Agenda item

(a)       That the report and action plan be noted; and

(b)       That the objective be set for the practice of balancing entries to end by no later than the closure of the 2013/14 accounts and for officers to aim to improve practices by the 2012/13 accounts, be noted.

The Finance Manager - Strategy & Technical introduced the Council’s response to the Wales Audit Office (WAO) report ‘Audit of Financial Statements 2011/12’ and action plan of how issues raised in the report would be addressed.

Mr. P. Williams referred to the intention for the accounts to be clear of balancing entries and said that assurances had previously been given that this would be resolved.  The Chair pointed out that the need to clear balancing entries was an outstanding issue mentioned in the WAO Annual Financial Audit Outline discussed earlier on the agenda.

The Finance Manager - Strategy & Technical confirmed that it was the intention to do so but was unable to give a guarantee of the outcome.  The Head of Finance said that this was a historic issue which had arisen in accounts from previous years and that a proportionate approach would need to be taken to manage resources and time taken to resolve it.  Ms. Hughes explained that the WAO view was to consider whether there was any risk of an underlying problem, however she was confident that there was no material error.  The issue had been identified within previous audit reports and if still unresolved, would continue to be raised.

Whilst the Head of Finance understood the concerns raised by Members, she said that there was a shared desire by all for financial records to be correct with no unresolved issues.  Officers had continued to make progress under the constraints of a major review of the Finance section and other financial work on major corporate projects across the Council.

In echoing concerns about balancing entries, Councillor A. Woolley asked for clarity on the cause of the problem.  The Finance Manager - Strategy & Technical responded that this was not known.  She explained that the Statement of Accounts was a technical complex document and there was a difference between management and financial accounts which needed to be produced within a set deadline.  The balancing entry of £46,000 would not trigger the materiality threshold and a balance had to be taken between the risk of identifying the source of this and delivering the Statement of Accounts within the statutory timescale.

When asked by Councillor I.B. Roberts if balancing entries were common in accounts of other Local Authorities, Ms. Hughes thought it was comparatively uncommon.

Councillor G.S. Banks queried the issue on the action plan arising from disclosure requirements of the Code of Practice.  The Finance Manager - Strategy & Technical remarked on the challenges faced by Councils arising from significant changes in the production of accounts in 2010/11.  There was now a need to include more information and this had been addressed through a review.

Councillor R.B. Jones remarked that the £46,000 balancing entry could be a netted figure and therefore possibly not an accurate representation, which was acknowledged by the Finance Manager.  Councillor Jones asked that an undertaking be given by officers to eliminate balancing entries by the following year.  Mr. Williams said that assurance was needed that dedicated resources were being allocated to this to provide a resolution within an agreed period of time.  The Head of Finance noted the concerns raised and reassured the Committee that a team would be identified to pursue the matter.

Whilst the Chief Executive was confident that a wider issue was not being masked, he agreed that the practice of balancing entries could not continue and should cease by 2014 at the closure of the 2013/14 accounts.

The Chair asked if the Committee was prepared to note the report and action plan subject to the assurances given by the Head of Finance and Chief Executive.  Councillor Roberts’ proposal that the Committee refuse to accept balancing entries was not formally seconded.

Ms. Hughes commented that if there were balancing entries in the 2012/13 accounts, that it could be an issue for 2012/13 if they were more significant than in previous years.

The Chair asked if Councillor Roberts was prepared to withdraw his proposal.  He agreed but said that noting the report was not sufficient.

The Chief Executive suggested that an objective be set that the practice of balancing entries would end by no later than the closure of the 2013/14 accounts and that officers would aim to improve practice by the closure of the 2012/13 accounts.  Officers would also analyse in more detail the trends and reasons behind the current practice.

In response to concerns by Councillor Roberts on achieving the objective, the Chief Executive said that analysing the situation which had led to the problem would assist officers to achieve the objective.

The Chair proposed that the report and action plan be noted with the suggestion made by the Chief Executive.  This was agreed by the Committee.

RESOLVED:

(a)       That the report and action plan be noted; and

(b)       That the objective be set for the practice of balancing entries to end by no later than the closure of the 2013/14 accounts and for officers to aim to improve practices by the 2012/13 accounts, be noted.