Updated 19/20 Audit Findings Report
To receive and consider the report from external auditor Grant Thornton
Michael Green, external auditor from Grant Thornton presented the report to Members. He highlighted that there had been no change to the report from July 2021 that related to the financial statements.
The value for money work had been completed, the work completed was under the previous audit practice, which provided a binary judgement of qualified or unqualified which considered three core criteria, informed decision making, sustainable resource deployment and working with partners and other third parties.
As part of the risk assessment, two significant risks were identified, the first was financial sustainability and the second was the purchase of Logistics House.
There was satisfaction with the arrangements in place that related to financial sustainability. It was recognised that the purchase of Logistics House was carried out on a timetable. It was emphasised that it was not said that the purchase was wrong or that there were any concerns with the investment that the Council made.
Reported findings centred on the arrangement to support the decision-making process with suggested improvements to ensure all Members received relevant information, in addition to management summaries provided to ensure informed decision making.
The recommendations had several key areas.
1) The decision to purchase Logistics House was supported by a robust and full business case which followed good practice models. However, the business case was not underpinned by robust risk management. The business case should have been supported by robust due diligence, that used both historical and predicted information. The due diligence engaged by the Council could have been enhanced.
2) The Council demonstrated good practice with informal meetings and engaged with Members as part of the decision making process, however, it could have been enhanced further with record keeping, minutes, and details of questions and challenges published for all Members in advance of the decision making process.
3) It was recommended that Members had access to all information to support a decision. This should include all relevant sensitive data. The Council’s property advisor Gerald Eve provided a purchase report that when taken to Council was redacted at the request of Gerald Eve without any formal agreement of non-disclosure. As the decision was made in closed session of Council, Members should have had the information to promote transparency.
4) Papers to the Council recommended a Wholly Owned Subsidiary that would hold the property on behalf of the Council. Members should have been made aware of other options. Seeking third party legal advice was advised.
It was on that basis that it was proposed to issue a ‘qualified except for opinion’ on the value for money conclusion.
In response to Members, Michael clarified that the recommendations made on agenda pages 36 and 37, put into practice would prevent the same concerns being repeated.
Chris Moister, Director of Governance added that the Council was a learning organisation that strived to learn and improve, but didn’t completely agree with the opinion, but understood there were areas and aspects that could be improved upon.
The time constraints on the purchase of Logistics house was not an excuse, but it paved the path of the decisions taken.
Michael welcomed any additional questions or queries from Members and were organising a training session for Members of the Governance Committee.
Decision – The report was noted.