Annual Governance Report 18sept09 - Sutton · 2008/09 Annual Governance Report I am pleased to...

Annual Governance Report London Borough of Sutton Audit 2008-2009 September 2009

Status of our reports The Statement of Responsibilities of Auditors and Audited Bodies issued by the Audit Commission explains the respective responsibilities of auditors and of the audited body. Reports prepared by appointed auditors are addressed to non-executive directors/members or officers. They are prepared for the sole use of the audited body. Auditors accept no responsibility to:

• any director/member or officer in their individual capacity; or • any third party.

Contents

Key messages 4

Next steps 6

Financial statements 7

Use of resources 12

Appendix 1 – Independent auditor’s report to Members of Sutton Council 15

Appendix 2 – Adjusted amendments to the accounts 20

Appendix 3 – Unadjusted errors 23

Appendix 4 – Draft letter of representation 24

Appendix 5 – Use of resources key findings and conclusions 28

Appendix 6 – Action Plan 40

Ladies and Gentlemen 2008/09 Annual Governance Report I am pleased to present this Annual Governance report on the results of my audit work for 2008/09. A draft of the report was discussed and agreed with the Strategic Director on 27 August 2009 and has been updated since as issues have been resolved. The report sets out the key issues that you should consider before I complete the audit. It asks you to: • consider the matters raised in the report before approving the financial statements

(pages 7 to 14); • take note of the adjustments to the financial statements which are set out in this report

(Appendix 2); • agree to adjust the errors in the financial statements I have identified (see Table 6)

which management has declined to amend or set out the reasons for not amending these errors;

• take note of the VFM Conclusion and Use of Resources score; • approve the letter of representation on behalf of the Council before I issue my opinion

and conclusion (Appendix 4); • take note that the audit certificate will not be issued due to an unresolved elector

issue; and • agree your response to the proposed action plan (Appendix 6).

Yours faithfully Lindsey Mallors District Auditor September 2009

Key messages

London Borough of Sutton 4

Key messages This report summarises the findings from the 2008/09 audit which is substantially complete. It includes the messages arising from my audit of your financial statements and the results of the work I have undertaken to assess how well you use and manage your resources to deliver value for money and better and sustainable outcomes for local people. Financial Statements Results Page

Unqualified audit opinion Yes 7

Financial statements free from error No 7 - 8

Adequate internal control environment Yes 9 - 11

Use of resources Results Page

Use of resources judgements Yes 12 - 14

Arrangements to secure value for money Yes 14

Audit opinion 1 I expect to issue an unqualified opinion on the financial statements following approval

of the revised statements by the Council on 24 September 2009.

2 I cannot formally conclude the audit and issue a certificate as an issue raised by an elector made during the financial year is not yet resolved. I am satisfied that this matter does not have a material effect on the 2008/09 financial statements.

Financial statements 3 The draft financial statements were submitted for audit on 23 June 2009 in accordance

with the agreed timetable. These financial statements were complete but contained errors which have been amended for in the revised statements and which you should consider before approving them.

4 My audit identified two classification errors in the notes to the financial statements which are material and are detailed in paragraph 16. These two errors have been amended by management and have no impact on the available revenue reserves reported in the financial statements.

Key messages

5 London Borough of Sutton

5 In paragraph 19 (Table 1), I have reported two unadjusted errors which are non trivial. Officers have declined to correct these areas. I therefore ask you to set out in the letter of representation your reasons for not amending these items.

• Increasing the value of impairments of fixed asset council dwellings (£5.4million) following a post balance sheet review.

• Uncertainty over year end sundry debtors and sundry creditors (£878k).

6 In addition, further non-trivial changes were made to the statements and these are summarised in Appendix 2.

Use of resources 7 I intend to issue an unqualified conclusion stating that the Council had adequate

arrangements to secure economy, efficiency and effectiveness in the use of resources.

8 On page 12, I report my assessment under the new Use of Resources framework. I have assessed the Council on a scoring scale of 1 (inadequate performance) to 4 as follows.

