Agenda item

The External Auditor, Grant Thornton for BCP Council, is required to consider whether the Council has put in place proper arrangements to secure economy, efficiency and effectiveness its use of resources.

Auditors are required to report their commentary under specific criteria, namely financial sustainability, governance and improving economy, efficiency and effectiveness. They are required to report on any significant weaknesses they identify.

The External Auditor has produced a 2023/24 Annual Report which has identified the following:

Three key recommendations were made to address significant weaknesses (two covering financial sustainability and one covering improving economy, efficiency and effectiveness).

A further three improvement recommendations were made, and thirty-one previous recommendations from 2020/21, 2021/22 and 2022/23 were followed up (23 implemented and remaining 8 being addressed). The Council has provided the External Auditor with management responses to all the recommendations.

Grant Thornton anticipate concluding their opinion on the financial statements by the end of October 2024.

Mr Peter Barber, representing Grant Thornton, the Council’s External Auditor, presented a report, a copy of which had been circulated to each Member and a copy of which appears as Appendix 'A' to these Minutes in the Minute Book.

Mr Barber introduced his colleague Alexa FN Ngini who was part of the Local Government Advisory Team and main author of the report to talk through some of the report.

Mr Barber reminded the Committee that their role was two-fold.  They give an opinion on financial statements and assess arrangements regarding Value for Money and the use of resources.  This report was the interim Auditors report for 23/24 and focussed on Value for Money.

Mr Barber highlighted that there were no key recommendations this year around Governance which reflected a real improvement on the previous year.

The position whilst still challenging was noted to be improving and stabilising.  There was some light at the end of the tunnel in terms of the medium term financial plan, the level of savings into the medium term was significantly less, however reserves were lower than seen in any other unitary authority.

Significant progress was made in relation to the transformation programme and this key recommendation was closed down by internal auditors. There was a significant weakness noted in regard to the dedicated school grant deficit, which was also an area which other Local Authorities were seeing especially in regard to the high need block.

The second area of weakness identified was in relation to Children’s Services, which was awarded an adequate Ofsted rating, which resulted in an intervention. It was recognised that significant progress had been made in that area and the Children’s Services improvement plan had been progressed significantly.  It was noted that there was still a significant weakness in regard to SEND[LS1] .

Mr Barber and the Chief Financial Officer (CFO) provided the following information in response to questions from the Committee:

• The backstop protocols were put on hold when the election was called. There wasn’t time to put them through primary legislation and they be approved. It was stated that the sensible option was to backstop the 23/24 audit and start early on the 24/25 audit.
• The financial outcome went through Cabinet and reserves had improved, they were around 7.6% of the net revenue expenditure which was above the previous referenced 5%.
• Direction of travel was positive but still in perilous position, everything was being done to improve this.  The DSG deficit was concerning as until a solution was found, the 25/26 budget could not be set.
• The Section 151 officer and previous Leader had lobbied various Government departments regarding the DSG deficit.
• Grant Thorton was disappointed that BCP had not managed to secure a deal with the DFE in regards to Safety Valve, which left BCP with out the Medium Term secure plan to manage the DSG deficit should the statutory override elapse on 31 March 26.
• When councils had a Safety Valve agreement it showed that there was a plan in place to reduce the deficit.

Grant Thornton anticipated concluding their opinion on the financial statements by the end of October 2024.

The Chief Executive assured the Committee that everything that could be done was being done including coming up with solutions that Government had not thought of.  A 15 year plan was also produced to bring the expenditure down to within the budget.

RESOLVED that the Audit & Governance Committee be fully informed of the findings of the Council’s External Auditor following their Annual Report for the year ended 31 March 2024, as set out in the report (Appendix 1).