The Chair invited Ade Oyerinde, Key Audit Partner (Grant Thornton) to speak.  He introduced the Audit Findings Report, the Letter of Representation and the Annual Financial Report 2024/25 as set out in the agenda papers.

Audit Findings Report

The Key Audit Partner reported that their audit was substantially completed and the financial statements were complete and accurate.  He drew attention to adjustments made to the Council’s accounts due to a previously disclosed prior year error of £2.085m; highlighted the bullet points on page 44 of the agenda pack; gave an update to say the outstanding matters had been resolved and that they were waiting for some additional papers before the closing procedure; and that there were no serious issues.

The Key Audit Partner reported that their Value for Money work was substantially completed and they were satisfied with the arrangements the Council had in place.  He drew attention to the key significant risk areas on page 61 of the agenda pack, all rated as ‘green’.

The Key Audit Partner said there were no plans to vary the Audit fee.

The Chair invited Members to ask questions and make comments, and these included:

·         Applauded the quality of the document and it was very clear to understand;

·         noted that it was ‘substantially completed’, would it be completed by Full Council?;

·         had the £2m error impacted the Council in a negative way?; and

·         concerned, with reference to ‘employee benefit expenditure’ on page 77 of the agenda pack and that a member of staff could be receiving more than one salary at Swale Borough Council (SBC).

In response, the Key Audit Partner said the outstanding working papers should be ready within a week.  He said the £2m error was a technical entry in the accounts and had no impact on the Council’s reserves

The Director of Resources explained that SBC’s payroll system had processes in place to minimise the risk of fraud and monthly reports were produced for managers which doubled up the checking process.

Letter of Representation

The Key Audit Partner said the following amendment needed to be made to point xi on page 96 of the agenda pack, to change from: ‘We have considered the unadjusted misstatements schedule included in your Audit Findings Report’ to ‘We have considered the unadjusted misstatements schedule included in your Audit Findings Report and attached to this letter’.

Annual Financial Report 2024/25

The Key Audit Partner reported that there were no key recommendations, and one improvement was raised as set out on page 221 of the agenda pack.

The Chair invited Members to ask questions and make comments, and these included:

·         Welcomed the report, and wondered how other councils were not getting as good a report as SBC was;

·         acknowledged the staff talent at SBC and wondered why other local authorities were not able to employ such experienced staff;

·         recognised the amount of work SBC staff were doing and concerned that workloads would increase after the devolution and local government reform (LGR);

·         considered staff might need support;

·         welcomed the internal Swale awards scheme and wanted to praise staff who had compiled and written the reports;

·         concerned that SBC had not established a long-term savings programme; and

·         sought information on how the Director of Resources and the Head of Finance and Procurement had improved and would continue to improve the accounts in the future.

The Director of Resources said that a lot of other local authorities were more complex than SBC, and therefore could be harder to audit, and delays in accounting could have a knock-on effect over into other years and these caused further delays.  The Key Audit Partner referred to the complexity of local authority audits and questioned whether there were enough experienced auditors within the market.  There could also be issues of nobody being held to account, and the whole audit process could be overwhelming.  He added that Grant Thornton tried to support local government and sign-off as much as they could and help to catch up and keep on top of the audit process.

In response to a statement, the Director of Resources confirmed that there were no current vacancies within the Finance team at SBC.  She said that matters regarding LGR would become clearer once SBC knew the geographies following reorganisation.  The Director of Resources referred to the savings programme issue and said SBC could plan once the budget gap was known.  She outlined the ways that the accounts were being improved which included de-cluttering, shrinking notes, deleting repeat wordings, and changing formatting on tables to look more visually appealing, and this would continue going forward.

Councillor Booth proposed the recommendations, which were seconded by Councillor Harrison.

Resolved:

(1)      That the external auditor’s Audit Findings Report at Appendix I to the report be noted.

(2)      That the Letter of Representation at Appendix II to the report be approved on behalf of the Council, subject to the change in wording to point xi from: ‘We have considered the unadjusted misstatements schedule included in your Audit Findings Report’ to ‘We have considered the unadjusted misstatements schedule included in your Audit Findings Report and attached to this letter’.

(3)      That the Annual Financial Report for the year ended 31 March 2025 at Appendix III to the report, including the adjustments set out in the Audit Findings Report be approved.

(4)      That the Chief Executive and Leader sign the Annual Governance Statement for the year ended 31 March 2025.

(5)      That the Chair of the Audit Committee signs and dates the Annual Financial Report for the year ended 31 March 2025.

(6)      That the external Auditor’s Annual Report including the recommendations and management responses at Appendix IV to the report be noted.