• Managing the finances – level 3, performing well. • Governing the business – level 3, performing well. • Managing resources – level 4, performing excellently.

These scores were shared with the Council on 11th September and will be formally published in November 2009.

Audit Fees 9 In my initial Audit Plan, the planned fee for the opinion audit was based on my best

estimate at the time and agreed at £204,000. This was based on the assumption that good quality working papers were available to support the financial statements. My actual fee was £210,000.

10 An increase in fee was necessary as significant additional work was required to obtain assurance on your classification, ownership and valuation of tangible fixed assets and cashflow statement (Table 3).

Next steps


Next steps This report identifies the key messages that you should consider before I issue my financial statements opinion and value for money conclusion, It includes only matters of governance interest that have come to my attention in performing my audit. My audit is not designed to identify all matters that might be relevant to you.

11 I ask the Audit Committee to:

• consider the matters raised in the report before approving the financial statements (pages 7 to 14);

• take note of the adjustments to the financial statements which are set out in this report (Appendix 2);

• agree to adjust the errors in the financial statements I have identified (see Table 6) which management has declined to amend or set out the reasons for not amending these errors;

• take note of the VFM Conclusion and Use of Resources score; • approve the letter of representation on behalf of the Council before I issue my

opinion and conclusion (Appendix 4); • take note that the audit certificate will not be issued due to an unresolved elector

issue; and • agree your response to the proposed action plan (Appendix 6).

Financial statements


Financial statements The Council’s financial statements and annual governance statement are important means by which the Council accounts for its stewardship of public funds. As Council members you have final responsibility for these statements. It is important that you consider my findings before the financial statements are authorised for issue.

Opinion on the financial statements 12 My work on the financial statement is now complete.

13 I plan to issue an audit report including an unqualified opinion on the financial statements. Appendix 1 contains a copy of my draft audit report.

Amended errors in the financial statements 14 The Committee should note that for 2008/09, the Audit Commission revised the

financial threshold it determines as trivial within the financial statements, from 10 per cent of materiality to 1 per cent. This was to move the Commission's approach into line with other audit suppliers.

15 As a result, for the Council any items above £98,000 I have determined as being above trivial (i.e. non-trivial) and therefore under auditing standards I am required to report these items to the Committee. Materiality has been set at £9.8m for revenue items and balance sheet items.

16 In carrying out my audit, I identified two classification errors in the notes to the financial statements which are material. Management amended the statements in respect of these errors which were:

• mis-classification of fixed assets within the Balance Sheet note disclosure of operational and non operational assets (£18,243k); and

• mis-classification of HRA impairments costs within the Statement of Movement on the Housing Revenue Account Balance (£23,067k).

17 A number of other non-trivial adjustments were also made to the draft financial statements and these are summarised in Appendix 2. An accounts memorandum going into more detail on these matters will be made available to officers but there are no governance issues arising from these findings that I wish to bring to your attention. Taken together, these non-trivial adjustments do not affect the level of available reserves or the Council's net worth.

18 Management has also made minor corrections and enhancements to some disclosure notes to comply with the statement of recommended practice (SORP). None of these affects the Council's financial position as presented in the draft financial statements.



Recommendation R1 Address recommendations made in the accounts memorandum to officers

regarding amendments made to the draft financial statements.

Unadjusted errors in the financial statements 19 I have identified two errors in the accounts which management has declined to amend.

These are out in the table below.

Table 1 Unadjusted errors

Accounts affected Nature of unadjusted errors

Fixed assets (Note 14). The Council carried out a post balance sheet review of impairments of council dwellings to ensure the asset values are fairly stated. Using the most up to date industry indices (August), the value of the council dwellings reported in the statement of accounts have reduced by a further £5.4 million.

Debtors (Note 19) and Creditors (Note 20)

My sample testing of sundry creditors identified an invoice incorrectly accounted for as a prepayment. The invoice related to 2009/10 and was incorrectly recorded as paid before year end. A corresponding debtor was raised at year end to correct the error. This method of correction resulted in year end debtors and creditors being overstated. Extrapolating the error results in an uncertainty of £878k within year end debtor and creditor balances.

