The Section 151 Officer submitted a report the purpose of which, was to present the final Statement of Accounts for 2015-16 which was now due to be signed off by the Council’s external auditors, Wales Audit Office (WAO), the associated Letter of Representation of the Council and the final audited Return for the Harbour Authority.

After a brief introduction to the report by the Head of Finance and Section 151 Officer, Mr Owen from the Wales Audit advised by way of background information, that the unaudited Statement of Accounts for the above period was presented to the Audit Committee on 30 June 2016 for noting and had been signed by the responsible financial officer on 16 June 2016. During the intervening period, the external audit had taken place, resulting in a number of amendments being made to the financial statements.

The audited Statement of Accounts 2015-16 was attached at Appendix A to the report, and this presented a true and fair view of the financial position of the Council as at 31 March 2016, by 30 September 2016 he advised.

Mr Owen referred to page 156/7 of the report which outlined the role of the Auditor General, and in terms of any significant issues arising from the audit, he confirmed that there were no uncorrected misstatements identified in the financial which remained uncorrected. He added however, that there were a number of misstatements some of which were material, that had been corrected by management, but which the Wales Audit Office felt should be drawn to the attention of the local authority. This was due to their relevance to its responsibilities over the financial reporting process. These were highlighted (together with explanations) in Appendix 3 of the report. Page 157 of the report also detailed other significant issues arising from the audit, however, Mr Owen confirmed that no major concerns had been raised overall as a result of the audit.

Appendix B to the report showed the Final Letter of Representation which was required by the Appointed Auditor to complete the process and enable the accounts to be signed off.

Paragraph 4.12 of the report confirmed that under International Auditing Standards (ISA) 260, the External Auditor was required to communicate relevant matters relating to the audit of the financial statements to “those charged with governance”. These matters were incorporated into the Audit of Financial Statements Report, which was attached at Appendix C to the report.

The remaining sections of the Statement of Accounts contained the Annual Return for the Porthcawl Harbour Authority (Appendix D), whilst Appendix E contained the audit letter that confirmed that there have been no adjustments to the draft return presented to the Audit Committee last June. The Audit Committee were required to approve the Annual Return.

 The Lay Member asked whether the underspend on services of £1.639m, irrespective of the post audit grant adjustments, went towards the future savings needed within the MTFS and when would the historic grant balances as a result of the creditors review be spent. The Head of Finance and Section 151 Officer explained that the underspend on services meant that earmarked reserves were able to be created that could be used to support the transformation needed to deliver future savings or protect the Council against known risks, but would not directly go against the savings figures as the underspend is a one off amount. A Member further asked about the historic grant balances and whether there were any terms and conditions that meant that these should be spent within certain service areas. The Chief Accountant stated that a full analysis of the historic balances had been undertaken with the external auditors. Where any terms and conditions hadn’t been met or that the grant might need to be repaid these remained within Creditors. The balances that had been unwound included £876,000 for Wellbeing Projects, which would have come mainly from the Local Health Board and which will still be used within the specific service area, Highways Commuted Sums of £692,000 which will be incorporated for use within the Highways Business Plan, and £488,000 for Housing Benefit Administration. She explained that the Housing Benefit balance was an allocation of funding for the Housing Benefits team that has built up over a number of years. It had not been fully needed due to sufficient budget within the area, so the balance will be used for a combination of Welfare Reform and Service reconfiguration. The Head of Finance and Section 151 Officer stated that all the new Earmarked Reserves that have been created from historic balances will be used over a period of 1 to 3 years. The Chief Accountant stated that the process would be a lot more transparent, as all earmarked reserves are monitored and reported to Cabinet at periods 6, 9 and 12.

RESOLVED:                That the Audit Committee:-

(1)       Approved the audited Statement of Accounts 2015-16 (Appendix A to   the report).

(2)       Noted and agreed the Final Letter of Representation to the Wales Audit Office (Appendix B).

(3)       Noted the Appointed Auditors’ Audit of Financial Statements Report (Appendix C).

(4)        Approved the Annual Return for the Harbour Authority (Appendix D) and note the audit opinion (Appendix E).