Agenda item

Verbal Update - Statement of Accounts Audit Progress/VAT

The Head of Finance and Investment will provide a verbal update.


Statement of Accounts 2020/2021


The Head of Finance and Investments provided a verbal update.  The statutory date for approval of the audited statement of accounts for 2020/21 was 30 September 2021.    However, the audit of the accounts was not yet finished and, as a result, the approval report on the audited accounts and planned training for Members would be delayed until the work had been completed. 


The Covid-19 pandemic and the ongoing impact on local authority finance teams, the overall financial position of Councils generally, and the work required by external auditors to undertake the audit had been significant.  These factors had resulted in delays in audit work being undertaken and audits being signed off nationally.  Many audits had still not started due to delayed audit opinions relating to previous years and workload for finance teams and audit firms.  Middlesbrough Council’s audit was progressing well and was ahead of many other authorities in comparative terms. 


There were some complex expenditure and funding arrangements to assess as a result of Covid-19, in respect of uncertainty around material assets and liability values.  This work needed additional discussion and evidencing by auditors.  There had also been staffing issues at both the Council and for local auditors also.   Middlesbrough Council had had a vacancy at Chief Accountant level since early last year.


The aim was to complete the audit in the next one to two months and the audited Statement of Accounts would either be presented to Members for approval at the Corporate Affairs and Audit Committee meeting scheduled for 9 December 2021,  or at an ad hoc meeting if completed earlier. 


As a result of the statutory deadline not being met, a notice would be placed on the Council’s website with the draft accounts from 30 September 2021, with a note to explain that the audit was ongoing and the audited accounts were not yet available for publication.


It was highlighted that no other Tees Valley local authority had been able to complete their audit of accounts within the statutory timeframe.


Responding to members’ queries it was clarified that the main areas of focus were pensions accounting and covid business grants.  It was confirmed that there were no penalties for late approval of the accounts.


The Chair requested that Members received notification of training as early as possible.


Value Added Tax


The Council had appointed a new VAT officer who had been in post since 23 March 2021. 


In relation to purchasing cards, the auditor had previously raised an issue of council staff using their purchasing cards but either not reclaiming any relevant VAT, and/or not retaining receipts and invoices as proof for HMRC.


In general there were a number of internal controls that need improving on the use of purchasing cards and most of this was in terms of awareness and compliance with business process that the Council used in this area.  This was being led by the Procurement team who had issued updated procedure notes and some direct training to remind users of what was required.  The main approach on VAT would be awareness via training sessions for managers and staff, publicity via the procurement forum on purchasing cards, and also in VAT newsletters. 


AGREED that the information provided was received and noted.