20 I ask you to set out in the letter of representation your reasons for not amending these items.

Letter of representation 21 Before I issue my opinion, auditing standards require me to obtain appropriate written

representations from you and management about your financial statements and governance arrangements. Appendix 4 contains an example of a letter of representation. It is important that this letter contains any additional information you think has not been drawn to my attention and which could affect the opinion I give on the financial statements.

Key areas of judgement and audit risk 22 In planning my audit I identified specific risks and areas of judgement that I have

considered as part of my audit. My findings are set out in Table 2.



Table 2 Key areas of judgement and audit risk

Issue or risk Finding

The Report on the 2007/08 audit identified two agreed adjustments where the Council had incorrectly accounted for asset valuations relating to: • housing stock transfer; and • ‘right to buy’ properties.

I have reviewed the basis of asset valuations relating to ‘right to buy’ properties and I am satisfied they are fairly stated. There was no housing stock transfer in the year.

During the year the Council entered into the South London Waste Partnership with neighbouring London Borough councils.

I have reviewed the Council’s accounting treatment and disclosure of the waste partnership arrangement and I am satisfied they are fairly stated.

The current economic climate increases the likelihood of impairments occurring to Council fixed assets and financial instruments.

A reduction in council dwelling values of £23 million was recognised by the Council (Note 14). A post balance sheet review by the Council identified a further reduction in value of £5.4 million which management has declined to amend (Table 1).

Accounting practice and financial reporting 23 I have considered the qualitative aspects of your financial reporting and Table 3

contains the issues I wish to raise with you.

Table 3


The Council’s control for processing and authorising journals within the ledger is for an authorised individual to perform both tasks. Usually, changes to the ledger made via journals are subject to a separation of duties covering preparation and authorisation. Adjustments to the ledger may not consistently be subjected to equivalent controls. This introduces a greater risk of error within the statements.

I note that this has been the practice within some directorates at the Council for a number of years with reliance on budget holders checking the accuracy of monthly reports as a compensating control. Introducing the separation of duties to journal processing would simplify the audit trail from the ledger to the financial statements and identify errors early which would in turn improve the accuracy of monthly budget monitoring reporting and the efficiency of the audit process.




The Council does not have a formal ICT disaster recovery plan covering all in-house and outsourced systems. The risk is that recovery plans for some systems may not be robust and/or tested in a timely way.

I note that the Council now has a new contract with an external provider, Steria for the provision of data recovery services and that the service was successfully tested since my initial review. However, the disaster recovery and service continuity plan now requires refreshing to ensure it is fit for purpose. The Council would also benefit by setting out in its plan, the business critical systems that should be prioritised for recovery following a disaster.

The Council’s working papers provided to support the draft statements were generally adequate. However, my work on the financial statements identified the following. • Material errors in classification of

tangible fixed assets (note 14). • Delays were experienced in verifying

ownership of assets. • Delays were experienced in addressing

fixed asset valuation basis. • Non trivial errors in school balance

reconciliations. • Incomplete working papers or

explanations to support cashflow statement movements and notes.

My audit findings is as follows. • The Council revisited the classification

of tangible fixed assets (Note 14) and provided me with a materially revised note on 23 June 09. I have reviewed the revised classification and other than the errors set out in Appendix 2 and 3, I am satisfied that Note 14 is fairly stated.

• The delays experienced in verifying ownership of assets were mostly due to source documents that were temporary lodged with the Land Registry to register a change of ownership. All my queries were later resolved satisfactorily.

• Errors identified in fixed asset valuations are set out in the detailed section of this report and in Appendix 2 and 3.

• Errors were identified in the school balances working papers which resulted to non trivial amendments to debtors, creditors and cash at bank balances (Appendix 2).

• I will revisit the cashflow statement and notes after the agreed amendments in Appendix 2 are made. I expect to conclude my work in these areas shortly and will report any significant findings to the Council.

