Draft Audited 2023-24 Annual Accounts Draft 2023-24 Annual Audit Report
Perth and Kinross Council · 2 December 2024
Back to Audit and Risk Committee — 2 December 2024 and its agenda
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Perth And Kinross Council Audit And Risk Committee 2 December 2024 DRAFT AUDITED 2023/24 ANNUAL ACCOUNTS DRAFT 2023/24 ANNUAL AUDIT REPORT Report by Chief Finance Officer (Report No. 24/340) 1. PURPOSE 1.1 This report presents the Council’s draft Audited 2023/24 Annual Accounts in accordance with the Local Authority Accounts (Scotland) Regulations 2014 and draft 2023/24 Annual Audit Report. 2. RECOMMENDATIONS 2.1 It is recommended that the Committee: • approves the Audited 2023/24 Annual Accounts – see Appendix 1. • authorises the Leader of the Council, the Chief Executive and the Chief Finance Officer to sign the Audited 2023/24 Annual Accounts and the Chief Finance Officer to sign the Letter of Representation – see paragraph 5.7. • Notes the contents of Audit Scotland’s Draft 2023/24 Annual Audit Report – see paragraph 6.3. 3. STRUCTURE OF THE REPORT 3.1 This report includes the following sections: • Section 4 Background • Section 5 Draft Audited 2023/24 Annual Accounts • Section 6 Draft 2023/24 Annual Audit Report • Section 7 Conclusions 4. BACKGROUND 4.1 In line with legislative requirements, the Audit and Risk Committee considered the Unaudited 2023/24 Annual Accounts on 24 June 2024 (Report No. 24/194 refers). 4.2 The Unaudited 2023/24 Annual Accounts were then submitted to Audit Scotland, the Council’s external auditors on the same day (24 June 2024).
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4.3 The Annual Accounts are prepared in accordance with the 2023/24 CIPFA Code of Practice on Local Authority Accounting (“the Code”). 4.4 These accounts also comply with the Local Authority Accounts (Scotland) Regulations 2014 which revoked the Local Authority Accounts (Scotland) Regulations 1985. 4.5 The Unaudited 2023/24 Annual Accounts were available for public inspection between 28 June and 18 July 2024 (inclusive). During this period, Audit Scotland received no objections to the Unaudited 2023/24 Annual Accounts. 5. DRAFT AUDITED 2023/24 ANNUAL ACCOUNTS 5.1 The audit of the 2023/24 Annual Accounts took place between July and November 2024. The audit considered not only the financial statements but also areas such as financial performance and corporate governance. 5.2 Significant findings and key audit matters are set out in detail in Exhibit 3 within the draft 2023/24 Annual Report which is included in Appendix 3. These findings are summarised as follows: • Error in accounting for depreciation of Council dwellings • Omission of additional pension contributions for senior staff • Classification of error within non-current assets • Reporting of performance within the management commentary • Errors in group accounts • Statutory basis for reserves • Application of financial flexibility for service concession arrangements 5.3 None of the misstatements identified above and within Exhibit 3 have an impact on the level of resources available to the Council. 5.4 In addition, there were a few minor presentational adjustments. 5.5 Approval of the Accounts at today’s meeting will provide authorisation for the Leader of the Council, the Chief Executive and the Chief Finance Officer to sign them. The Draft Audited 2023/24 Accounts (unsigned) are attached to this report at Appendix 1. 5.6 The Chief Finance Officer will also sign the Letter of Representation included at Appendix 2. Once signed, the Draft Audited 2023/24 Annual Accounts and Letter of Representation will be passed to Audit Scotland so that they may issue their opinion in the form of an audit certificate. 5.7 ACTION: The Committee is asked to approve the Draft Audited 2023/24 Annual Accounts and authorises the Leader of the Council, the Chief Executive and the Chief Finance Officer to sign them and also to authorise the Chief Finance Officer to sign the Letter of Representation.
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5.8 All signatures will be provided electronically using a system recognised by Audit Scotland that ensures the signings comply with the legislative requirements. 6. DRAFT 2023/24 ANNUAL AUDIT REPORT 6.1 The Draft 2023/24 Annual Audit Report is set out at Appendix 3. The Draft 2023/24 Annual Audit Report sets out Audit Scotland’s opinions and conclusions on the overall audit and their findings to be reported under ISA260: Report to those Charged with Governance. The Draft 2023/24 Annual Audit Report also includes the findings in relation to Perth and Kinross Charitable Trusts. 6.2 The key messages from the 2023/24 audit are set out in the Audit Conclusions on page 3 of Appendix 3 and are summarised as follows: 2023/24 annual accounts 1. Audit opinions on the annual accounts of the Council, its Group, connected charities administered are unmodified. Financial management 2. The council’s budget setting and financial management arrangements operated effectively during 2023/24. 3. Excluding the one-off impact of service concession flexibility, the Council reported a £15.1 million (3.2%) deficit on General Fund services for 2023/24 which was £20.2 million less than planned. The Housing Revenue Account balance reduced by £0.4 million during 2023/24 due to the planned use of reserves (£0.3 million) and additional one-off costs identified during the year (£0.1 million). 4. The Council delivered 76 percent of its capital programme in 2023/24. External debt levels remained relatively static during the year as the council had taken advantage of low borrowing rates in previous years and these loans have been used to fund capital expenditure. 5. Key financial controls operated effectively during 2023/24. Financial sustainability 6. The Council’s General Fund balance increased in the year due to the application of the service concession financial flexibility accounting arrangements. The council has used this to support its 2023/24 outturn and plans to use the remainder to support its budgets though to 2027/28. 7. The 2024/25 budget included a planned use of reserves of £13.8 million, but subsequent amendments increased this to £28.1 million. 8. The medium-term financial plan was last presented in October 2023 and will be reviewed following publication of the Scottish Government’s Medium-Term Financial Strategy.
