Agenda item

Report of the External Auditor

John Gregory, External Audit Director introduced the Audit Finding for Nottingham City Council. He reminded the committee that a draft version of this document had been presented to the committee in July 2019 and a delay in completion had come about as a result of the delay in receiving the full audited Robin Hood Energy (RHE) Accounts. The following points were highlighted during discussion on this report:

(a)  The 2018/19 audit of RHE was signed off on 24 March with a significantly increased loss and material uncertainty of the company’s going concern;

(b)  Due to the delay in receiving the accounts the Value for Money conclusion is still outstanding due to concerns around company governance. Key risks identified were major projects, company governance, and financial resilience, Consideration is being given as to whether a report in the public interest should be issued or make statutory recommendations about the council’s governance arrangements in respect of its relationship with RHE.. This processes is currently subject to consultation process with interested parties;

(c)  The issue around the consolidation of the Bridge estate into the accounts is a technical one and should not be a cause for concern for the Committee;

(d)  The Statement of Accounts produced by Nottingham City Council was complex and comprehensive and given the complexity was produced to a good standard, tracking the changes to the accounts clearly. The significant movement in the numbers should not divert from that;

(e)  The McCloud pensions issue highlighted in the report was out of the control of the Authority and has had sector wide impact;

(f)  Robin Hood Energy changes reflect the revised numbers into the group accounts. These changes have also significantly impacted parts of the Council’s accounts as loans to the company and the equity holding share capital converted a number of years ago;

(g)  All adjustments identified have been made and in relation to the impairments those are the Council’s judgements that the have been challenged and agreed;

(h)  Opinion on the accounts will be given around mid-August and a report on the Value for Money conclusion will come to the September Audit Committee meeting;

(i)  The draft EAR attached to the report on the published agenda still needs refinement. This will be completed and forwarded to officers for circulation;

Following a vote, Committee agreed to appoint Councillor Jane Lakey as Chair for this part of the meeting because both Councillor Steve Battlemuch (Chair) and Councillor Audra Wynter (Vice-Chair) had declared an interest in elements of the conversation around Robin Hood Energy. Along with Councillor Lauren O’Grady they did not take part in these discussions. The following further points were highlighted:

(j)  Financing of monies advanced to RHE is from reserves. It is not possible to borrow from the PWLB to finance this. All loans to RHE are currently being fully utilised;

(k)  Transactions in related party transactions notes should be making clear those transactions included elsewhere between the council and entities where the Council is a controlling party. It would including income and outgoings as well as balance sheet transactions;