WE012 Annual Audit & Inspection Letter - FINAL

R-Joinson

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audit 2003/2004 ANNUAL AUDIT AND INSPECTION LETTER
We will carry out a formal review of progress on
implementation of the plan during 2005.
Executive summary
Action on some of the key themes in the
improvement plan is already well underway.
The purpose of this letter
Financial position
This is our audit and inspection ‘Annual Letter’
for members incorporating the Annual Audit The council budgeted for an increase of
Letter for 2003/04. It is presented by the £1.929 million in 2003/04, leading to the need
council’s Relationship Manager and District for a 53 per cent increase in council tax in order
Auditor. The letter summarises the conclusions to achieve a balanced budget.
and significant issues arising from our recent The budget for 2004/05 was £9.347 million,
audit and inspection work at the council. leading to a council tax increase of 6.9 per cent.
We have issued separate reports during the year A deficit of £187,000 is currently projected for
having completed specific aspects of our the year.
programme. These reports are listed for The council’s five-year medium-term financial
information in Appendix 1. plan was updated in 2004. It now shows that
further savings estimated at £3 million need to Appendix 2 sets out the scope of audit and
be made from the base budget over the period inspection.
2005/06 to 2008/09, corresponding to over Appendix 3 provides information about the fees
£700,000 in each of the next four financial charged.
years.

The council needs as a priority to develop robust

plans to achieve these savings and to align
future services and available finances at a Key messages
sustainable level.
Council performance Accounts and governance
The council was rated as ‘weak’ following the We are required by professional standards to
Comprehensive Performance Assessment (CPA) report to those charged with governance certain
reported in July 2004. The assessment, based matters before we give an opinion on the
on inspection work carried out in February 2004, financial statements. There are no issues arising
found that the council had put in place some of from our audit of the accounts for 2003/04 that
the building blocks that it needs to improve and need to be brought to the attention of members.
had plans to improve further. Members approved the council’s annual accounts
An improvement plan, described appropriately on 22 July 2004 and we issued a standard
as a foundation for transforming the council, is unqualified opinion on the accounts on
now in the later stages of evolution and 23 September 2004.
refinement. It is based around the high-level We have not identified any significant
improvement themes agreed unanimously by weaknesses in the overall financial control
members in September 2004, and is expected to framework although there is some scope for
be presented formally to councillors early in improvement in relation to reconciliations and
2005. the extent of cover provided by Internal Audit.
Although this represents a longer development
period than in the majority of district councils, it
is important that the council is giving measured
consideration to the significant issues raised and
that these are then fully supported by the whole
council.

Annual Audit and Inspection Letter – Audit 2003/2004 Weymouth and Portland Borough Council – Page 2
audit 2003/2004 ANNUAL AUDIT AND INSPECTION LETTER
Report to those with responsibility for Performance information
governance in the council
We are required by professional standards to Best Value Performance Plan (BVPP)
report to those charged with governance certain
The Best Value Performance Plan (BVPP) issued
matters before we give an opinion on the
in June 2004 complies with legislation. financial statements.
The audit of the council’s Best Value
During our audit of accounts a number of
Performance Indicators (BVPIs) has been matters were raised with your accountants and
concluded. One indicator was reserved and there the draft accounts were revised where
were none omitted. Twelve indicators were necessary. There were no significant matters
amended following audit and republished on the that we were required to raise with members
council’s website. and we issued a letter, our SAS 610 report
An unqualified opinion was given on the council’s confirming this, on 23 September 2004.
indicators on 8 December 2004. We issued a standard unqualified opinion on the
council’s accounts on 23 Se

Auditor scored judgements
Accounts and governance
The council audited scored judgements are
shown below. These were used principally to We have given an unqualified audit opinion on
inform the CPA inspection. your accounts.
Corporate governance arrangements are sound
EXHIBIT 1 CPA AUDITOR SCORED JUDGEMENTS except for the need to make substantial revenue
savings over the next five years. Area of governance Scores
2003/04
Audit of 2003/04 accounts Financial standing 3
Systems of internal financial 3 We gave an unqualified opinion on the council’s
control
accounts on 23 September 2004.
Standards of financial conduct; 3
prevention and detection of fraud Matters arising from the final accounts
audit Financial statements 2
The published accounts are an essential means Legality of significant financial 3
transactions by which the council reports its stewardship of
the public funds at its disposal and its financial
performance in the use of those resources. Financial standing
Members approved the council’s annual accounts
The council budgeted for an increase of on 22 July 2004.
£1.929 million in 2003/04, leading to the need
In last year’s Annual Audit and Inspection Letter
for a 53 per cent increase in council tax in order
we emphasised that timeliness in producing the
to achieve a balanced budget.
accounts will become increasingly important
The budget for 2004/05 was £9.347 million, over the next few years as the deadline for
leading to a council tax increase of 6.9 per cent. completion of the accounts is brought forward in
A deficit of £138,000 is currently projected for line with the Government’s requirement. The
the year, primarily the consequence of high accounts were prepared well in time to meet
expenditure on homelessness. both this year’s 30 August deadline and also
next year’s 31 July deadline. However the
deadline in 2006 is 30 June which will be more
difficult to achieve and will require early
planning and careful scheduling.

Annual Audit and Inspection Letter – Audit 2003/2004 Weymouth and Portland Borough Council – Page 5
audit 2003/2004 ANNUAL AUDIT AND INSPECTION LETTER
The council’s five-year medium-term financial In setting this budget, the council planned to
plan was updated in 2004. It now shows that make efficiency savings of £1.48 million and
further savings estimated at nearly £3 million relied on increased income of £1.36 million.
are likely to need to be made from the base Against this the council had to offset net pay
budget over the period 2005/09. This and price changes of £819,000 and unavoidable
corresponds to over £700,000 per year in each commitments of £1.774 million. The council
of the next four financial years (mid-point recognises in its subsequent year forecasts that
estimate). gains of this magnitude will not be readily
available again either from efficiency savings or The council needs to be able to align future
from increased income. services and available finances at a sustainable
level in order to avoid major financial difficulties The latest financial monitoring report produced
in the future. Robust plans to achieve the at the end of October 2004 shows a predicted
necessary savings need to be developed and adverse variance of £138,000 for the current
implemented as a top priority. financial year of which £113,000 can be
attributed to increasing levels of homelessness.
General fund spending and balances The council’s five-year medium-term financial
2003/04
plan, first developed in 2002/03, was updated in
The net revenue expenditure budget for 2003/04 2004. It now shows the need to make further
was set at £9.364 million, an increase of £1.929 savings totalling £2.984 million from the base
million compared to the previous year. This budget over the period 2005/09, as shown
necessitated a council tax rise of below.
53 per cent, intended to restore the council’s
finances to a sustainable level. Council tax was
EXHIBIT 2 MID-RANGE ESTIMATE OF REVENUE set at £201 for a Band D property which is near
SAVINGS NEEDED the highest end of the range for district councils.
The average for shire districts for 2003/04 was
Year 2005/ 2006/ 2007/ 2008/
£151. 06 07 08 09
Actual outturn for 2003/04 was £9.159 million, Amount 729 713 779 763
allowing a £232,000 contribution to reserves to £,000
be made.
General Fund balances at 31 March 2004
Over the four-year period, this further saving amounted to £1.057 million, with a further
equates to 32 per cent of the current net £269,000 held in