SE004 Annual Audit and Inspection Letter - FINAL
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2004 Annual Audit and Inspection Letter Sefton Metropolitan Borough Council INSIDE THIS LETTER PAGES 2 - 15 • Executive summary • Key messages • Council performance • Accounts and governance • Other work • Looking forwards • Closing remarks PAGES 16 - 19 Appendices • Appendix 1 - Audit and inspection reports issued • Appendix 2 - Scope of audit and inspection • Ax 3 - Audit and inspection fee Reference: SE004 Annual Audit and Inspection Letter Date: January 2005 2004 ANNUAL AUDIT AND INSPECTION LETTER Financial position Sefton’s revenue reserves are very low Executive summary compared with similar councils. This is being addressed through an annual contribution to The purpose of this Letter build up the level of balances. However, members need to ensure service expenditure is This is our audit and inspection ‘Annual Letter’ strictly controlled and that any over-spending is for members which incorporates the Annual not merely financed from balances. Audit Letter for 2003/04, and is presented by Levels of arrears are increasing for council tax the council’s Relationship Manager and District and NNDR, and collection rates need to improve. Auditor. The Letter summarises the conclusions and significant issues arising from our recent audit and inspections of the council. Other accounts and governance We have issued separate reports during the issues year, having completed specific ...
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| Publié par | Zien |
| Nombre de lectures | 16 |
| Langue | English |
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2004 Annual Audit and Inspection Letter Sefton Metropolitan Borough Council
I N S I D E T H I S L E T T E R
P A G E S 2 - 1 5 • Executive summary • Key messages • Council performance • Accounts and governance • Other work • Looking forwards • Closing remarks
P A G E S 1 6 - 1 9 Appendices • Appendix 1 - Audit and inspection reports issued • Appendix 2 - Scope of audit and inspection • Appendix 3 - Audit and inspection fee Reference: SE004 Annual Audit and Inspection Letter Date: January 2005
2004
Executive summary The purpose of this Letter This is our audit and inspection ‘Annual Letter’ for members which incorporates the Annual Audit Letter for 2003/04, and is presented by the council’s Relationship Manager and District Auditor. The Letter summarises the conclusions and significant issues arising from our recent audit and inspections of the council. We have issued separate reports during the year, having completed specific aspects of our programme. These reports are listed at Appendix 1 for information. Appendix 2 sets out the scope of audit and inspection. Appendix 3 provides information about the fees charged. Key messages Council performance The Comprehensive Performance Assessment (CPA) has changed the council’s classification from fair to good. This particularly reflects improvements to education and environment services during the year, and other services performing well. This year has also seen significant improvements in the way the council works, with better management and planning of finance, employees and performance. It is important that the council maintains the pace of this progress and ensures initiatives have the desired impact. In addition there are a number of ambitious initiatives to improve services, such as Children, Schools and Families, the decision to ballot tenants on stock transfer and the housing market renewal initiative.
Annual Audit and Inspection Letter 2004
ANNUAL AUDIT AND INSPECTION LETTER
Financial position Sefton’s revenue reserves are very low compared with similar councils. This is being addressed through an annual contribution to build up the level of balances. However, members need to ensure service expenditure is strictly controlled and that any over-spending is not merely financed from balances. Levels of arrears are increasing for council tax and NNDR, and collection rates need to improve. Other accounts and governance issues The implementation of the new benefits system is resulting in significant operational problems, with a large backlog of cases. This is affecting the timeliness of benefit assessments and renewals and has a knock- on effect on the level of council tax and housing rent arrears. Arrangements for preparing grant claims need to improve and proposals are in place aimed at achieving this. There is a risk of the council losing grant if a scheme’s requirements are not met. Action needed by the council • Maintain the pace of improvements to finance, employees and performance and ensure initiatives are implemented fully and have the desired impact. • Plans to increase the levels of revenue balances need to be achieved in practice. Service expenditure should be strictly controlled so that any over-spending is not merely financed from balances. • Action should be taken to improve collection rates for council tax and NNDR. • Monitor progress in addressing implementation problems in the new benefits system. • Senior officers in departments need to take greater responsibility for ensuring grant claim requirements are met.