There is scope for the Council to further strengthen its arrangements for the review of the draft statements to minimise errors.



Recommendations R2 The Council’s journal processing should introduce a control where there is a

separation of duties in processing and authorisation.

R3 Refresh the ICT disaster recovery plan to include Council priorities for recovery of business critical systems.

R4 Strengthen arrangements for the review of the draft statements and working papers to minimise errors.

Use of resources


Use of resources I am required to consider how well the Council is managing and using its resources to deliver value for money and better and sustainable outcomes for local people, and give a scored use of resources judgement. I am also required to conclude whether the Council put in place adequate corporate arrangements for securing economy, efficiency and effectiveness in its use of resources. This is known as the value for money (VFM) conclusion.

Use of resources judgements 24 In forming my scored use of resources judgements, I have used the methodology set

out in the use of resources framework. Judgements have been made for each key line of enquiry (KLOE) using the Audit Commission’s current four point scale from 1 to 4, with 4 being the highest. Level 1 represents a failure to meet the minimum requirements at level 2. Level 4 is characterised by strong arrangements that have led to demonstrably excellent value for money outcomes throughout the year under review.

25 I have also taken into account, where appropriate, findings from previous use of resources assessments (updating these for any changes or improvements) and any other relevant audit work.

26 The Council's use of resources theme scores are shown in Table 4 below. The key findings and conclusions for the three themes, and the underlying KLOE, are summarised in Appendix 5.

Table 4 Use of resources theme scores

Use of resources theme Scored judgement

Managing finances 3 - performs well

Governing the business 3 - performs well

Managing resources 4 - performs excellently

27 I include a summary of each theme below.

Managing finances - performing well 28 Overall the Council is able to demonstrate that it can effectively manage its finances to

deliver value for money with strong arrangements in place to plan its finances to deliver strategic priorities and it has demonstrated some good examples of outcomes.

29 Sutton has a history of strong financial management and performance. There is a strong alignment between asset management and the Council's and community

Use of resources


priorities. Priorities reflect needs and there is a good balance between national, regional and local priorities, with priorities shared and owned by partners.

30 Sutton Council delivers VFM services and understands the relative performance and costs of all its services through the established use of its award winning VFM quotients tool and service efficiency plans. The Council is featured in the Audit Commissions recently published document 'Summing Up' for its robust approach which is embedded across the Council.

31 The Annual Report 2007 presented the Councils performance information for 2007/08 and key achievements in a narrative style. These include not only traditional financial details but efficiencies delivered and environmental information.

Governing the business - performing well 32 The 2008 Corporate Assessment scored the Council a 4 (on a scale of 1 to 4 with 4

being well above minimum requirements – performing strongly), including 4 for both achievement and ambition. Under the same regime, the Council’s arrangements for the management of data quality was also assessed at level 4.

33 My data quality spot check review in 2008/09 found the performance management system was generally good.

34 Key strategies are in place to drive commissioning and procurement including with the voluntary sector. There is a clear focus on equalities and sustainable development. The Council has a strong focus on meeting the needs and preferences of its residents and has the highest customer satisfaction rating in London (81 per cent).

35 The Council is characterised by a culture of openness, trust and respect amongst councillors and managers which underpins outstanding partnership working to deliver priorities, increase capacity, improve performance and deliver efficiency such as £18.1million of Gershon savings in 2008/09. Scrutiny is making an active contribution towards policy development. Governance arrangements are strong and there is a sound system of internal control with effective risk management.

Managing resources - performing excellently 36 The Council’s approach to managing its natural resources is exemplary and has been

recognised nationally as good practice in some areas. There is a strong corporate and community leadership role and the use of quality assurance systems such as Environmental Management Accreditation System means that it has been able to embed a strong culture of environmental awareness and deliver measurable results. Outcomes include reduced energy and water consumption, increased sustainable travel and better managed biodiversity. Plans are actively being progressed with partners to achieve the ambitious target of all Council services having a zero carbon footprint by 2016.

