Audited Annual Accounts 2023/24 & External Audit Report
Argyll and Bute Council · 26 March 2025
Back to Argyll and Bute HSCP Integration Joint Board (IJB) — 26 March 2025 and its agenda
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1 Integration Joint Board Date of Meeting: 26 March 2025 Title of Report: Audited Annual Accounts 2023/24 & External Audit Report Presented by: James Gow, Head of Finance The Integration Joint Board is asked to: • Note that Mazars have completed their audit of the Annual Accounts and for 2023-24 and issued a draft unqualified Independent Auditor’s Report. • Consider the Annual Audit Report prepared by Mazars and management responses to their recommendations. • Note that the IJB is reporting an underspend of £2.9m carried forward in general reserves. • Approve the Letter of Representation and the Audited Accounts for signature and publication. • Note that the accounts are prepared on a going concern basis. 1. EXECUTIVE SUMMARY 1.1 The Integration Joint Board is required to produce a set of audited annual accounts. These have been subject to independent audit by Mazars, who have issued an unqualified audit report. The Accounts, Audit Report and Letter of Representation have been considered and endorsed by the Audit & Risk Committee at its meeting on 18 February 2025. 1.2 The Audited Annual Report and Accounts are provided as an appendix along with External Audit Report and Letter of Representation and audit opinion. The figures in the accounts are unchanged from the unaudited accounts published in June 2024. As is normally the case, a number of relatively minor disclosure changes and corrections have been made to the accounts during the audit process, these are highlighted in the audit report. Following approval by the IJB, the accounts require to be signed by the Chair, Chief Officer and Chief Financial Officer. The audit report, letter of representation and the audit opinion, which requires to be signed by Mazars are also provided. The Audit Report will be published by Audit Scotland in due course. The risk in respect of financial sustainability is again highlighted by Mazars in their report. The audit and completion process has taken longer than initially planned. 1.3 In relation to financial performance, the accounts are reporting that the HSCP underspent against the allocations made available to it, by £2.9m. It is carrying its underspend forward within its general reserves to fund investment in service transformation and the budget gap in 2024/25.
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2 2. Recommendations 2.1 The Integration Joint Board is Recommended to: • Note that Mazars have completed their audit of the Annual Accounts and for 2023-24 and issued a draft unqualified Independent Auditor’s Report. • Consider the Annual Audit Report prepared by Mazars and management responses to their recommendations. • Note that the IJB is reporting an underspend of £2.9m carried forward in general reserves. • Approve the letter of representation and the Audited Accounts for signature and publication. • Note that the accounts are prepared on a going concern basis. 3. DETAIL OF REPORT 3.1 The Integration Joint Board was established under the requirements of the Public Bodies (Joint Working) (Scotland) Act 2014 and is a section 106 body as defined in the Local Government (Scotland) Act 1973. The financial statements are therefore prepared in compliance with the Code of Practice on Local Authorities Accounting supported by International Financial Reporting Standards (IFRS) unless legislation or statutory guidance requires different treatment. 3.2 The Annual Accounts are subject to independent audit by Mazars and some minor changes have been made in respect of disclosures and the narrative. There have been no substantive changes to the unaudited accounts published in June, no objections raised by the public and no uncorrected errors highlighted by the auditor. The Audited Annual Accounts are provided as Appendix 1. The most significant change during the audit process has been to reduce the level detail on spend disclosed in the final version of the accounts. 3.3 Mazars conclude that the Integration Joint Board’s accounts present a true and fair view of the financial performance of the IJB during the year. The Independent Auditors Report provides further information on the audit process and basis of the opinion. It is acknowledged that the IJB is highly dependent upon both partners in respect of financial accounting processes and systems. 3.4 Mazars have prepared an Annual Audit Report for consideration by the IJB. This indicates the auditors are content with financial accounting and reporting and concludes that governance and arrangements for securing value for money were likewise appropriate. The audit report does make a recommendation in respect of medium term planning and the financial sustainability challenge currently faced by the HSCP and other public bodies. Mazars have also recommended that the IJB completes the development of the new strategic plan and requested that some improvements are made to the working papers provided alongside the accounts at the start of the audit. The recommendations and management responses are included in the Mazars report. 3.5 A summary of spend and resources over the past 3 years is provided below:
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3 2021/22 2022/23 2023/24 £'000 £'000 £'000 Employee Costs 101,153 111,382 125,466 Premises 10,009 11,260 11,236 Supplies and Services 15,183 15,253 20,029 Transport 3,201 3,918 4,153 Third Party Payments 148,745 155,004 163,926 Income -19,104 -18,458 -21,019 Primary Care Services 52,930 53,137 55,287 Other 248 285 317 Total Spend 312,365 331,781 359,395 Total Funding 326,975 327,575 362,284 Increase / (Decrease) in reserves 14,610 -4,206* 2,889 *deficit due to recovery of covid reserves Spend increased by £27.6m or 8.3% against the prior year with direct staff costs accounting for 35% of net expenditure. This is largely due to inflationary pressure and spend of reserves held at the end of the prior year. 3.6 Whilst there was an underspend against the resources allocated to the IJB of £2.9m, a better outturn than anticipated, the Scottish Government allocated £4.7m at the year end for value and sustainability work. This allocation resulted in total reserves increasing by £2.9m rather than reducing by £1.8m. The following table summarises the movement in reserves: Earmarked Reserves £000 Opening Reserves at 1 April 2023 16,991 Reserves spent during 2023/24 (3,139) Reserves returned to NHS Highland (2,297) Excess Social Work Spend – funded from reserves (788) NHS Underspend (added to general reserve) 2,798 Specific funding received and carried forward 6,314 Closing Balance at 31 March 2024 19,879 The general reserve is available to the IJB to hold, invest or spend at its discretion. The year end general reserve balance was £8.4m and this has been earmarked for: • Service Transformation & Budget Gap £7.8m • Prevention Programme £0.6m Investment in transformation and infrastructure projects are considered by the Transformation Board and the Infrastructure Transformation Board.
