Agenda item

(To receive a report by Michelle Grady, Assistant Director – Finance, which presents the draft Auditor’s Annual Report for Lincolnshire County Council and a Audit Completion Report for Lincolnshire Pension Fund, and a draft Audit Completion Report for Lincolnshire County Council)

Consideration was given to a report presented by Mazars, External Auditors, which detailed the draft Auditor’s Annual Report for Lincolnshire County Council and an Audit Completion Report for Lincolnshire Pension Fund, and a draft Audit Completion Report for Lincolnshire County Council.

Mr Mark Surridge, External Auditor - Mazars, delivered the update for the Lincolnshire County Council audits.

The Committee sought further detail in the determining schools' and county farms’ valuations and if any lessons could be learned in the future. Mr Surridge explained that one determining factor for schools' valuations were the size of the premises footprint. Upon a sample test, the figures listed in the undelaying records differed from that identified by the valuer. As a result of this, the external auditors had to understand what the impact of those differing figures were to the valuation. Moving forward the Council would have to review its records and ensure they're kept up to date. A supplementary point of clarification was made, noting that schools' funding was determined by the number of students on roll rather than the footing of the premises.

On the issue of county farms’ valuations, Mr Sturridge advised one element of consideration was based on a judgment by the Council's valuer, who used special considerations when determining the long term life of the leases that supported the county farms. This resulted in a difference in the valuations but only to an insignificant extent. Dependent of the judgement of the Council's valuer, these issues may because apparent again in future audits.

In follow up comments, Members noted that they'd appreciate an overview of the practical implications of inaccurate valuations to be included as part of the Auditors' letter and further clarity from the narrative extrapolation for the unadjusted sample.

Members asked if the Covid-19 grant recognition presented any unexpected issues when auditing the Council's accounts. Mr Surridge noted that accounting for Covid-19 grants ultimately wasn't as difficult as initially expected.

Making reference to the comment in the report of the large variances to the invoices, Members asked for further details of the inaccuracy for the manual processes. It was advised that the manual accruals resulted from invoices due to be paid from highways contracts. There was a nominal variation in final fees which was identified by the external auditors. Officers would endeavour to address these in the future.

Mr John Pressley and Mr Cameron Waddell, External Auditors - Mazars, delivered the updates for the Lincolnshire Pension Fund audit.

Members made reference to the issue of unquoted investment valuations, seeking clarity if this issue was likely to continue into next year's account's audit and if anything could be done to mitigate the impact. It was explained that at the Executive Director – Resources had been in correspondence with the County Treasurers Network to identify how the Council could work with the scheme advisory board and pension's regulator to ensure a better outcome.

Noting the increasing life expectancy of scheme members, the Committee asked if the fund had considered if increased contributions would have to be made to cover pension expenditures. It was advised the fund was currently at 98 per cent capacity. Furthermore, the fund had recently appointed a new actuary and their first valuation was expected in 2022. Though the Council's budget, provision had been made to cover past deficits which were modelled though medium-term planning.

Making reference to the reported deficiency in the performance of Prudential, Members asked if this was a general issue among Additional Voluntary Contributions (AVCs). It was advised this is issue appeared to be limited to the Prudential, noting that funds that didn’t used Prudential were unaware of service issues.

RESOLVED

That the External Auditor's Annual Report and Audit Completion reports be noted.