Agenda item

The Committee considered a report of the Director of Corporate Resources, the purpose of which was to present a copy of a progress report and sector update from the Council’s External Auditors (Grant Thornton UK LLP) for consideration and comment. A copy of the report marked ‘Agenda Item 10’, is filed with these minutes.

The Chairman thanked Mr Morris of Grant Thornton UK LLP, the County Council’s external auditors, for remaining to present the item.

Arising from questions from members the following points were made:

(i)      Assurance was provided that Grant Thornton would be working to complete the external audit for the statement of accounts 2021/22 for the County Council and its Pension Fund in line with the statutory deadline of 30 November 2022.  The completion of the external audit for the last couple of years had been delayed somewhat due to the impact of the Covid-19 pandemic and the increased work caused by changes in national auditing requirements.  The replacement of the County Council’s accountancy software in the year 2020/21 had also had an effect.  The same issues were not expected for the current year, therefore no delays were anticipated.

(ii)    It was clarified that the reference in the Appendix that all files reviewed in relation to Value for Money required no more than limited improvement (page 73 of the agenda pack referred), was one of the findings of the Financial Reporting Council’s annual report about the work carried out by Grant Thornton, not the County Council.  Members noted that whilst a couple of the files had been identified as requiring limited improvement where the quality of reporting was concerned, the majority had been graded as ‘good’ with no improvements required.

(iii)   In response to concerns raised by a member about the risk of the County Council and other councils not being able to balance their budgets in the medium/long term, and the impact this could have on delivering public services, Mr Morris confirmed that:

a.     Grant Thornton would continue as part of its annual assessment to consider the overall arrangements the Council had in place to deliver its medium term financial plans and the future outlook to ensure that the Council was identifying any savings needed.

b.     Whilst Grant Thornton had commented positively about the way Leicestershire County Council managed its finances in its 2020/21 annual report, it was acknowledged that local government finances and public funding in general continued to be under significant pressure.  Therefore, the identification and delivery of any necessary savings was becoming increasingly more challenging for local councils. 

c.      The situation was such that the option to reduce or stop certain services was something that councils were having to consider.  Grant Thornton had made a recommendation about this in its 2020/21 annual report of the County Council, suggesting that it made a distinction between ‘statutory’ and ‘discretionary’ spending in its budgetary information provided to members and published online. Though it was recognised that in some cases a distinction would be difficult to determine.

The Director confirmed that the Council always aimed to create a coherent and credible plan to deliver its MTFS.  Although further challenges lay ahead, the key would be for the Council to keep focussed on the actions it could take to find solutions.  Assurance was also given that since the most recent changes to national auditing requirements were introduced, the Council had seen a marked increase in the level of rigour undertaken by the auditors to assess the arrangements the Council had in place to manage its finances, both in terms of sustainability and for the protection of services.

A member highlighted that the situation of each council would be different depending on how they were managed and funded.  It would therefore be important to sustain focus on the local situation and for all members to lobby the Government for fairer funding for Leicestershire.  Members commended officers on the excellent job they had been doing in managing the budget under very difficult circumstances and praised the efforts made to set out a clear plan for a way forward.

(iv)   In response to a question raised and a concern that some councils might eventually be unable to afford to provide even statutory services, it was confirmed that whilst external auditing companies such as Grant Thornton were not able to make formal representations to the Government to address the financial challenges discussed, they were obligated to take formal action where individual councils were failing to set a balanced budget, or did not have robust plans in place for the future.  Members were reminded that such action had been taken as outlined in recent public interest reports.  Grant Thornton also regularly liaised with those who were able to make representations to the Government on such issues (such as CIPFA, the County Council Network and Treasurers societies) to ensure that its views and concerns could be taken into account.

RESOLVED:

(a)   That the progress report and sector update from the County Council’s External Auditor (Grant Thornton UK LLP) be noted;

(b)   That the additional information and assurance provided regarding pressures on local government funding and the future delivery of services be noted.