Use of resources


37 The Council is using its assets well to support the delivery of its strategic and community priorities resulting in improved services and quality of life for residents. Asset management extends beyond service and Council boundaries and is very much delivered in partnership which is creating added value. Whilst outcomes are strong, key processes and plans, such as stock condition surveys and property and highway asset management plans need to be updated. Plans to realise future capacity from assets through the accommodation strategy and the refurbishment of Leisure Centres are being worked on.

38 Investment in and disposal of assets is carefully considered and is targeted at effectively supporting the delivery of strategic priorities. There is good work with partners and good engagement with stakeholders. Planned delivery is focused on sustainable development solutions.

Value for money conclusion 39 I assess your arrangements to secure economy, efficiency and effectiveness in your

use of resources against criteria specified by the Audit Commission from the use of resources key lines of enquiry (KLOEs) each year. For 2008/09 the relevant criteria and my assessment of the Council’s achievement of them are set out in Appendix 5.

40 I therefore intend to issue an unqualified conclusion stating that the Council has adequate arrangements to secure economy, efficiency and effectiveness in the use of resources. Appendix 1 contains the wording of my draft report.

Appendix 1 – Independent auditor’s report to Members of Sutton Council



Opinion on the Authority accounting statements

I have audited the Authority and Group accounting statements and related notes of London Borough of Sutton for the year ended 31 March 2009 under the Audit Commission Act 1998. The accounting statements comprise the Authority and Group Income and Expenditure Account, the Authority Statement of the Movement on the General Fund Balance, the Authority and Group Balance Sheet, the Authority and Group Statement of Total Recognised Gains and Losses, the Authority and Group Cash Flow Statement, the Housing Revenue Account, the Statement of Movement on the Housing Revenue Account the Collection Fund and the related notes. The Authority and Group accounting statements have been prepared under the accounting policies set out in the Statement of Accounting Policies.

This report is made solely to the members of London Borough of Sutton in accordance with Part II of the Audit Commission Act 1998 and for no other purpose, as set out in paragraph 49 of the Statement of Responsibilities of Auditors and of Audited Bodies prepared by the Audit Commission.

Respective responsibilities of the Strategic Director and auditor The Strategic Director’s responsibilities for preparing the financial statements in accordance with relevant legal and regulatory requirements and the Code of Practice on Local Authority Accounting in the United Kingdom 2008 are set out in the Statement of Responsibilities for the Statement of Accounts.

My responsibility is to audit the Authority and Group accounting statements and related notes in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).

I report to you my opinion as to whether the Authority and Group accounting statements present fairly, in accordance with relevant legal and regulatory requirements and the Code of Practice on Local Authority Accounting in the United Kingdom 2008:

• the financial position of the Authority and its income and expenditure for the year; and • the financial position of the Group and its income and expenditure for the year.



I review whether the governance statement reflects compliance with ‘Delivering Good Governance in Local Government: A Framework’ published by CIPFA/SOLACE in June 2007. I report if it does not comply with proper practices specified by CIPFA/SOLACE or if the statement is misleading or inconsistent with other information I am aware of from my audit of the financial statements. I am not required to consider, nor have I considered, whether the governance statement covers all risks and controls. Neither am I required to form an opinion on the effectiveness of the Authority’s corporate governance procedures or its risk and control procedures.

I read other information published with the Authority and Group accounting statements and related notes and consider whether it is consistent with the audited Authority and Group accounting statements. This other information comprises the Explanatory Foreword, Summary of Accounts and Pension Fund Annual Report. I consider the implications for my report if I become aware of any apparent misstatements or material inconsistencies with the Authority and Group accounting statements and related notes. My responsibilities do not extend to any other information.

Basis of audit opinion I conducted my audit in accordance with the Audit Commission Act 1998, the Code of Audit Practice issued by the Audit Commission and International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the Authority and Group accounting statements and related notes. It also includes an assessment of the significant estimates and judgments made by the Authority in the preparation of the Authority and Group accounting statements and related notes, and of whether the accounting policies are appropriate to the Authority’s circumstances, consistently applied and adequately disclosed.

