2009-2010 - Annual Audit Letter - West Yorks Joint Services Committee - v1.0

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Annual Audit Letter West Yorkshire Joint Services Committee Audit 2009/10

The Audit Commission is an independent watchdog, driving economy, efficiency and effectiveness in local public services to deliver better outcomes for everyone. Our work across local government, health, housing, community safety and fire and rescue services means that we have a unique perspective. We promote value for money for taxpayers, auditing the £200 billion spent by 11,000 local public bodies. As a force for improvement, we work in partnership to assess local public services and make practical recommendations for promoting a better quality of life for local people.

Contents

Key messages .................................................................................................... 2 Audit opinion and financial statements ......................................................... 2 Value for money............................................................................................ 2 Current and future challenges ...................................................................... 2

Financial statements and annual governance statement .............................. 3 Overall conclusion from the audit ................................................................. 3 Significant weaknesses in internal control .................................................... 3

Value for money ................................................................................................. 4 VFM conclusion ............................................................................................ 4 Risk-based work ........................................................................................... 5 Approach to local value for money work from 2010/11................................. 5

Current and future challenges .......................................................................... 6 Financial outlook........................................................................................... 6 Future developments .................................................................................... 6

Closing remarks ................................................................................................. 7 Appendix 1 – Audit fees .................................................................................... 8

Appendix 2 – Glossary ...................................................................................... 9

Audit Commission

Annual Audit Letter

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Key messages

This report summarises my findings from the 2009/10 audit. My audit comprises two elements: ƒthe audit of your financial statements (page 3); and ƒmy assessment of your arrangements to achieve value for money in your use of resources (pages 4 to 5). I have included only significant recommendations in this report. The Joint Committee has accepted these recommendations.

Audit opinion and financial statements

1 I issued an unqualified opinion on your 2009/10 accounts on 28 September 2010.

Value for money

2 I issued an unqualified opinion on your 2009/10 value for money conclusion on 28 September 2010.

Current and future challenges

3 The financial outlook faced by the Joint Committee is challenging. For all public sector bodies, the impact of the economic downturn and the related pressure on public sector finances presents a significant challenge in meeting the needs of the population within available resources.

4 You are taking active steps in response to the current and future financial pressures you face.

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Financial statements and annual governance statement

The Joint Committee's financial statements and annual governance statement are an important means by which the Joint Committee accounts for its stewardship of public funds. I gave an unqualified opinion on the Joint Committee's 2009/10 financial statements on 28 September 2010, within the statutory target date.

Overall conclusion from the audit

5 There were no significant issues arising from the audit. As in previous years, the financial statements and working papers submitted for audit were of a good standard and provided in accordance with our timescale.

6 Following the audit, you made one material amendment to the accounts and a number of minor amendments. You declined to amend the accounts to remove two unnecessary prior period adjustments and one minor error. The adjusted and unadjusted misstatements do not affect the overall financial position of the Joint Committee.

Significant weaknesses in internal control

7 I did not identify any significant weaknesses in your internal control arrangements.

Recommendation

R1Consider the amendments made to the financial statements and the unadjusted errors identified during the audit when preparing the 2010/11 statement of accounts.

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Value for money

I considered whether the Joint Committee is managing and using its money, time and people to deliver value for money. I assessed your performance against the criteria specified by the Audit Commission and have reported the outcome as the value for money (VFM) conclusion.

VFM conclusion

8 I assessed your arrangements to achieve economy, efficiency and effectiveness in your use of money, time and people against criteria specified by the Audit Commission. The Audit Commission specifies which Key Lines of Enquiry (KLOE) are the relevant criteria for the VFM conclusion at each type of audited body.

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This is a summary of my findings.

Table 1:

Criteria

Managing finances

Understanding costs and achieving efficiencies

Financial Reporting

Governing the business

Good Governance

Risk management and internal control

Ade uate arrangements?

Yes

Yes

Yes

Yes

10 I issued an unqualified conclusion stating that the Joint Committee had satisfactory arrangements to secure economy, efficiency and effectiveness in its use of resources.

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Riskbased work

11 Our work on partnerships concluded that you have good arrangements for engaging with the constituent authorities and contributing to the achievement of local priorities.

12 These arrangements could be improved by setting targets which focus less on having processes in place and more on measurable outcomes for local people.

13 The 2007/08 annual audit letter recommended improved arrangements for the identification and governance of significant partnerships. You have addressed this recommendation by: ■ Revising your Partnerships and Grant Funding Policy; ■ Completing an annual review of partnership arrangements reported to the Archaeology, Archives and Trading Standards Sub-Committee; and ■ Ensuring contracts are in place for all significant partnerships.

