Agenda item

Stuart Basnet, Audit Manager, Grant Thornton presented the Lancashire County Council Audit Findings Report 2019/20, for the year ending 31 March 2020.

The following points were highlighted from the report:

·  Due to the pandemic the audit had been undertaken remotely, resulting in some tasks taking longer than usual. However excellent communication between council officers and Grant Thornton, meant that the majority of work was now complete and an unqualified audit opinion was anticipated.

·  The audit approach was unchanged from that reported at the July committee meeting and there was no change to the figures applied for materiality and triviality.

·  The significant risk areas were listed in the report, along with the work completed by the auditors to gain assurance against each. No issues were reported against each risks, apart from the valuation of land, buildings and investment, where a material uncertainty paragraph (emphasis of matter) would be included due to the movement of property prices and valuations as a result of Covid-19. It was noted that this was a general issue, not specific to Lancashire County Council.  This additional note would provide context to readers of the accounts when reviewing the valuation.

·  The review of the budget for next year, medium term financial strategy and cash-flow forecasts had confirmed that the county held a strong reserve base, meaning there was no material uncertainty regarding the going concern status of the council.

·  Some deficiencies in the strength of internal controls were highlighted in relation to access of the council’s management information system – Oracle, and the process for notifying payroll when staff left. Recommendations had been made to address this and management had provided a response.

·  The Value for Money conclusion was that the council had secured economy, efficiency and effectiveness in the use of resources. The significant level of reserves meant that the council was in a strong position to face the current challenges faced by local government.

·  The report also included a follow up of prior year recommendations, audit adjustments, fees levied for the audit and the draft audit opinion.

In response to questions the following information was clarified:

·  In relation to overpayment of salaries, Neil Kissock, Director of Finance, confirmed that measures had been taken to reduce this and there had not been a significant increase in the number of occurrences or financial impact. However managers would continue to be reminded of the importance of processing staff changes quickly, to prevent overpayment.

·  The savings made and reserve balance had mitigated the financial challenge of the council's response to the pandemic. A £50 million budget gap next year had been reported to Cabinet, however the reserve balance alongside the receipt of central government funding would offset the financial impact of the Covid-19 pandemic. A monthly report on additional expenditure and loss of income was reported to the Budget Scrutiny Review Panel and confirmed that the additional funding was offsetting Covid-19 costs.

Resolved: That the findings of the 2019/20 Lancashire County Council Audit report, amendment made to the financial statements and the issues raised by the auditor, as presented, be noted.