Report of the Chief Finance Officer.

The Chair then invited Councillor Smart to address the Committee regarding item 7 and thanked him for his comments.

The Chair invited Ola Owolabi, Deputy Chief Finance Officer (DFCO), to present the report.

The DFCO explained that the Statement of Accounts was an update of the version considered by the Committee at the November meeting and that the outstanding issues at that time had been resolved. The Council was now in a position to sign a Letter of Representation, to formally and publicly confirm the correctness and completeness of the auditing of accounts for 2018/19.  The DFCO then invited Ben Sheriff, Deloitte, to present the report from Deloitte, External Auditors, (Appendix A of the report) regarding ISA 260.

The Chair thanked Ola Owolabi, DCFO, and Ben Sheriff, Deloitte, and invited comments and questions from Members as they considered the report.

During the following discussion Members noted the volume and complicated nature of the material associated with the agenda and requested that Officers consider the amount, relevance and accessibility of agenda materials going forward.

Points of clarification from Officers included:

·         That there were statutory requirements regarding what should be included in the Statement of Accounts and how it should be presented, in compliance with the International Financial Reporting Standards/CIPFA Code, and that the main purpose of the covering report was to provide a more accessible, narrative summary.

·         That a segmental income analysis could be provided.  However, it was noted that the detail had significantly changed since the time of the report i.e. 2018/19.

·         That the original timescale for delivery of externally audited accounts agreed with Deloitte at the start of 2021 was: 2018/19 by April / May; 2019/20 by end of July 2021 and 2020/21 by end of September 2021. Work on the 2019/20 accounts had now started. 

·         Deloitte noted that resource issues at Deloitte had contributed to the delays.

·         That the Chief Internal Auditor would liaise with CMT regarding possible inclusion of risks identified in the External Accounting within the Strategic Risk Register.

·         That Officers would provide an explanation of the increased employment costs to Members of the Committee. 

·         That Officers would liaise with the Chair to set up pre-committee briefing meetings, to aid Members’ understanding of material due to be considered by the Committee that was of a particularly complicated nature.

Regarding ICE (Investment Company Eastbourne Ltd) in particular:

·         Officers clarified that the complicated nature of the ICE joint venture (the Council’s investment company) had contributed to the delay of the audit, but that there was now an agreed accounting model which would be used going forward.  The cash receipt of £2m was banked but that there had been changes in the way the ICE transaction and accounting were presented within the accounts.Officers also clarified that the report’s comment that “the final contractual structure [of ICE] was not the one approved by Council in 2017”, referred to the structure for accounting and not the structure of the commercial venture / business proposition itself, which was essentially the same.

·         Deloitte noted that ICE increased the number of risk variants for the Council, which in turn impacted the Council’s risk profile.Deloitte acknowledged the difficulties associated with the complicated nature of the ICE accounting, compounded by a loss of institutional knowledge due to Officers having left the organisation since the venture was set up, and confirmed that the Council had followed proper governance procedures and had sought appropriate legal and other expert advice at the proper times, throughout the process prior to transaction of ICE.

·         At the request of Members, Ola Owolabi, DCFO, provided a short, high-level overview of the ICE joint venture, including its initial set up and its terms going forward.  

The members then proceeded to consider the recommendations of the report. In the course of the discussion, Ben Sheriff, Deloitte, was asked to provide his verbal update for the 2019/20 Statement of Accounts (originally scheduled as Agenda Item 8) so that all four recommendations could be considered together.

Resolved (unanimous):

1.    To note the Independent Auditor’s (Deloitte) report to those charged with governance on EBC Accounts, and the Value for Money conclusion report.

2.    To approve the Audited 2018/19 Statement of Accounts.

3.    To authorise the Chief Finance Officer to sign the formal Letter of Representation to Deloitte; and

4.    To note the 2019/20 Statement of Accounts audit update.