Agenda item

The report was introduced by the Head of Financial Services and Jamie Bewick. Panel members were informed that it had been a challenging year for officers leading up to the close of the accounts process, largely because of the finance department’s re-organisation and the introduction of the Oracle system. It was noted that there were some issues and discussion over valuations, and timings around valuations.

Members were told that there had been agreement between officers and external auditors as to what needed to be put in place going forward. The Head of Financial Services said the accounts were completed a week earlier than the previous year, and would be going to Council on 17 September 2014.

Darren Wells gave an overview of three reports within the accounts, which included the audit findings for Lewisham, the audit findings for Lewisham’s Pension Fund and a report on value for money for Lewisham.

Councillor Slater said £18.8m was a large amount of money to make an error with. Jamie Bewick said this was because of late information provided by the District Valuer, and was less than 1% of the property plant and equipment budget, which related specifically to Prendergast school. The Head of Financial Services said he was aware that it was a large amount, but officers relied on the District Valuer to give correct valuations. On this occasion he came back with different sets of figures.

Following a question from Councillor Ingleby, it was confirmed that the new programme should support the audit function significantly better. Panel Members noted that over 80% of the valuation had been done this year, and this process would be used each year.

Councillor Mallory asked what the original valuation figure was before the amendment of £161m. Jamie Bewick stated that the year had not been normal as CIPFA qualified accounting rates were received later, and there had been a significant rise in the London property market. He added that it was £161m less than the current rate of £886m.

Councillor Barnham asked for an explanation of the difference between red and amber coded risks. Following the explanation from officers, he asked Darren Wells whether he was satisfied that the right steps had been taken by officers to address risks that have been highlighted. It was noted that this was the case. The Chair received confirmation that the discrepancy relating to Drumbeat school was because of human error.

Pension Fund

Darren Wells introduced the Pension Fund report. He said their audit did not identify any adjustments affecting the Fund’s reported financial position. He added that a small number of adjustments had been proposed to improve the presentation of the financial statements. Panel members were told the quality of the financial statements were of a good standard, and working papers were provided to auditors at the start of the audit.

The Chair asked what the Council’s contribution to the Pension Fund was and was told £1m a year, which was in line with the actuary valuation. Panel members were informed that a Pension Board would be set up from 1 April 2015 in accordance with Statutory Regulations.

Darren Wells brought to the Panel’s attention the importance of their approval of the Letter of Representation, which was tabled at the meeting. The Chair read and approved its contents.

Value for Money Report

Jamie Bewick introduced the report. Panel members noted that Grant Thornton

carried out an initial risk assessment and planned to carry out work in the following areas to address the risks identified.

·         review key financial performance indicators for 2013/14.

·         review and comment on Lewisham’s medium term financial projections.

·         review Lewisham’s performance against its savings targets and comments on its identification of savings 2014/15 and beyond.

·         consider the work of the Lewisham Futures Board in seeking to ensure a sustainable future for the Council’s services.

·         consider the management of staffing reductions in the finance function.

·         Comment on Lewisham’s partnership working in seeking to maximise the benefits of the Better Care Fund.

Panel Members were told that based on the review of the Council’s arrangements to secure economy, efficiency and effectiveness in its use of resources, Grant Thornton prosed to give the Council an unqualified VFM conclusion.

Councillor Mallory asked if Lewisham’s VFM conclusion was similar to other London Boroughs. Jamie Bewick said that from what he knew of other London Boroughs the situation was not dissimilar.

Councillor Barnham expressed concern over the sickness record within the workforce. The Head of Corporate Resources said that Lewisham’s rates were not high, and within the average. In response to a concern raised about the cost of temporary staff, the Head of Corporate Resources informed members that the figures had gone up because of the challenges of maintaining permanent staff for schools. He added that officers had worked very hard to keep the numbers down following Audit Panel concerns two years ago. Panel members were told that a report on employment strategy would be going to the Safer Stronger Communities Select Committee.

Councillor Ingleby stated that it had been brought to members attention that there had been some issues with Oracle, and the Council had not been settling its accounts because of a systems shut down. He added that small businesses cannot afford not

to be paid on time. The Head of Financial Services said that this was a planned shutdown to ensure a smooth transition from Oracle 11 to Oracle 12, and it took place over a 3 week period.

Councillor Slater said he had complaints from external consultants, and had noted

that up to 300 invoices were outstanding. In response the Head of Financial Services said he was aware that there were a backlog of invoices to be paid, but before the shutdown payments were up to date. Councillor Slater said officers should be aware that backlog would now build up and they would need to address the problem effectively. The Head of Corporate Resources said the Council was now in a good position to improve payment purchases, and the systems were unavoidably down for less than 20 days. Councillor Slater said he did not think the situation was

acceptable for small businesses.

The Chair raised concerns over the amber ratings given to the Council on Financial Control for savings projected for the following year, and for Improving Efficiency & Productivity, which related to Adult Social Care. The Chair said it was important to address these issues and asked the external auditors what other authorities were

doing to address similar issues. Daren Wells said that some authorities were looking

at the use of shared services, and shared services arrangements which would

generally lead to savings. He added that although it would take a lot of effort to put

this in place the LGA had reported £350m worth of savings achieved through shared services. The Chair asked if this could be looked into, and officers said they had considered this, and it would be investigated further.

RESOLVED that the External Auditors reports for the Council’s Main Accounts and the Lewisham Pension Fund Accounts 2013/14 be noted.