Agenda item

In reference to Minute No. 49/21 (above) the Audit Findings Report in connection with the 2019/20 Statement of Accounts was presented by the Council’s external auditors, Grant Thornton.

It was noted that there had been many delays in presenting this report, as a result of queries around asset valuation.  Adjustments to the Comprehensive Income and Expenditure Statement (CIES) had resulted in a net decrease of £10.6m in deficit.  A number of significant adjustments had been made, however, there was no loss to the Council.

It was again highlighted that the current processes for valuation of property, plant and equipment were poor and overly complex and would continue to cause delays in the audit process until resolved.  Urgent action had been recommended.

Concerns had been reported to management around weaknesses in IT controls and the use of journals and the control measures in place. 

Concerns around the establishment of Sandwell Land and Property and the contingent liability for the Council around its shares were re-iterated. The Committee noted that the company was in the process of being wound up.

Auditors had concluded that the Council had proper arrangements in place to secure economy, efficiency and effectiveness in its use of resources, except for its arrangements around Children’s services which had been rated as ‘inadequate’ by OFSTED.  Progress could be seen in Sandwell Children's Trust however there was a need to address staff vacancy rates.  Members highlighted that the recent Ofsted inspection of the Trust’s fostering service had resulted in a “Good” rating.  It was hoped that this have a positive impact on the wider organisation.

The Head of Finance confirmed that the majority of required actions in the report had now been implemented, however the implementation of an electronic asset register was still in progress as a procurement process would need to be undertaken.

The Committee requested a further report to a future meeting on progress in addressing the high-risk actions set out in the accompanying action plan, particularly in relation to the implementation of new systems to replace Excel asset registers, the implementation of a new property database and management challenge of external valuations of property, plant and equipment.

In relation to the sale of Providence Place in West Bromwich, (Minute No. 20/20 of the Budget and Corporate Scrutiny Management Board meeting held on 20 August 2020 and Minute No. 68/20 of the Cabinet meeting held on 26 August 2020 refer), the sale represented a significant financial loss for the Council of around £22m.  Whilst the decision to sell the building for use as an academy for arts and music was laudable, the external auditor highlighted the significant financial loss to the Council and urged that future purchases or sales of land and property were clearly aligned with a long-term estates strategy.

The Committee was informed that both the purchase of the building and its subsequent sale were supported by external valuations.  The decision to purchase the building and the cost of such had been offset against the cost of rent for the remainder of the lease (up to 2026).  Following a change in the Council’s operational requirements, and the declaration of the building as surplus to requirements, the opportunity to attract a new school had been taken.

Contracts for the sale of the building had recently been exchanged with the Department for Education and discussions were taking place regarding a completion date.  Discussions were also taking place with officers from Strategic Assets and Land on the lessons learned from the process, as part of Grant Thornton’s detailed review of governance, the findings of which would be reported to the Committee after October 2021.