Seft on Metropolitan Borough Council Page 2
2004
Council performance CPA scorecard EXHIBIT 1 Element Assessment Overall Good Current performance Out of 4 Education 4 Housing 2 Use of resources 3 Social care (children) 2 Social care (adults) 3 Benefits 3 Environment 4 Libraries and leisure 2 Capacity to improve 2 out of 4 (not re-assessed in 2004) (Note: 1=lowest, 4=highest) Sefton MBC is now a good council It has made significant improvements in education and environment (planning, waste and transport) services over the last year. Good progress is being made across all major service areas, including the outcomes of a recent positive independent inspection of education services. The establishment of a Children, Schools and Families Directorate, bringing together these services to provide the capacity for a better and more ‘joined up’ service to people in Sefton, is an important development and is progressing well. Significant progress has also been made in improving the way the council works. Better management and planning systems covering finance, employees and performance are being put in place. These systems are being developed across the council in a co-ordinated and effective way. Based on Sefton’s plans, the council is well placed to improve the way it works and the services it provides to local people. Annual Audit and Inspection Letter 2004
ANNUAL AUDIT AND INSPECTION LETTER
CPA improvement report In this section we comment on the overall direction of travel, in particular the progress being made against the improvement priorities that were set following the corporate assessment in 2002. Council overview Overall performance in most services is above average. Education and environment services have shown considerable improvements during the year. There was, for example, the recent positive independent inspection of education services. Environment services (planning, waste, transport) have also improved during the year. Benefits and housing repairs are the main areas for improvement. The council has invested in a number of areas in order to improve its capacity and to secure continuous service and community improvements. There is good progress and the developments are in line with good practice. Already some of these developments are bearing fruit, with improvements in a number of services. Over the next year, the council needs to maintain the pace of progress and ensure that all the initiatives are fully implemented and have the desired impact. There is a common agenda for improvement with clear ambitions being set out in the community plan, performance plan and through the LPSA targets. The planning framework has helped to clarify the council’s high level priorities to improve services and enhance corporate capacity to support its improvement agenda. There are a number of ambitious initiatives to transform services and improve other areas. These include the establishment of the Children, Schools and Families directorate, agreeing to ballot tenants on a stock transfer and the housing market renewal initiative.
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2004
The council is making good progress in developing its performance management arrangements. There is an improving picture in terms of performance improvement in most areas. A review of 2003/04 performance indicators compared with 2002/03 shows that 56 per cent of all indicators improved, which is a significant improvement on last year (43 per cent of indicators improved). There were strong improvements in education and housing indicators but less than half of social care and benefits indicators improved. The council is well placed to secure future improvements in services with positive assessments from inspections in community safety, waste and housing repairs. The CSCI annual assessment commented on the good progress being made in responding to the Children’s Bill but set out concerns about the level of management capacity to respond to change in adults services. Performance management, people, ICT and financial plans are being developed and linked together. Good progress is being made and it is important that the council continues to ensure it has the capacity to deliver its programme of improvements. Department and service plans identify the links to corporate priorities. There are inconsistencies in the way that these links are demonstrated and the council is aware of these and intends to issue new guidance for the development of service plans to be used from April 2005. The council is continuing to review its improvement priorities and has approved a comprehensive improvement strategy which includes new developments in communications, consultation and value for money. Plans are being developed to decentralise services to the diverse range of neighbourhoods in the borough. An area committee for Southport and a new parish council for Formby have been established. Discussions on the shape and form of decentralised services are progressing with the area committee for local councils. A framework for neighbourhood management has also been developed in South Sefton.
Annual Audit and Inspection Letter 2004
ANNUAL AUDIT AND INSPECTION LETTER
Improvement priorities The council’s response to CPA improvement planning was to develop its capacity to support future improvement. This included the development of medium-term financial planning, performance management and a more strategic approach to human resource management. The council also prioritised improvements in its approach to regeneration and has establishing a new Children, Schools and Families directorate to develop a co-ordinated approach to education and social care. We comment on progress against the key priorities of the council below. Medium-term financial planning The council’s financial management arrangements have improved since last year. This is reflected in a greater emphasis on longer-term financial planning, improved financial processes and recognition of the need to improve the links between service and financial planning. The medium-term financial plan is a significant development and is recognised as such within the council. It sets out the financial challenges facing the council and highlights the funding gap it faces for 2005/06 to 2007/08. It has helped provide a sound financial basis for the council, ensuring key financial issues are identified and addressed. Examples include the annual contribution to build up the level of revenue balances and addressing emerging issues such as the deficit on the pension fund. Developing budget monitoring arrangements will involve more regular reporting to members. This, with other improvements to financial ground rules, such as incentives and disincentives for under and over-spending, are positive developments that should aid financial management. The council recognises these developments are part of an incremental process and further improvements are planned, including closer links between service planning and budgeting. Service plans are not yet fully integrated with the MTFP process but this will be addressed for 2005/06.