I planned and performed my audit so as to obtain all the information and explanations which I considered necessary in order to provide me with sufficient evidence to give reasonable assurance that the Authority and Group accounting statements and related notes are free from material misstatement, whether caused by fraud or other irregularity or error. In forming my opinion I also evaluated the overall adequacy of the presentation of information in the Authority and Group accounting statements and related notes.

Opinion In my opinion:

• the Authority financial statements present fairly, in accordance with relevant legal and regulatory requirements and the Statement of Recommended Practice on Local Authority Accounting in the United Kingdom 2008, the financial position of the Authority as at 31 March 2009 and its income and expenditure for the year then ended; and

• the Group financial statements present fairly, in accordance with relevant legal and regulatory requirements and the Statement of Recommended Practice on Local Authority Accounting in the United Kingdom 2008, the financial position of the Group as at 31 March 2009 and its income and expenditure for the year then ended.



Opinion on the pension fund accounts I have audited the pension fund accounts for the year ended 31 March 2009 under the Audit Commission Act 1998. The pension fund accounts comprise the Fund Account, the Net Assets Statement and the related notes. The pension fund accounts have been prepared under the accounting policies set out in the Statement of Accounting Policies.

This report is made solely to the members of London Borough of Sutton in accordance with Part II of the Audit Commission Act 1998 and for no other purpose, as set out in paragraph 49 of the Statement of Responsibilities of Auditors and of Audited Bodies prepared by the Audit Commission.

Respective responsibilities of the Strategic Director and auditor The Strategic Director’s responsibilities for preparing the pension fund accounts, in accordance with relevant legal and regulatory requirements and the Code of Practice on Local Authority Accounting in the United Kingdom 2008 are set out in the Statement of Responsibilities for the Statement of Accounts.

My responsibility is to audit the pension fund accounts and related notes in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).

I report to you my opinion as to whether the pension fund accounts present fairly, in accordance with relevant legal and regulatory requirements and the Code of Practice on Local Authority Accounting in the United Kingdom 2008, the financial transactions of the pension fund during the year and the amount and disposition of the fund’s assets and liabilities, other than liabilities to pay pensions and other benefits after the end of the scheme year.

I read other information published with the pension fund accounts and related notes and consider whether it is consistent with the audited pension fund accounts. This other information comprises the Explanatory Foreword published in the financial statements, Summary of Accounts and Pension Fund Annual Report. I consider the implications for my report if I become aware of any apparent misstatements or material inconsistencies with the pension fund accounts and related notes. My responsibilities do not extend to any other information.

Basis of audit opinion I conducted my audit in accordance with the Audit Commission Act 1998, the Code of Audit Practice issued by the Audit Commission and International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the pension fund accounts and related notes. It also includes an assessment of the significant estimates and judgments made by the Authority in the preparation of the pension fund accounts and related notes, and of whether the accounting policies are appropriate to the Authority’s circumstances, consistently applied and adequately disclosed.



I planned and performed my audit so as to obtain all the information and explanations which I considered necessary in order to provide me with sufficient evidence to give reasonable assurance that the pension fund accounts and related notes are free from material misstatement, whether caused by fraud or other irregularity or error. In forming my opinion I also evaluated the overall adequacy of the presentation of information in the pension fund accounts and related notes.

Opinion In my opinion the pension fund accounts and related notes present fairly, in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom 2008, the financial transactions of the Pension Fund during the year ended 31 March 2009, and the amount and disposition of the fund’s assets and liabilities as at 31 March 2009, other than liabilities to pay pensions and other benefits after the end of the scheme year.

Conclusion on arrangements for securing economy, efficiency and effectiveness in the use of resources

Authority’s Responsibilities The Authority is responsible for putting in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources, to ensure proper stewardship and governance and regularly to review the adequacy and effectiveness of these arrangements.

