Mr Robin Baker of Grant Thornton UK LLP, the Council’s external auditors, presented a report to Members on work undertaken with regard to the delivery of their responsibilities as External Auditor covering the Year ending 31 March 2017. Mr Baker provided the Audit and Risk Management Committee with a summary of the purpose and key findings of the External Auditor that included a summary of the detailed findings from their audit work to the Audit and Risk Management Committee on 25 September 2017.

The report informed that the External Auditor had provided an unqualified opinion on the Council’s financial statements on 26 September 2017. The report also informed that the External Auditor’s review of the Council’s arrangements to secure economy, efficiency and effectiveness which had resulted in a qualified - except for value for money conclusion. The reason for this being concern that progress in respect of Ofsted monitoring visits had not yet met expectations and some time would be needed to implement all the actions to deliver the required service improvement.

A Member questioned the External Auditor with regard to the financial pressures facing the Council, use of balances and the sustainability of its use of general fund balances. The External Auditor’s report informed that the Council recognised that it continued to face significant financial pressures. The Quarter 1 revenue monitoring report for 2017/18 set out a projected £4.2 million overspend that had been mainly attributable to additional investment in Children’s services. An early review of the 2017/18 financial position resulted in a further £8.5 million of the revenue budget contingency being added to service budgets, consequently only £3.5 million of this contingency remains.

The External Auditor’s report further informed that revenue monitoring report detailed further risks and actions resulting in a projected General fund balance of just £9.4 million at 31 March 2018 which was below the £10 million minimum recommended by the Section 151 Officer. The External Auditor recognised that there continued to be a £3.5 million in the contingency budget, however it was important the Council take decisive action to ensure spending was constrained and the general fund balance does not fall below recommended levels.

Mr Baker apprised the Audit and Risk Management Committee on the independence of the auditor and that the same team would be delivering the next year’s audit. He added that the Council faced additional pressures with regard to the required reporting deadlines, in addition to the pressures faced by the majority of local authorities in the current financial climate. Mr Baker took the opportunity to thank Mr Tom Sault, Assistant Director: Finance and Investment (S151 Officer) for his honest, clear and supportive assistance with the work of the External Auditor.

A Member questioned the delay in resolving an objection to the Council’s 2015-16 accounts that related to a request for a public interest report and application to the courts for a declaration that Wirral Council’s Lender Option, Borrower Option loan borrowing as referenced in the 2015-16 accounts was unlawful. The External Auditor informed that the Council had provided prompt and full co-operation on this matter, but was not possible at present to place a definitive timescale to reach a resolution regarding the objection.

The Assistant Director: Finance and Investment (S151 Officer) informed the Committee that the Council continued to face significant financial pressures and Q2 accounts had been presented to Cabinet, along with the need to action a projected overspend of £4.2million form Q1 mainly attributable to additional investment in Children’s Services. 

Resolved – that the Annual Audit Letter for Wirral Council be noted.