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2004
The overriding priority for the council is to limit the council tax increase for Sefton services and this leads to conflicts with corporate and service priorities, because of its impact on available funding. The council needs to clarify the basis of the judgements it makes between these competing demands. The council is familiar with an annual round of savings. However, the more significant efficiency savings required by the Gershon efficiency review will require a more strategic and fundamental review of budgets. This also needs to consider re-directing resources from non-priority areas. Implement a corporate performance management framework Following the 2002 corporate assessment, the council identified improvements to performance management as an important part of its approach to improvement planning. The council continues to make good progress in developing its approach to performance management. The performance management framework follows good practice and brings together the community strategy, corporate plan and service plans. There are also good arrangements in place to support the implementation of the framework through a performance management lead officer group and the council is implementing an electronic performance management system. There is an improving picture in terms of performance improvement in all areas except social care and use of resources. A review of 2003/04 Performance Indicators (PIs) compared with 2002/03 shows that: • 56 per cent of all indicators improved which is a significant improvement on last year where only 43 per cent of indicators improved; • 79 per cent of education PIs improved compared to 33 per cent last year; 43 per cent of social care indicators • improved last year compared to 60 per cent in 2002/03; • 60 per cent of housing indicators improved compared to 50 per cent last year; • 59 per cent of environment indicators have improved compared to 36 per cent;
Annual Audit and Inspection Letter 2004
ANNUAL AUDIT AND INSPECTION LETTER
• 27 per cent of benefit indicators improved compared to none in 2002/03; • 50 per cent of use of resources indicators improved compared to 80 per cent last year; and • 45 per cent of library indicators improved compared to 33 per cent last year. The challenge is to ensure that performance management continues to drive up improvement in all areas and to ensure that data quality is robust. Our audit of Best Value Performance Indicators (BVPIs) suggests their accuracy has declined since last year. We amended more indicators than last year, over half of which form part of the CPA model. Officers responsible for preparing and authorising BVPIs need to recognise the importance of these indicators to the council, and the need to ensure their accuracy. Internal validation of indicators needs to improve to ensure basic data is correct. Four statutory BVPIs were not produced in 2003/04 and adequate systems need to be in place to ensure all the indicators required for 2004/05 are produced. Human Resources Good progress has been made in developing a strategic Human Resources (HR) framework and in developing the capacity to implement this. Following the corporate assessment in 2002, the council identified the need to develop a strategic approach to HR and carried out a best value review to support its development. The council has prepared a HR strategy and improvement plan. The plan addresses a number of strategic HR issues and has been embraced by elected members, senior managers, the trade unions and employees. Good progress has been made in a short space of time. The original improvement plan was short-term and did not consider all of the resource implications needed to deliver it, but the council has recognised these shortcomings and is putting the necessary resources in place.
Seft on Metropolitan Borough Council Page 5
2004
Other important areas are being addressed. The council recently implemented a workforce planning framework and has established a strategic workforce development group to take this forward. HR issues are now being considered as part of the council’s overall planning arrangements and have been built into the council’s corporate plan. The council has also recently implemented an appraisal scheme for chief officers and has agreed a scheme for staff; these will support the delivery of council-wide objectives. However, it is less clear how the objectives have been integrated into the planning and delivery of services. It is important that HR issues are mainstreamed in this way to ensure that everyone, particularly councillors and line managers, take ownership of managing HR issues and implementing the strategy. Effective management development and training is an important part of the council’s improvement programme. Progress in implementing the management development programme has been slow due to the lack of resources committed to it. The council has now allocated funding for the programme to increase the number of managers who can benefit from it. Procurement The council spends £227 million each year on goods, services and works and has made positive steps to improve its approach to procurement, including a newly agreed procurement strategy and action plan. This takes account of national developments and proposes: • achieving maximum value for money by (eg) developing partnerships; • reducing costs through e-procurement, with a team charged with purchasing software by April 2005; and • working with suppliers to develop markets. Annual Audit and Inspection Letter 2004
ANNUAL AUDIT AND INSPECTION LETTER
A dedicated Procurement Manager has been appointed and an officer group has been set up to help drive through the planned improvements in departments. This group will be important in helping to gain ownership of the new strategy, as the basis for changing the culture around procurement in a sustainable way. The new strategy provides an effective basis for improving the efficiency of procurement processes and the cost-effectiveness of purchasing. Our report sets out specific recommendations to support and develop this process. Children, Schools and Families There has been significant progress in the development of the Children, Schools and Families directorate. The directorate became operational in April 2004 with its management team, budget and staff in place and services being delivered. The council is ahead of national requirements in this area and early indications are that it will have real benefits for children, young people and their families in the borough. The demanding agenda for change is being managed well and the council is aware that it needs to ensure it has sufficient capacity and support in strategic finance, information services and personnel in order to deliver its ambitions fully. Regeneration The council has continued to invest in its capacity to develop its regeneration priority. It is implementing its best value improvement plan and has merged the economic development and neighbourhood renewal functions with the planning section. This provides a platform to deliver an integrated approach to regeneration, with plans overseen by a cabinet member. The council continues to deliver a range of programmes to support renewal. In addition to housing market renewal (see below), developments include Sefton@Work, several farmers markets and tourism initiatives in Southport.