Auditor’s Responsibilities I am required by the Audit Commission Act 1998 to be satisfied that proper arrangements have been made by the Authority for securing economy, efficiency and effectiveness in its use of resources. The Code of Audit Practice issued by the Audit Commission requires me to report to you my conclusion in relation to proper arrangements, having regard to relevant criteria specified by the Audit Commission for principal local authorities. I report if significant matters have come to my attention which prevent me from concluding that the Authority has made such proper arrangements. I am not required to consider, nor have I considered, whether all aspects of the Authority’s arrangements for securing economy, efficiency and effectiveness in its use of resources are operating effectively.

Conclusion I have undertaken my audit in accordance with the Code of Audit Practice and having regard to the criteria for principal local authorities specified by the Audit Commission and published in May 2008 and updated in February 2009, I am satisfied that, in all significant respects, London Borough of Sutton made proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the year ending 31 March 2009.



Delay in certification of completion of the audit The audit cannot be formally concluded and an audit certificate issued until I have completed my consideration of matters brought to my attention by a local authority elector. I am satisfied that these matters do not have a material effect on the financial statements.

Lindsey Mallors District Auditor Audit Commission 1st Floor, Millbank Tower Millbank London SW1P 4HQ September 2009

Appendix 2 – Adjusted amendments to the accounts


Appendix 2 – Adjusted amendments to the accounts The following misstatements were identified during the course of my audit and the financial statements have been adjusted by management. I bring them to your attention to assist you in fulfilling your governance responsibilities.

Table 5

Income and Expenditure Account

Balance Sheet

Adjusted misstatements

Nature of Adjustment Dr £000s

Cr £000s

Dr £000s

Cr £000s


Authority I&E Account

To correctly classify area based grant in line with SORP requirements

7,800 7,800

Revaluation reserve

242

I&E

To recognise the impairment on ‘Dorchester road’ incorrectly charged to revaluation reserve

242

Balance Sheet and Notes to Financial Statements

Fixed asset dwellings

411

Fixed assets revaluation reserve

Note 14 Tangible fixed assets: recognition of equity share holdings not previously accounted for in the balance sheet

411



Income and

Expenditure Account

Balance Sheet

Adjusted misstatements Nature of Adjustment Dr

£000s Cr £000s

Dr £000s

Cr £000s

Fixed assets disposals 1,163

Fixed assets reclassifications 17,080

Fixed assets revaluation reserve

Note 14 Tangible fixed assets: to reclassify transactions included in error within various classes of asset within operational and non operational assets.

18,243

Fixed assets disposals

Note 14 Tangible fixed assets: to recognise land value of assets earmarked for demolition. (Impacts on a several statements and notes not listed here).

1,181

Cash and Bank 1,723

Debtors 968

Creditors

Balance Sheet Cash and Bank, Note 19 Debtors and Note 20 Creditors: to correct errors in schools balances returns recorded on the consolidation statements.

755

Revaluation reserve

954

Capital Adjustment Account

Note 24 Movement in Reserves and Balances: to correct fixed asset additions incorrectly credited to the CAA rather than revaluation reserve.

954

Housing Revenue Account

Amounts included in the HRA

23,067

Amounts not included in the HRA

Statement of Movement on the HRA: To reclassify HRA impairments costs in line with SORP requirements

23,067




Balance Sheet

Adjusted misstatements

Nature of Adjustment Dr £000s

Cr £000s

Dr £000s

Cr £000s

Group Accounts and Notes to group accounts

Debtors 219

Creditors

Note 6 to Group cashflow statement: to eliminate of inter-group debtor and creditor balances

219

In addition to the numerical adjustments to the statements, the Council have also agreed to make the following disclosures.

Notes affected Nature of error Adjustment to note

Balance Sheet The SORP requires investments to be analysed between short and long term investments.

This additional disclosure has been made.

Cash Flow Statement

Agreed amendments in Table 5 results in non trivial errors in the cash flow statement.

Appropriate amendments have been made.

Note 14

The SORP requires disclosures of depreciation methods used and the useful life’s or depreciation rates used.

These additional disclosures have been made.

