The report for item 6 also covers this item.

Report and appendix added 23 July 2018.

The Chief Financial Officer introduced the report which sought the Audit Committee’s approval of the Council’s Annual Financial Report for 2017/18 and included the external auditor’s Audit Findings Report.  He explained that the Ministry of Housing, Communities and Local Government had brought forward the timetable for submission of the report and this had added additional pressure for officers to meet the deadlines.  He thanked the Financial Services Manager and Trevor Greenlee (Grant Thornton), and referred to the tabled papers.

The Chairman suggested that more colour included in the document would be beneficial in making the report clearer and easier to understand.

The Financial Services Manager provided an overview of the Annual Financial Report.  He drew Members’ attention to the significant items in the Expenditure and Funding Analysis, the Comprehensive Income and Expenditure Statement, the Movement in Reserves Statement, the Balance Sheet and the Cash Flow Statement.  In response to a question, he advised that the pension figure in the accounts met the requirements of the accounting regulation IAS 19, but this did not affect the actual amount which the Council paid to the Kent Pension Fund.

The Financial Services Manager explained that there had been an increase in the Council’s reserves of £2million, resulting in total usable reserves of £19.9million, and that there had been a large increase in the Property, Plant and Equipment figures as a result of the Sittingbourne Town Centre Regeneration, a consequent reduction in Short Term Investments and that the cash flow had slightly increased by £1million.

Members congratulated the Financial Services Manager and his Team for a comprehensive and applaudable set of accounts.

Mr Trevor Greenlee (Grant Thornton) was invited to introduce the Audit Findings for the Year ending 31 March 2018.  He acknowledged the time constraints in producing the report in a shorter timescale, and he outlined the approach taken, what worked best, as well as getting some of the work completed early, to try and reduce pressure at the end.

A Member raised concern with the scenario of there being issues with the accounts and the target dates then not being reached.  In response, the Chief Financial Officer explained that the accounts had been published on 25 May 2018, before the 31 May 2018 deadline.  He added that he spoke regularly with Grant Thornton, the Financial Services Manager and the Chief Executive, so that any issues could be resolved quickly.  The Chief Financial Officer also noted that because of the change in deadlines, this had resulted in the accounts being put to the Committee for approval two months earlier.

Mr Greenlee referred to the Headline section and that an area at one of the Council’s leisure centres had not been included in the initial valuation.  He explained that this had since been resolved and there were no outstanding issues related to this.  This had, though, resulted in a net understatement of £363,000 in the value of the asset, but this was not material against the total value of the Council’s year assets, so the accounts had not been adjusted.  A Member raised concern that there had been an error in the original valuation.

Mr Greenlee explained that there were measures in place to address this going forward.

Mr Greenlee stated that in general the standard of accounts was very high, with some very minor changes required.  He advised that there were no risks that were Swale-specific, and there was nothing of concern in relation to the accounting policies.  The Chief Financial Officer in response to a comment from Mr Greenlee, advised that he would investigate further the instance where a response had not been received from a third party, as noted on page 13 of the tabled paper.

Mr Greenlee said that looking ahead, proper arrangements were in place to ensure the Council delivered value for money.  Mr Greenlee thanked the Financial Services Manager and his Team for their proactive work with presenting complex accounting issues, which had resulted in the accounts being completed to a very high standard.

A Member endorsed Mr Greenlee’s comments, and he also thanked the Chief Financial Officer, the Finance Team and the Cabinet Member for Finance and Performance.

The Chairman referred to the letter of representation and asked the Cabinet Member for Finance and Performance, the Chief Financial Officer, the Head of Audit Partnership, and the Financial Services Manager for their formal confirmation that they were not aware of any reasons why the Audit Committee should not approve the letter and whether there was any information that the Committee needed to be aware of prior to approving the letter. They individually gave the Committee the necessary confirmation.

The Cabinet Member for Finance and Performance thanked the Audit Committee and Finance Team and the Audit Team for the reports and thanked Mr Greenlee for his guidance over the years.

Resolved:

(1)      That the external auditor’s Audit Findings Report (Appendix I) be noted.

(2)      That the letter of representation (Appendix II) be approved on behalf of the Council.

(3)      That the Annual Financial Report for the year ended 31 March 2018 including the Annual Governance Statement (Appendix III) be approved.

(4)      That the Audit Committee Chairman signs and dates the Annual Financial Report for the year ended 31 March 2018 be approved.