Issue - meetings

The committee is requested to consider and note the attached report which summarises the external auditor’s audit conclusion in relation to the Council’s financial position and results of operations for the year end 31 March 2017.

The committee considered the report included with the agenda.

Mr P King and Mr M Young from Ernst & Young LLP (EY) were in attendance.

Mr Young presented the report, taking members through the main sections in the Audit Results Report for the year ended 31 March 2017. The auditors intended to issue unqualified statements subject to receipt of the Letter of Representation from the Chairman of this committee and the Head of Finance & Governance Services.

Mr Young drew members’ attention to one material matter arising. This related to the methodology used to value the three leisure centres as a result of the outsourcing of leisure services. In discussion between EY’s valuers and the council’s valuers the technical adjustment made by the council to the value of the leisure centres as a result of outsourcing was revised. This had resulted in an increase of £10m in the valuation of this property in the draft 2016-17 accounts and roughly what it had been in the prior year’s accounts.

The planned audit fees set out in Appendix B remained as stated in the scale of fees. The early close of the 2017-2018 accounts would be a challenge however initial planning between the auditors and the finance team had been arranged in October 2017 to scope this out.

The committee made the following comments and received answers to questions as follows:

·             The revised valuation of the leisure centres would have no impact on the contract between the council and the contractor, SLM. It was solely an adjustment in the accounts.

·             Concern about the pension deficit of £4m and assumptions taken into account - Assumptions were set out in the financial statement. An EY consulting actuary reviews the work undertaken by the council’s actuary and gives EY comfort that the assumptions made are within the appropriate range. This is then checked by EY’s own internal actuary. There is a wide range of estimation uncertainty and this was listed in the notes. A triennial review of the West Sussex Local Government Pension Scheme looked at pension liability, assumptions made and performance in the market against a set of criteria. This council is one of the few in the county which is nearly fully funded; a deficit of £4m is not a significant amount. A decrease in life expectancy, if it becomes a trend, would then be built into future assumptions. Even a small adjustment would produce large variations; in this case it would be expected to have a beneficial effect on the liability.

RESOLVED

That the Annual Results Report 2016-17 be noted.