To submit the statutory
financial statements for 2014/15.
a) To submit the revised statutory
financial statements by the Head of Finance for the Committee’s approval (copy
herewith – white paper)
b)(i) To
submit the formal “ISA 260” report to “those charged with governance” by the Wales Audit Office on the 2014/15
Statement of Accounts for Gwynedd Council (copy herewith – grey paper)
b)(ii) To authorise the Committee Chairman and the
Head of Finance to sign the “letter of representation” on behalf of the Audit
Committee, which is charged with governance in relation to approving the
statutory financial statements for Gwynedd Council (copy enclosed as Appendix 1
to the Wales Audit Office report in (b)(i) above)
c)(i)
To submit the formal “ISA 260” report
to “those charged with governance” by the Wales Audit Office on the 2014/15
Statement of Accounts for the Pension Fund (copy herewith – lilac paper)
c)(ii) To authorise the Committee Chairman and the Head of Finance to sign the “letter of representation” on behalf of the Audit Committee, which is charged with governance in relation to approving the statutory financial statements for the Pension Fund (copy enclosed as Appendix 1 to the Wales Audit Office report in (c)(i) above)
Minutes:
i) Statement of the Accounts
The
Head of Finance Department submitted the revised statutory financial statements
for approval by the committee. He noted that Appendix 3 in the reports that
followed by the Wales Audit Office (WAO) noted the main changes in the accounts
since the pre-audit version had been submitted to the Committee meeting of 16
July.
ii) Report of the Appointed
Auditor on the Audit of Financial Statements
a) The Council’s Accounts
In
accordance with the Annual Audit procedure, namely the Appointed Auditor’s
report for those charged with governance, the report of the WAO was submitted.
The Engagement Leader and Local Manager, WAO, were present to submit the
information.
It
was noted that WAO was responsible for undertaking an audit on behalf of the
Auditor General and for reporting whether it was of the view that the reports
presented the financial position of the Council accurately and fairly at the
end of every year. It was reported that the Appointed Auditor intended to issue
an unqualified audit report on Gwynedd Council’s accounts for 2014/15.
The
WAO representatives noted the following main points:
·
That there would be a delay before the accounts
were certified as a member of the public had expressed an objection to the
accounts relating to the expenditure of the Trunk Road Agency. Consequently,
WAO could not formally conclude its audit responsibilities or issue the
certificate of audit closure until the matter had been addressed.
·
In the context of misstatements not corrected,
WAO had identified an overstatement of £825,000 in the provisions, namely:
Ø A
provision of £490,000 to cover the future loss of Council tax as a result of
householders with properties that were not fully occupied throughout the year
transferring over to the National Non-Domestic Rate.
Ø
A provision of £335,000 to contribute towards
the existing pension deficit. Whilst there was a past
obligation in relation to these costs, it was not appropriate to have a
provision in the accounts as the liability was already reflected in the
accounts through the International Accounting Standard 19 – Employee Benefits (IAS19) entries.
·
Although
it was appreciated that it was prudent to set aside these funds in budgetary
terms, they did not comply with the definition of ‘provisions’ from a technical
accounting perspective and it would be more appropriate for these sums to be
set aside in earmarked reserves.
In response to the above observations, the Head of Finance
Department noted the following:
·
That he was not of the opinion that the
objection made by a member of the public was directly related to the accounts
for 2014/15.
·
In relation to the overstatements, these were
two technical accounting matters. Two funds had been set aside prudently;
however, the auditor suggested that they should not be treated as provisions.
It was noted that there were grounds to consider the money set aside as either
provisions or as funds; however, the procedure would be re-considered by
2015/16.
In response to a member’s observations regarding the
provision relating to Council Tax, the Head of Finance Department confirmed
that a Scrutiny Investigation was in the pipeline on the subject of Holiday
Homes and Taxes.
In response to a member’s question, it was noted that the
accounting method of presumptions and the historical pension deficit had
changed, with a specific sum rather than a percentage of salary given as a
contribution. It was reported that the number of jobs had not reduced as much
as had been anticipated in 2014-15, and thus there had been more money
allocated; however, due to the financial climate a reduction was anticipated in
the number of jobs in the subsequent years, therefore it was prudent to set
aside the relevant provision.
b) Gwynedd Pension Fund
Accounts
The Local Manager for the Wales Audit Office reported that
the Council was responsible for preparing financial statements to present the
financial position of the Gwynedd Pension Fund as at 31 March 2015.
It was noted that WAO was responsible for undertaking an
audit and for reporting whether it was of the view that the reports presented
accurately and fairly the financial position of the Pension Fund at the end of
the year.
She notified the Committee that the Appointed Auditor
intended to issue an unqualified audit opinion on the accounts of the Gwynedd
Pension Fund for 2014/15.
The following main points were made by the Local Manager
for the Wales Audit Office:
·
In the context of uncorrected misstatements, that
WAO had identified that death benefits and other lump sums had been understated
by £119,000 with two payments relating to the 2014/15 financial year having
been accounted for in 2015/16. She added that it was a minor issue; however, it
was WAO's duty to draw attention to the matter.
·
That the Pension Fund had not updated its
Written Statement of Investment Principles (SIP) in accordance with the
three-yearly timetable.
·
Although the Council’s accounts and the Pension
Fund accounts were dealt with in separate reports, only one certificate would
be issued. She noted that the Auditor General could not release the certificate
until enquiries arising from an objection raised by a member of the public had
been formally completed.
In response to the above observations, the Head of Finance
Department noted the following:
·
That the understatement was a relatively small
amount considering the £1,400,000,000 value of the Pension Fund; therefore, it
was not considered that this needed to be corrected.
·
The Pensions Committee would review the
Statement of Investment Principles and a consultation would be undertaken in
2015/16.
The Engagement Leader, Wales Audit Office expressed his
gratitude for the many years of collaboration in terms of auditing the accounts
considering that WAO’s responsibility for auditing them was coming to an end He
added that the quality of the accounts had facilitated the audits over the
years.
The Chairman and Head of Finance Department expressed
their appreciation of the WAO auditors’ work over the years.
It was explained that the Auditor General had decided to
allocate the work of auditing the accounts to Deloitte. It was noted that the
Council had no technical objection to the change but that it had emphasised to
the Auditor General that that the company would have to cope with the fact that
Welsh was the internal administration language of the Council.
A member noted that a letter should be sent to the Auditor
General to express gratitude for the work and cooperation of WAO officers over
the years in relation to auditing the accounts.
RESOLVED:
(i) that the Audit Committee, with the power
delegated by the Council to be “those charged with governance” in relation to
approving the statutory financial statements and the relevant audit, approves
the amended statutory financial statements, accepts the related reports by the
Wales Audit Office, and authorises the Head of Finance Department and Chairman
of the Committee to sign the letters of representation and to submit them to
the Appointed Auditor of the Wales Audit Office.
(ii) that a letter should be sent to the Auditor
General to express gratitude for the work and cooperation of WAO officers over
the years in relation to auditing the accounts.
Supporting documents: