16 and on Grant Thornton’s advice, all assets had been reviewed whereby IFRS 16 could be on lease, including issues around peppercorn rents and how PFI was managed.  These would be effectively reflected in the accounts.

        k)     Mr Dossett confirmed that the external auditor’s assessment of the financial sustainability of the Authority would be provided by 30 November 2025.  In addition, he confirmed that if Members wanted to deep dive into any areas, it would be a judgement for the Committee and they should speak to the relevant officers.

3.     RESOLVED the Members noted the external audit plan for Kent County

        Council for 2024-2025.