14 Two recommendations were made in last year's annual audit letter as a result of the work completed on medium term financial planning. You have addressed these recommendations by: ■ reviewing and revising your reserves policy to clearly define earmarked and general reserves; and ■a three year service delivery plan supported by three year developing service business plans.

Recommendation

R2Develop improvement targets which focus on measurable outcomes for local people in the constituent authorities.

Approach to local value for money work from 2010/11

15 Given the scale of pressures facing public bodies in the current economic climate, the Audit Commission has been reviewing its work programme for 2010/11 onwards. This review has included discussions with key stakeholders of possible options for a new approach to local value for money (VFM) audit work. The Commission aims to introduce a new, more targeted and better value approach to our local VFM audit work.

16 My work will be based on a reduced number of reporting criteria, specified by the Commission, concentrating on: ■ securing financial resilience; and ■ prioritising resources within tighter budgets.

17 I will determine a local programme of VFM audit work based on my audit risk assessment, informed by these criteria and my statutory responsibilities. I will report the results of all my local VFM audit work and the key messages for the Joint Committee in my annual report to those charged with governance and in my annual audit letter.

Audit Commission

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Current and future challenges

Financial outlook

18 The financial outlook faced by the Joint Committee is challenging. For all public sector bodies, the impact of the economic downturn and the related pressure on public sector finances presents a significant challenge in meeting the needs of the population within available resources.

19 The key financial pressures include: ■ reduced income in key service areas, notably Archaeology; ■ changes to the Consumer Direct contract; ■interest rates on cash balances; reduced ■issues in two Archives facilities; and accommodation ■ budget savings required by the five constituent authorities as a result of the Comprehensive Spending Review.

20 You are taking proactive steps in response to the current and future financial pressures you face.

Future developments

21 From 2010/11, the Joint Committee's financial statements will be prepared under International Financial Reporting Standards (IFRS).

22 You have plans in place to ensure that the transition to IFRS goes smoothly. These include: ■ reviewing minutes of the lead authority's IFRS and close of accounts working groups; ■2009/10 restated and 2010/11 skeleton accounts prior to 31 preparing March 2011; and ■with Members by presenting the restated 2009/10 accounts to engaging the Governance and Audit Committee in March 2011.

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Closing remarks

23 I have discussed and agreed this letter with the Chief Officer, the Divisional Manager (Resources) and the Director of Finance. I will present this letter at the Joint Services Committee on 11 November 2010 and will provide copies to all committee members.

24 Full detailed findings, conclusions and recommendations in the areas covered by our audit were included in the reports I issued to the Joint Committee during the year.

Table 2:

Report

Audit Plan

Opinion Audit Plan

Annual Governance Report

Audit Memo

Date issued

June 2009

June 2010

September 2010

October 2010

25 The Joint Committee has taken a positive and helpful approach to our audit. I wish to thank the Joint Committee staff for their support and cooperation during the audit.

Simon Dennis Appointed Auditor

November 2010

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Appendix 1 – Audit fees

Financial statements and annual governance statement

Value for money

Total audit fees

Audit Commission

Actual

£23,543

£8,485

£32,028

Annual Audit Letter

Proposed

£23,543

£8,485

£32,028

Variance

Nil

Nil

Nil

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Appendix 2 – Glossary

Annual governance statement

Governance is about how local government bodies ensure that they are doing the right things, in the right way, for the right people, in a timely, inclusive, open, honest and accountable manner.

It comprises the systems and processes, cultures and values, by which local government bodies are directed and controlled and through which they account to, engage with and where appropriate, lead their communities.

The annual governance statement is a public report by the Joint Committee on the extent to which it complies with its own local governance code, including how it has monitored the effectiveness of its governance arrangements in the year, and on any planned changes in the coming period.

Audit opinion

On completion of the audit of the accounts, auditors must give their opinion on the financial statements, including: ■they give a true and fair view of the financial position of the whether audited body and its spending and income for the year in question; ■ whether they have been prepared properly, following the relevant accounting rules; and ■ for local probation boards and trusts, on the regularity of their spending and income.

Financial statements

The annual accounts and accompanying notes.

Qualified

The auditor has some reservations or concerns.

Unqualified

The auditor does not have any reservations.

Value for money conclusion

The auditor’s conclusion on whether the audited body has put in place proper arrangements for securing economy, efficiency and effectiveness in its use of money, people and time.

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