Agenda item

Main Accounts

Members received a tabled update at the meeting. Sue Exton, District Auditor, Audit Commission introduced the report. She said that she was pleased to report that most of the work on the accounts had been completed, and external auditors were currently awaiting the signed subsidiary accounts for the group accounts and had a few outstanding queries for the main accounts.  She added that the quality of the accounts was much improved from the previous year. Ms Exton advised members that a number of amendments have been agreed, as there was still scope for improvement. It was noted that all risks have been identified, and the work completed, with no issues to report.

Ms Exton informed members that there were two significant weaknesses in asset control:

• in the preparation of bank account reconciliations for some of its bank accounts.
• asset register did not contain all the transactions that had taken place during the financial year.

Ms Exton stated that the Council have identified steps that needed to be taken to address them.

The Chair asked what the timeframe was to complete the action plan in appendix 6. Members were told the end of October was the deadline. The Head of Business Management and Service Support said that he would give a personal assurance that Bank reconciliations would be addressed as soon as possible. Mr Webb asked why there were no documentation to back the stated figures. The Group Finance Manager said that there were two sets of reconciliations that of payments, and that of income. He added that there were some gaps in the reconciliation of income, and although they were incomplete for part of the year, the figures had not been made up.

Mr King said that the date for completion was October 2012, and asked whether staff would adhere to this date. The Head of Business Management and Service Support said that he would take responsibility to sign off the reconciliation for the end of September in October. He added that he could not guarantee they would be completed, but he recognised the urgency and would do his best. Mr King asked whether staff had thought of using a weekly process. He also said that given the differences that had been highlighted, staff would not be certain that fraudulent activity had not taken place. The Head of Business Management and Service Support said that although he was not certain of this, given the nature of the differences it was unlikely fraud was the case.

The Chair said he needed to confirm that reconciliation was now taking place. This was confirmed by the Head of Business Management and Service Support, who said that an update report would be brought to the Panel at their next meeting.

Pension Fund

Sue Exton introduced the report and stated that although there were problems last year, the quality of the accounts was much improved this time, but there was still scope for improvement. She added that the corrected areas could be found on appendix 2 of the report, with the action plan in appendix 6. Ms Exton informed members that the 3 recommendations in appendix 5 have all been agreed.

Mr King said he had noted the discrepancy in the date of Habourvest Investments which was wrong and asked if this was a common error identified by auditors. Ms Exton said it was not. The Head of Business Management and Service Support said that it was a practice of external custodians, and staff would have discussion with them about reconciling their timetable with that of the Council. The Chair said that this was an important issue if it had resulted in a £2. million difference. The Head of Business Management and Service Support, said that the error would be investigated. Councillor Whittle asked if this issue could be pursued by the Pension Investment Committee. The Chair said this could be done if the Committee was looking at the figures.

Councillor Whittle asked why the Pension Bank Fund Account was not separate from that of the Council. The Head of Business Management and Service Support said that this would be an administrative cost that would add to the Council’s oncost. He added that so far they were not aware of any incident of concern. He said that everything was being done to ensure that pension assets do not get mixed up with Council assets.

The Chair asked whether there was not a regulation in place that needed to be followed by the Council, and was told yes, Regulation 2009. Sue Exton said that this weakness had been mentioned before, but there were some Councils who followed the Regulation as stated, and some who do so for some transactions, and not for others. Mr Webb said that this would not be viewed positively in the Governance report. The Head of Business Management and Service Support, said that he would not be able to justify the extra spending for something that would not be beneficial to the Council, and it was not an urgent priority. The Chair asked for this issue to be considered, he added that he was happy to note that the accounts might be signed on time this year.

RESOLVED that the Annual Governance Reports for the Council’s Main Accounts and the Lewisham Pension Fund Accounts be noted.