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The council has yet to develop its revenue financial planning beyond six years as recommended in the 2019 Best Value Assurance Report. 9. The council’s capital investment programme totals £674 million over the next five years and a Corporate Asset Management Framework has been approved to inform investment decision-making. Following an updated options appraisal, the PH2O project, which was paused last year due to inflationary pressures, is going ahead on an alternative site. 10. The Transformation and Change Programme is progressing in line with the planned timetable. Best Value 11. Our Best Value thematic review of workforce innovation confirmed that the Council has a workforce plan to support the delivery of its strategic objectives but has yet to set targets against which to measure and report on progress. 12. Two of the 2019 Best Value Assurance Report recommendations remain outstanding and there has been limited reporting of progress to members or the Executive Leadership Team. Vision, leadership, governance, and use of resources 13. The Council revised its service and senior leadership structure during the year as part of its Transformation and Change Programme. 14. The Council has appropriate governance arrangements in place for delivery of its plans. 15. In line with national trends, there has been an overall decline in LGBF performance indicators over the last 5 years, although performance relative to other councils is largely unchanged. KPI trend analysis suggests improvement in performance compared to last year. 16. The Council is compliant with the Accounts Commission’s SPI direction with comprehensive performance information available via ‘PK Performs.’ 6.3 ACTION: The Committee is asked to note the contents of Audit Scotland’s Draft 2023/24 Annual Audit Report. 6.4 It is anticipated that the final 2023/24 Annual Audit Report will be issued by Audit Scotland following completion of the final accounts process. 7. CONCLUSIONS 7.1 Audit Scotland’s findings on the 2023/24 audit are set out in the Draft 2023/24 Annual Audit Report which is attached at Appendix 3 to this report.
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Author(s) Name Designation Contact Details Scott Walker Chief Finance Officer chxfinance@pkc.gov.uk Alison O’Brien Corporate Accounting Manager
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ANNEX 1. IMPLICATIONS, ASSESSMENTS, CONSULTATION AND COMMUNICATION Strategic Implications Yes / None Community Plan / Single Outcome Agreement None Corporate Plan Yes Resource Implications Financial Yes Workforce Yes Asset Management (land, property, IST) Yes Assessments Equality Impact Assessment Yes Strategic Environmental Assessment Yes Sustainability (community, economic, environmental) Yes Legal and Governance None Risk None Consultation Internal Yes External None Communication Communications Plan None 1. Strategic Implications Corporate Plan 1.1 The Council’s Corporate Plan 2022 – 2027 lays out seven outcome focussed strategic objectives which provide clear strategic direction, inform decisions at a corporate and service level and shape resources allocation. They are as follows: • Tackling poverty • Tackling climate change and supporting sustainable places • Growing a sustainable and inclusive local economy • Enabling our children and young people to achieve their full potential • Protecting and caring for our most vulnerable people • Supporting and promoting physical and mental wellbeing • Placing communities at the heart of how we work 1.2 This report relates to all these objectives. 2. Resource Implications Financial 2.1 There are no direct financial implications arising from this report other than those reported within the body of the main report.
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Workforce 2.2 There are no direct workforce implications arising from this report other than those reported within the body of the main report. Asset Management (land, property, IT) 2.3 There are no direct asset management implications arising from this report other than those reported within the body of the main report. 3. Assessments Equality Impact Assessment 3.1 Under the Equality Act 2010, the Council is required to eliminate discrimination, advance equality of opportunity, and foster good relations between equality groups. Carrying out Equality Impact Assessments for plans and policies allows the Council to demonstrate that it is meeting these duties. 3.2 The information contained within this report has been considered under the Corporate Equalities Impact Assessment process (EqIA) and has been assessed as not relevant for the purposes of EqIA. Strategic Environmental Assessment 3.3 The Environmental Assessment (Scotland) Act 2005 places a duty on the Council to identify and assess the environmental consequences of its proposals. 3.4 The information contained within this report has been considered under the Act. However, no action is required as the Act does not apply to the matters presented in this report. Sustainability 3.5 Under the provisions of the Local Government in Scotland Act 2003 the Council has to discharge its duties in a way which contributes to the achievement of sustainable development. In terms of the Climate Change Act, the Council has a general duty to demonstrate its commitment to sustainability and the community, environmental and economic impacts of its actions. 3.6 The information contained within this report has been considered under the Act. However, no action is required as the Act does not apply to the matters presented in this report.
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4. Consultation Internal 4.1. The Executive Leadership Team have been consulted in the preparation of this report. 2. BACKGROUND PAPERS 2.1 No background papers, as defined by Section 50D of the Local Government (Scotland) Act 1973 (other than any containing confidential or exempt information) were relied on to any material extent in preparing the above report. 3. APPENDICES Appendix 1 – Draft Audited 2023/24 Annual Accounts Appendix 2 – Letter of Representation Appendix 3 – Draft 2023/24 Annual Audit Report