Agenda item

16.1

The Committee considered a report of Ernst and Young, External Auditors.

16.2

Hayley Clark (Ernst and Young) presented an interim commentary on the Value for Money arrangements for Sheffield City Council for the audit year 2022/23. The report explained the work undertaken during the year, and highlighted any significant weaknesses identified, along with recommendations for improvement.

16.3

It was noted that the audit had identified one risk of significance in relation to financial sustainability. The auditors undertook the required procedures in relation to this and confirmed that no significant weaknesses were identified in the arrangements the Council had in place. One recommendation was raised, as detailed in Appendix B of report. This was to highlight that, whilst the council had set balanced budgets for 2022/23 and 2023/24, some significant variances had been reported during month one of 2023/24. This raised a question/challenge as to whether this could have been identified as part of the budgeting process for 2022/23. It was noted that the Council had a good track record of working through differences once they had been identified, and no further findings were anticipated during the preparation of the final audit report.

16.4

Members of the Committee asked questions and the following responses were provided: -

16.5

There had been a trend of variances identified in the first month of an audit year, however these had been more significant in previous years due to pressures such as adult social care costs. Other authorities faced similar financial challenges, although style of budget reporting varied so it was difficult to compare.

16.6

Evidence showed that planned use of reserves was tracked and revised appropriately, and reporting showed that challenges were understood and mitigated where possible.

16.7

The final report for 2022/23 was scheduled to be heard at Committee in November, before the ‘backstop’ date of 13 December, 2024. This would be combined reporting of the audit results and the auditor’s annual report, and it was noted that Ernst and Young were no longer Sheffield City Council’s auditors after this.

16.8

Reserves had been managed well and had been utilised where needed. There was a challenge around building reserves back up in the current financial environment, but it was noted that medium-term financial reporting had recognised this risk and raised this as a concern.

16.9

As the Council was moving to a system of focusing on business priorities that were subject to more risk, it was important to consider how to embed this into the culture of the organisation.

16.10

The Council had responded well to significant challenges around the end of 2021/22 and into 2022/23, and reporting and communication with the auditors around the actions taken to mitigate the challenges had helped to manage this position.

16.11

The scope of the audit was to consider whether there were sufficient arrangements in place to ensure there was no significant weakness in the ability to secure value for money. The remit did not include outcomes or monitoring of how arrangements put in place were working in practice.

16.12

The areas identified as being of greatest risk were not at a critical stage, but work was required in order to bridge the gap.

16.13

The cost to the Council of the pop-up space on Fargate were relatively small and had not been identified as a significant weakness, but was noteworthy in terms of lessons to be learned.

16.14

The Committee noted their thanks to Ernst and Young for the work carried out.

16.15

RESOLVED:That the Audit and Standards Committee notes the Value for Money Interim Report 2022/23.