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2004
The implementation of the Neighbourhood Renewal Strategy continues along with programmes such as community support officers and neighbourhood wardens, schools in the community and kerbside recycling. E-government and ICT Improvements to ICT and e-government are recognised as being key to the ongoing development of the council. Significant progress has been made in the council’s plans in these areas. The contact centre is now open and providing services to the public. Operations for two service areas are supported by the Customer Relations Management (CRM) system The council has however, experienced similar technical difficulties to other councils in making the links from CRM to corporate IT systems. The Information Services (IS) department has established a proven method which aims to allow other systems to be connected to CRM and to support the customer contact strategy. In this respect, Sefton is at the forefront of this technology when compared with similar councils. E-government requirements, particularly those mandatory under the Government’s priority outcomes, have required the IS department to prioritise its development programme so that all new developments must now be business driven. The IS department restructure has progressed well, with key management posts filled. The next stage of developing standards and skills to support electronic service delivery now needs to be completed. There have been some notable achievements such as establishing the contact centre, the IT helpdesk and the technology to support it. There is however, still much to do in ICT service delivery, particularly the need to establish more effective service level agreements and recharging mechanisms.
Annual Audit and Inspection Letter 2004
ANNUAL AUDIT AND INSPECTION LETTER
Improvements have been made to the ICT infrastructure. The council recognises the increasing importance of the security and integrity of its information systems and significant steps have been made in reducing its vulnerability to loss. New technology will enable better recovery of information and resilience to equipment failure or loss of facilities. This is to be enhanced to include the backup and recovery of departmental and PC based systems. Next steps should include the use of wide area network links with Southport to provide resilience in the event of more widespread emergencies. These enhancements require funding and would need to done in conjunction with a corporate approach to business continuity. With this in mind, the cross-departmental business continuity group will develop corporate and departmental requirements as part of its response to the Civil Contingencies Act. Decent homes council housing stock The council has recently agreed that Large Scale Voluntary Transfer (LSVT) is the best option for meeting the decent homes target. (The exception to this is Willow House, Seaforth where tenants are being consulted on an option to transfer to an existing housing association). An application is being made for the 2005/06 LSVT programme. The timetable proposes a ballot of tenants by November 2005 and, subject to a ‘yes’ vote, transfer would take place on 31 March 2006. Giving tenants the option of stock transfer is a difficult decision for any council to make, particularly one with no overall control. Members have however, recognised the need to meet the decent homes target, have considered all possible options and have consulted tenants. This represents a significant decision for Sefton Council.
Seft on Metropolitan Borough Council Page 7
2004
Decent homes Housing market renewal Housing market renewal involves working strategically with partners across all tenures to transform housing markets in the borough. Sefton is part of the NewHeartlands pathfinder programme, with Liverpool and Wirral. Its delivery plan shows the main activities in 2004/05 as acquisitions and related clearance, and acquiring strategic sites to provide opportunities for re-development. Preparations on these activities are progressing well in Sefton, and acquisition activity is advanced at a number of sites. External solicitors have been appointed to provide legal advice and other technical advice is being obtained when required. Both the Legal Director and Finance Director are involved in key decisions. Progress is being made in signing or negotiating partnership agreements with lead developers and registered social landlord lead partners in each neighbourhood. We will continue to monitor progress as the programme develops, focusing on governance and accounting issues. Our work to date has not identified any obvious concerns. In addition, the Audit Commission Housing Inspectorate has a scrutiny and programme monitoring role across the whole NewHeartlands pathfinder. Its first scrutiny report includes recommendations on issues such as developing a risk management strategy, reviewing governance arrangements and developing a procedures methodology. Progress is being made on these issues and the Inspectorate will continue to monitor them. Benefits Benefits is a key service for a vulnerable group and the council has been developing this service. The service has been assessed as fair by the Benefit Fraud Inspectorate.
