Agenda item

To receive the external auditors report for both Hampshire County Council and the Hampshire Pension Fund for the year ending 31 March 2022.

The Committee received the external auditors report presenting the provisional audit conclusion for both Hampshire County Council and the Hampshire Pension Fund for the year ending 31 March 2022.

The external auditors were invited to introduce the report through which it was heard that:

·         The audit was well progressed, with the final report anticipated by 30 November.

·         As reported to the previous meeting, the issue relating to highways asset valuation was ongoing, and therefore the final audit would need to be brought to a future meeting for sign off by the Audit Committee. The Chartered Institute of Public Finance and Accountancy (CIPFA) had been expected to issue guidance on the matter by mid-September, which had been delayed, and Hampshire County Council had determined to wait for the CIPFA guidance to be issued before proceeding. It was heard that this issue was affecting most councils with infrastructure assets nationally.

·         The basis of materiality had not changed and there was no change to the identified areas of audit risk.

·         The change in value of assets, as noted in section four of the report, was not considered material and therefore the auditors were content with the decision not to report this.

·         The audit variation for streetlights was just above the reporting threshold, however did not represent a material difference and would not impact upon the audit opinion.

·         The final outcome for assessment of pension fund assets was awaited, however since publication of the report the required information for three of the four assets had been received. Otherwise the audit of the Pension Fund was complete with no issues and the auditors expressed confidence that the valuations are appropriate.

·         The unadjusted differences on council tax and business rates were as a result of timing variations and this would be corrected in final statement of accounts.

In response to Members questions it was heard that:

·         Recording the infrastructure asset base on a ‘one line’ basis had previously been determined to be reasonable, as it allowed capital expenditure to be audited. The information was not otherwise utilised for making decisions related to spend. It did not, however, differentiate between new and replacement spend, which was the core of the issue being raised nationally. It was heard that a significant amount of additional work would be required each year to maintain more detailed records for a county the size of Hampshire. It was recognised that the CIPFA code represented good practice, however difficulties were being met in determining a reasonable approach to capture the required information. It was heard that should CIPFA’s recommended approach not be achievable then a statutory instrument may be required and should neither result in a resolution there was a risk that the accounts may be qualified with a limitation of scope.

·         One risk had been identified in respect of value for money, triggered by the Chief Finance Officer’s (CFO) recent statement regarding medium term financial stability. Members heard the auditors had undertaken work in response, as outlined within the report, and had engaged with the CFO on the matter. With the actions already taken by the Council, including financial resilience meetings, the auditors considered monitoring of pressures was appropriate, with officers maintaining open dialogue regarding any identified issues. The auditors, at the time of the meeting, could not recommend any further actions to be undertaken and noted that arrangements were in place to offer value for money. Whilst, in the auditor’s opinion, the approach being taken by Hampshire County Council was appropriate, they were unable to guarantee that this would resolve the issues without significant decisions being necessary on the future level of services

RESOLVED:

That the Audit Committee received and noted the Hampshire County Council and Hampshire Pension Fund Audit Reports for year ending 31 March 2022