Agenda item

The Committee considered a report of the External Auditor which asked Members to note the contents of the External Auditor report on the audit of the statement of accounts for the County Council for the year ended 31 March 2018 (for copy see file of Minutes).

Mr M Kirkham, Mazars introduced the report and was pleased that all deadlines on the conclusion of the accounts with the statutory two month earlier close down had been met.  The accounting standards were still at the high standard despite the earlier deadline and he acknowledged the achievements made by management and officers.

Mr Collins, Mazars highlighted the audit work carried out in relation to the completion of the accounts.  He advised that assurances had been received regarding the significant risks. Information regarding property valuations has been challenged and work was ongoing with the Assets team and the assumptions used.  With reference to the internal control recommendations Mr Collins highlighted that some leavers still had system access however checks had confirmed that the networks or business critical systems had not been accessed.  He reported on the unadjusted misstatements and adjusted misstatements.

Referring to the valuation of assets Councillor Shuttleworth enquired as to the value of the Laurel Building at Bishop Auckland as he was aware a lot of money had been spent on this and it was standing empty.  He asked how this was valued.  The Head of Planning and Assets confirmed that this was a listed building and therefore a different market was required.  He confirmed that it did have an asset value together with the land around it.  He report back at a later date with progress.  Councillor Shuttleworth requested an update on costs from 2013 onwards.

The Chairman said that he was disappointed that the significant risk for the accounts not to be closed off early last year was due to planning and asset services as the floor space had not been correctly assessed or missed.  He was assured that Internal Audit had been involved and had carried out further work with the service to ensure this did not occur in the future and that this was a credit to all those that had worked hard.  He referred to the significant risks highlighted within this report about the valuation of property and was again disappointed that this had not been picked up by management.  He said that this was not an isolated incident and referred to the Windlestone Hall issue and the weaknesses that had been highlighted following that investigation about the service.  He stated that the Committee would expect assurances going forward and would be monitoring the situation.

The Head of Planning and Assets accepted that the Committee required assurances and he advised that the service were working very closely with Internal and External Audit.  With regards to the management side he informed the Committee that they would be undertaking a Corporate Review of all Assets with the assistance of CIPFA who had carried a review on best practice and the best way forward.  The review would assist in understanding what assets we held and why.  A report would be prepared in the next few months and changes would be implemented by 1 April 2019.  A new structure would be in place by then with new ways of working and a new culture in place. 

He went on to explain that with regards to last years accounts the service had worked very hard with the Audit team to implement all of the recommendations and had made a number of strategic changes.

Referring to this years accounts he explained that the issue was raised in February/ March after the assets were re-valued.  Durham had a large portfolio and the change following the re-assessment was plus 13%.  This issue was not unique to Durham and many other Councils had contacted Durham asking how they were dealing with the changes.  He was also disappointed but assured the Committee that the service were working with CIPFA and Internal and External Audit and he was happy to come back in respect to the changes being introduced within the service.

The Chairman said that focus should be on Durham County Council and how we could resolve issues.  He sought assurances that this would stop occurring and expected to see improvements on how it would be corrected.  He accepted the assurances given today but said that he would expect future updates to Committee.

In respect to Windlestone Hall Councillor Shuttleworth said that this was raised back in 2012 when the service was not working as it should be.  He would have expected it to be running smoothly by now.

Councillor Temple asked when the query was first raised by External Audit.  Mr Collins responded that following a report by Gerald Eves, Independent Valuer, there were two stages.  The first stage was reported in March/ April time when the initial queries had been raised and then again in early June.  Councillor Temple commented that the team therefore had from March to June to work on this and correct it before the accounts were finalised and he was concerned about this.

Resolved:

That the information contained in the report, including the summary of misstatements detailed in section 4 of the report, be noted.