Annual Audit and Inspection Letter 2004
ANNUAL AUDIT AND INSPECTION LETTER
Recent months have seen a re-structuring of the department, improvements to counter-fraud arrangements and the introduction of a new benefits system. The new system’s implementation has led to significant operational problems and there is a large backlog of cases to be processed. An action plan has been agreed with the supplier to address these problems. The key challenge for the service is to improve performance, particularly for timeliness. However, this will be difficult to achieve in 2004/05 in view of the problems in implementing the new system and the backlog noted above. The other major challenge is to introduce the Verification Framework; this provides the basis for more secure and accurate administration of claims, making fraud more difficult. The introduction of the Verification Framework is planned for 2005/06. Other performance work Access to services The council is making good progress in improving the way citizens and businesses can access its services via its contact centre and one-stop shops. The council carried out a best value review of access in 2002 which demonstrated a good awareness of the need for improvements and set an agenda for radical change. The council has approached this with vigour and this drive has been matched by significant commitment of funds to enable improvements to be realised. The newly approved customer charter sets out commitments relating to courtesy, confidentiality and customer service. If the council can deliver the commitments in the charter, they will be providing a good standard of customer care and access to services. There are also some positive early signs on the quality of the data being processed by the call centre.
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2004
However, there are some areas to improve if the council is to maximise the benefits of the approach, including being clearer about the overall aims for customer contact and ensuring access for all users in the borough. In particular more could be done to explore the particular needs of all the local population such as the elderly, young people, disabled people or those of black or racial minorities. The council needs to ensure that the location of the one-stop shops allows all sections of the community to be able to access services. While targets on the percentage of calls answered and call waiting time are not yet being met, performance is expected to improve. Sound project and risk management systems will continue to be important as the council progresses this important initiative. Local management of schools In last year’s Letter, we reported the events that led to significant changes in the funding allocations made to Additionally Resourced Mainstream Schools (ARMS). Our work identified a number of key areas where Children, Schools and Families (CSF) could improve on previous practices of the Education Department. We have followed up progress, and while CSF is still in its infancy, it is clear that much has been learned from the last year’s ARMS funding difficulties. Relationships between schools, CSF senior management and the cabinet member have improved, and processes have been put in place to enable CSF stakeholders to work together effectively. The capacity of CSF is being addressed and schools are confident that key services have the potential to deliver what is required. Youth Offending Team The Audit Commission’s work on youth justice identified national and local concerns about the reliability of the performance data sent from local Youth Offending Teams (YOTs) to the Youth Justice Board. As a result, the Commission has reviewed data quality in a sample of youth offending teams, including Sefton. This examined the accuracy and reliability of data reported, and supporting management arrangements.
Annual Audit and Inspection Letter 2004
ANNUAL AUDIT AND INSPECTION LETTER
Our overall assessment is that the YOT’s arrangements are adequate, although several issues need to be addressed. Information Technology problems are a key issue for the YOT. Staff at all levels report problems of slow response times, lack of equipment, and equipment failures that are exacerbated by very slow and poor backup from the council. A focus group of staff reported low morale, primarily caused by IT problems. Staff knowledge and training is variable and there is no written guidance. However, the YOT has now developed action plans to address training issues and there is detailed monthly checking of data. Our detailed work found that completeness of data was good, and its accuracy was adequate, based on criteria laid down by the Audit Commission. Audit Commission inspections Waste management and cleanliness We inspected waste and cleanliness services in January 2004. The service is good with promising prospects for future improvement. There are a number of positive features, including: • good and cost-effective refuse and bulky waste collection service which is reflected by customer satisfaction levels; • a low and decreasing waste production rate; • an improved recycling rate and the council supporting recycling activity for the most deprived areas; • a good education and awareness programme; and • the service addressing major fly-tipping. There are areas to address; including the publication of service standards and users sometimes have difficulty contacting the service.
