Audit Commission Annual Governance Report 2009/10

Report: 4
Date: 13 September 2010
By: Treasurer and Director of Resources on behalf of the Commissioner

Summary

This report brings to the attention of the Committee the Audit Commission’s Annual Governance report on the MPA audit 2009/10.

A. Recommendation

That

1. the Audit Commission’s annual governance report be received.

B. Supporting information

1. Attached at Appendix 1 is the Audit Commission’s annual governance report on the MPA audit for 2009/10. This is the annual governance report covering the audit of the Authority for the year ended 31 March 2010 and is presented by the District Auditor.

2. The Audit Commission is required by the Audit Commission’s statutory Code of Audit Practice for Local Government bodies (the Code) to issue a report to those charged with governance summarising the conclusions from their audit work. For the purpose of the audit, the Authority’s Corporate Governance Committee is considered to fulfil the role of “those charged with governance”.

3. The Audit Commission is required by professional auditing standards to report to the Corporate Governance Committee certain matters before it gives its opinion on the financial statements. The section of their report covering the financial statements fulfils this requirement.

4. The main purposes of the governance report are:

• To reach a mutual understanding of the scope of the audit and the respective responsibilities of the auditor and the Corporate Governance Committee;
• To share information to assist both the auditor and those charged with governance to fulfill their respective responsibilities; and
• To provide the Corporate Governance Committee with recommendations for improvement arising from the audit process.

5. In undertaking its audit, the Audit Commission’s responsibilities are to view and report on, to the extent required by the relevant legislation and the requirements of the Code:

• The Authority’s financial statements; and
• Whether the Authority has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources.
  Financial statements audit opinion

6. Subject to the satisfactory completion of outstanding audit work the District Auditor is proposing to issue an unqualified audit opinion by 30 September.

7. The areas of audit testing that are still being undertaken are:

• some elements of the Income and Expenditure Account;
• fixed assets;
• creditors and
• Statement of Movement on the General Fund balance, Statement of Total recognised Gains and Losses (STRGL) and Cash Flow Statement

8. The audit testing is planned to be completed before the opinion deadline of 30 September 2010. If any matters arise in concluding the outstanding work, that needs to be reported, they will be raised with the MPA Treasurer, MPS Director of Resources and the chair of the Corporate Governance Committee as appropriate.

9. The auditors have identified two areas where adjustments are required and these have been accepted by the officers:

• re-classifying £3.5 million of the total Public Finance Initiative (PFI) liability of £105 million as 'current' rather than 'long-term' liabilities in the Balance Sheet; and
• re-classifying £3.5 million of Pension Fund 'refunds of contributions' as 'other payments' within the Pension Fund Revenue Account.

10. The auditors have also proposed several more minor amendments to improve the financial statements which have also been accepted by officers. Details of these are included in the appended report.

11. With regard internal control and in response to a recommendation made in the auditors governance report for 2008/09 with regards contract compliance, the auditor recognises progress made in implementing improved arrangements and recommends that the Authority continues to focus on strengthening processes to ensure contract compliance.

12. For the third year running, the District Auditor has awarded the Authority an unqualified Value for Money Conclusion stating that the Authority has maintained adequate arrangements to secure economy, efficiency and effectiveness in its use of resources in 2009/10.

C. Other organisational and community implications

1. Equalities impact

There are no equality and diversity implications directly arising from this report.

2. Met Forward

Having proper arrangements in place to deliver economy, efficiency and effectiveness in the use of resources is key to the delivery of MetForward

3. Financial implications

The Audit Commission has reported on the Authority’s financial statements; and whether the authority has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources.

4. Legal implications

The Audit Commission is required by the Audit Commission’s statutory Code of Audit Practice for Local Government bodies (the Code) to issue a report to those charged with governance summarising the conclusions from their audit work. For the purpose of the audit, the Authority’s Corporate Governance Committee is considered to fulfil the role of “those charged with governance”.

5. Environmental implications

There are no environmental implications directly arising from this report.

6. Risk implications

The appended report includes details of the findings and conclusions from the audit work performed in respect of risks included in the Audit Commission’s supplementary opinion plan reported to June’s Corporate Governance Committee.

D. Background papers

• Corporate Governance Committee – 14 June 2010 - External Audit fee 2010-11 and audit opinion plan
• Corporate Governance Committee – 14 June 2010 – Statement of Accounts 2009/10

E. Contact details

Report author: Annabel Adams - Deputy Treasurer, MPA

For information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

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