Agenda item

Gareth Mills, Director, Grant Thornton, provided an update in relation to the External Auditor’s ISA 260 report, which summarised the key findings and other matters arising from the work undertaken by the External Auditor for 2022/23 on the Council’s financial statements audit of the accounts, prior to issuing their opinion on the Council’s financial statements. The Value for Money report for 2022/23, as part of the External Auditor’s Annual Report would be presented to the Committee at the meeting in February 2024.

Prior to presenting the report, the Director thanked the Committee for extending the deadline for completion of the External Auditor’s audit work. Members’ attention was drawn to the key headlines, as set out at page 3 of the External Auditor’s Executive summary of the ISA 260 report, including:-

• no audit adjustments had been identified impacting on the council’s outturn position and useable reserves
• although there were adjustments in relation to the value of the Council’s Pension Scheme, Doncaster’s analysis and judgement to include the Pension as an asset on the balance sheet was correct and ahead of the curve.
• aspects of the External Audit’s work outstanding were to be completed within the next few weeks.

Since writing the report, Perminder Sethi, updated the Committee regarding two further adjustments identified on the balance sheet in respect of the valuation of schools, which had been undervalued by £2.8m, which was due to a calculation error in the valuation. The second adjustment related to £0.8m spent on Doncaster Archives that had been incorrectly de-recognised. Both adjustments would be updated in the External Auditor’s final audit findings report.

The Director, Grant Thornton commended the Finance team for their significant achievement for completion of the draft Statement of Accounts within the deadline of 31st May 2023, which had placed Doncaster in a favourable position compared to other Local Authorities. It was further reported that to date no issues had arisen in relation to the audit. The External Auditor continued to have a good level of engagement with the Council’s Finance team whilst undertaking the audit. The accounts were on schedule to be completed within the next few weeks, which placed Doncaster in a good position compared to other local authorities across the country. In relation to the External Auditor’s work regarding the Council’s Value for Money arrangements, Members were informed that it was anticipated that this was to be concluded and presented to the Committee at its meeting on 1st February 2024. No issues or concerns had been identified as part of the External Auditor’s work.

Following the presentation of the report, the Chair on behalf of the Committee thanked and congratulated both the Finance Team for completion of the accounts and the External Auditor for auditing of the accounts, given the continuing challenges and conditions to complete the audit this year. The Committee recognised the positive achievement in completing the audit within timescales to that of other local authorities and, despite the challenges, had raised the bar, which further demonstrated that the Council’s finances were well managed.

The Chair referred to some local authorities being served with a Section 114 notice and sought assurances from both the External Audit and the Assistant Director of Finance in terms of the Council’s financial position. The External Auditor stated that Doncaster’s was in a good position financially, compared to other similar size local authorities, however, he highlighted that Adult, Social Care and Children’s Services were placing significant pressures on local authorities, but Doncaster’s financial position meant it could better deal with such issues. In relation to the medium to long term position, in common with other local authorities it was highlighted that the significant pressures faced by local authorities needed to be planned for. However, Doncaster was not deemed as a high-risk authority, as it had put in place contingencies to deal with the national difficulties posed. However, the External Auditor spoke of the further difficulties faced by local authorities in the future, due to the increase to public spending. 

Faye Tyas, Assistant Director of Finance added that the Council had set a balanced budget, which was being closely monitored. She spoke of the significant financial challenges placed on the Council, due to pressures in Adult Social Care and Children’s Services, together with inflationary pressures and the position regarding the increase in the Dedicated School Grant (DSG) deficit, which were all impacting on the Council and its ability to plan for the long term regarding the Council’s future finances. It was confirmed that at the present time, the Council does not envisage serving a Section 114 notice. As part of the budget setting process, leading to the Council budget consideration in February next year, a review would be undertaken in terms of the robustness of the budget proposals and the level of reserves.

In response to questions by the Vice-Chair, the Assistant Director of Finance confirmed that the DSG override remains in place, therefore the overspend is carried forward into next year.  The Council continues to review the position in relation to the DSG spend and progress plans to reduce spend, focusing on delivering best value. The Council is in dialogue with CIFPAand Newton, and the DfE regarding the overall funding position and continues to identify further opportunities, however, to date this work has identified insufficient additional options, to those already being progressed, to meet the current funding gap. In terms of the risks to the Council, the Director, Grant Thornton advised that nationally the override was in place until the 2025/26 financial year and any potential risks for the financial sector were likely to be from the 2026/27 financial year. He highlighted that it was not unusual for a local authority to be in deficit in terms of the significant costs in respect of the DSG.

Following a question by the Chair in relation to Paragraph 10 of the draft Annual Governance Statement, the Director of Corporate Resources clarified the key governance officers in the Council and partners who had been consulted regarding the draft Annual Governance Statement, including, the Section 151 Officer, Monitoring Officer, Caldicott Guardian and SIRO, had provided additional assurance within their respective areas. Each Manager had been engaged to look at each of their service areas and report any issues of concern up through the organisation. She outlined the cross-cutting approach used across the Council and its partners, including St Leger Homes and the former Doncaster Children’s Services Trust (DCST) regarding strategic functional areas that were potentially areas of concern and would be brought to the Committee as part of the Annual Governance Statement. 

The Director of Corporate Resources then provided an update in relation to the completion and actions relating to the Social Care Data Quality, as outlined on page 7 of the Annual Governance Statement.

To conclude, the Assistant Director of Finance wished to place on record her thanks to the Finance Team for their continued work given the challenges faced this year. She also extended her thanks to the External Auditor, Grant Thornton for their work to complete the audit in a timely manner. The Chair on behalf of the Committee, acknowledged the high level of work undertaken by the Finance Team in maintaining the completion of the accounts within the statutory timeframe and the good position of the Council. He expressed his appreciation for the hard work undertaken by the Finance Team and Grant Thornton who had contributed to the process.

RESOLVED that

(1)    the contents of the draft external audit ISA 260 report, be noted;

(2)    the Letter of Representation included in the draft ISA 260 report, be endorsed for signature by the Chair of the Audit Committee and the Chief Financial Officer;

(3)    the Statement of Accounts 2022/23, be approved;

(4)    the Annual Governance Statement 2022/23, for signature by the Mayor and the Chief Executive, be approved; and

(5)    delegated authority be given to the Chief Financial Officer, in consultation with the Chair, to agree any adjustments to the Statement of Accounts 2022/23, following the completion of the audit by Grant Thornton, should any changes be necessary, prior to signing by the Chief Financial Officer and the Chair of the Audit Committee.