Seft on Metropolitan Borough Council Page 9
2004
Prospects for future improvement are promising as key projects to tackle issues that matter for local people are being implemented or planned. The council is also working actively with the disposal authority to develop a long-term waste strategy although progress is moving slowly. The council has committed increased resources for the cleansing service, and service planning and performance management are advanced within the service. There are some potential barriers to improvement including short-term resource allocation and high sickness absence levels. Community safety Community safety is a fair service with promising prospects for improvement. There is strong partnership working and good use of external funding opportunities to tackle crime issues in the most deprived wards, including new approaches such as alley-gating, ‘youth only zones’ and the ‘Tower’ drugs project. There have been positive outcomes from projects such as the alley-gating and Tower drugs projects on local burglary levels and the public are noticing the difference in high crime areas. There are some areas for improvement including a lack of clarity about the fear of crime, no overall approach to using enforcement powers and the evaluation of performance is not fully measured or reported. There are gaps in the council’s level of implementation of its S17 duty and fragmentation of service delivery within the council There are good plans to address weaknesses including better intelligence gathering, enhanced capacity and better performance management. It is resourced, with target dates for completion and responsibility allocated, and the council has a good track record at making improvements. It has good partnership working in place and is planning to invest in the service. Housing repairs and maintenance Our inspection of the council’s repairs and maintenance service, carried out in May 2004, assessed the service as providing a fair service with excellent prospects for improvement.
Annual Audit and Inspection Letter 2004
ANNUAL AUDIT AND INSPECTION LETTER
Clear and discernible improvements have been achieved over the last 18 months, including the introduction of an appointments system, a reduction in the level of inspection, the introduction of a call centre and new partnering arrangements. All these have helped to produce significant cost savings. Tenants are now actively involved in the service and will benefit from the introduction of a new appointments system and improved repair turnaround times. Tenants are generally positive about the service they receive from the council. However, too many of the repairs are responsive rather than planned and responsive repairs are too often carried out as ‘emergencies’. This increases costs. Costs are also increased through long turnaround times in void properties. In addition the council’s approach to diversity and tenant participation needs to be strengthened and embedded in order to effectively inform and drive improvements to service delivery. Our overall conclusion, however, is that the council is on track to further improve the service through strong and effective management. Working with other inspectorates and regulators An important aspect of the role of the Relationship Manager is to work with other inspectorates and regulators who also review and report on the council’s performance. These include: • Ofsted; • Commission for Social Care Inspection (CSCI); • Benefits Fraud Inspectorate (BFI); • DfES; and • Government Office - North West.
Seft on Metropolitan Borough Council Page 10
2004
We share information and seek to provide ‘joined up’ regulation to the council. During the last year the council has received the following assessments from other inspectorates. EXHIBIT 2 Ofsted • Sefton local education authority has improved since the previous inspection and is now highly satisfactory. CSCI • Overall two star service. • Serving most adults well with promising capacity to improve. • Serving some children well with promising capacity to improve. BFI • Benefits service is providing a fair level of performance. Accounts and governance Overall corporate governance arrangements are satisfactory in most key areas but with some areas to improve. We have given your accounts a qualified audit opinion on technical grounds due to the effects of an error dating back to 1992/93. Audit of 2003/04 accounts We gave a qualified opinion on the council’s accounts on 18 November 2004. Matters arising from opinion audit The timetable for 2004/05 requires the council to have its accounts approved by 31 July 2005. It is therefore important to avoid delays in next year’s closedown. Key issues to address include simplifying the bank reconciliation process and maintaining up-to-date reconciliations for all control accounts and feeder systems.
Annual Audit and Inspection Letter 2004
ANNUAL AUDIT AND INSPECTION LETTER
We have completed our opinion audit for 2003/04. Because of an uncertainty of £3.596 million, we were required to issue a qualified audit opinion. This is a technical qualification that has arisen because of the cumulative effects of an error made in the calculation of commutation adjustments in 1992/93. No action is required from the council as this will be self-correcting through the new capital financing requirement being introduced in 2004/05. Financial standing There are some financial pressures facing the council, particularly the low level of revenue balances. The council needs to ensure collection rates improve and the level of arrears for NNDR and council tax arrears reduce. General fund The latest forecast of 2004/05 expenditure projects total overspending of £1.4 million from a number of services. The MTFP means such budgetary problems are being identified earlier in the year. However, members must ensure expenditure is strictly controlled and that any over-spending is not merely financed from balances. Balances continue to remain low, with £892,000 in the general fund reserve at March 2004. Sefton’s balances are significantly lower than the majority of similar councils. The medium-term financial plan is addressing this problem through an annual contribution to build up the level of balances. Although this strategy will mean balances continue to be low in the short-term, it will lead to a sensible level of balances in the longer-term and shows the council is serious about addressing this issue.
Seft on Metropolitan Borough Council Page 11
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