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4 3.7 The balance sheet debtor is equivalent to the reserves held by NHS Highland and Argyll and Bute Council. These have been earmarked for specific purposes and an analysis is included in Note 6 of the accounts. 3.8 The accounts present a favourable view of financial performance, provide an overview of the governance framework and summary of performance and risk. The HSCP has now operated within budget for four consecutive years and had reserves available to it at year end. However, the HSCP has a deficit budget which is reliant on the use of these reserves, this is not sustainable. In respect of the Going Concern judgement, the favourable outcome enables the IJB to fund its budget gap from reserves and non-recurring savings. 3.9 The Integration Joint Board is also asked to approve the draft letter of management representation (this is provided along with the External Audit Report). It provides a number of assurances from the Chief Finance Officer to the auditor and requires to be considered by the IJB prior to issue. 4. RELEVANT DATA AND INDICATORS 4.1 Information contained within the accounts is derived from the financial systems of NHS Highland and Argyll and Bute Council. The audit of the IJB accounts is supported by the audits of both partners. 5 CONTRIBUTION TO STRATEGIC PRIORITIES 5.1 The annual accounts are a key statutory reporting and accountability requirement. They communicate both financial and key service delivery performance information in an accessible public document. 6. GOVERNANCE IMPLICATIONS 6.1 Financial Impact – The IJB is required to consider and approve the Audited Annual Accounts. The accounts present a favourable summary of financial performance during the year and the position at the year end. The Annual Audit Report provides important independent assurance to the IJB in respect of financial management and governance. 6.2 Staff Governance – None 6.3 Clinical Governance – None 7. PROFESSIONAL ADVISORY 7.1 Professional leads have had the opportunity to consider the contents of this report and the draft accounts. 8. EQUALITY & DIVERSITY IMPLICATIONS 8.1 None 9. GENERAL DATA PROTECTION PRINCIPLES COMPLIANCE 9.1 None
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5 10. RISK ASSESSMENT 10.1 There are no changes to the risk register arising from the contents of this report. 11. PUBLIC & USER INVOLVEMENT & ENGAGEMENT 11.1 The unaudited annual accounts were made publicly available in June 2024. The accounts will be made publicly available by the HSCP and the Annual Audit Report will be published by Audit Scotland. No objections to the un-audited accounts were received by the auditor. 12. CONCLUSIONS 12.1 The audited accounts for 2023-24 require to be approved by the IJB prior to publication. This report summarises the accounts. These were audited by Mazars and an unqualified independent auditors report has been received. There were a small number of minor changes made as part of the audit process but no amendments to the figures. The accounts report that the IJB operated within budget during the year and that its governance arrangements were appropriate. The audit report provides the IJB with independent assurance in respect of financial management and governance. 13. DIRECTIONS Directions required to Council, NHS Board or both. Directions to: tick No Directions required √ Argyll & Bute Council NHS Highland Health Board Argyll & Bute Council and NHS Highland Health Board 14. PREVIOUS REVIEW OF THE REPORT Meeting Title of report Date Output (if relevant) SLT Unaudited Annual Report and Accounts 05/06/24 none Audit & Risk Committee Unaudited Annual Report and Accounts 18/06/24 endorsed Audit & Risk Committee Audited Annual Report and Accounts and External Audit Report 18/02/25 endorsed REPORT AUTHOR AND CONTACT James Gow, Head of Finance and Transformation, james.gow@argyll- bute.gov.uk APPENDIX 1: Annual Accounts for the year ended 31 March 2024 APPENDIX 2: External Audit Report and Audit Opinion APPENDIX 3: Letter of Representation