Appendix 3 – Unadjusted errors


Appendix 3 – Unadjusted errors 41 The following misstatements were identified during the course of my audit and the

financial statements have not been adjusted by management. I bring it to your attention to assist you in fulfilling your governance responsibilities. If you decide not to do so, please tell me why in the representation letter. If you believe the effect of the uncorrected errors, individually and collectively, is immaterial, please reflect this in the representation letter.

Table 6


Balance Sheet

Unadjusted misstatements

Nature of Adjustment/uncertainty

Dr £000s

Cr £000s

Dr £000s

Cr £000s

Fixed assets council dwelling – additional impairment error post balance sheet date

Income and Expenditure a/c Statement of movement on GF balance

5400

5400

Sundry debtors and creditors (Notes 19 and 20) - sundry creditors invoice incorrectly accounted for as a prepayment

Debtors Creditors

878

878

Appendix 4 – Draft letter of representation


Appendix 4 – Draft letter of representation Dear Lindsey,

London Borough of Sutton - Audit for the year ended 31 March 2009 We confirm to the best of our knowledge and belief, having made appropriate enquiries of other officers of Sutton Council, the following representations given to you in connection with your audit of the Council’s financial statements for the year ended 31 March 2009 and the associated financial statements of its pension fund. We acknowledge our responsibility under the relevant statutory authorities for preparing the financial statements which present fairly and for making accurate representations to you. The Council has no plans or intentions that may materially alter the carrying value or classification of assets and liabilities reflected in the financial statements.

Uncorrected misstatements I confirm that I believe that the effects of the uncorrected financial statements misstatements listed in the attached schedule are not material to the financial statements, either individually or in aggregate. These misstatements have been discussed with those charged with governance within the Council and the reasons for not correcting these items are set out in Table 7.

Table 7 Unadjusted errors

Account affected Nature of unadjusted error Reason

Fixed assets (Note 14).

A post balance sheet review of impairments of council dwellings using the most up to date industry indices (August) results in an additional impairment charge of £5.4 million

This adjustment to a fixed asset valuation was finalised at a late stage in the audit, is not material and would involve a large number of consequential changes. It will be taken into account for the 2009/10 accounts.



Account affected Nature of unadjusted error Reason Debtors (Note 19) and Creditors (Note 20)

A sundry creditor invoice was incorrectly: • accounted for as a prepayment;

and • recorded as paid before year

end. A corresponding debtor was raised at year end to correct the error resulted in year end debtors and creditors being overstated. Uncertainty of £878k within year end debtor and creditor balances.

This adjustment was identified at a late stage in the audit and is not material. Procedures will be reviewed to ensure correct treatment for the 2009/10 accounts.

Supporting records All the accounting records have been made available to you for the purpose of your audit and all the transactions undertaken by the Council have been properly reflected and recorded in the accounting records. All other records and related information, including minutes of all Members meetings, have been made available to you.

Related party transactions We confirm the completeness of the information provided regarding the identification of related parties. The identity of, and balances and transactions with, related parties have been properly recorded and where appropriate, adequately disclosed in the financial statements.

Contingent assets and contingent liabilities There are no other contingent assets or contingent liabilities, other than those that have been properly recorded and disclosed in the financial statements. In particular: • there is no significant pending or threatened litigation, other than those already

disclosed in the financial statements; • there are no material commitments or contractual issues, other than those already

disclosed in the financial statements; and • no financial guarantees have been given to third parties, other than those already

disclosed in the financial statements.



Law, regulations, contractual arrangements and codes of practice There are no instances of non-compliance with laws, regulations and codes of practice, likely to have a significant effect on the finances or operations of the Council. The body has complied with all aspects of contractual arrangements that could have a material effect on the financial statements in the event of non-compliance. There has been no non-compliance with requirements of regulatory authorities that could have a material effect on the financial statements in the event of non-compliance.

Irregularities We acknowledge our responsibility for the design and implementation of internal control systems to prevent and detect error. There have been no: • irregularities involving management or employees who have significant roles in the

system of internal accounting control; • irregularities involving other employees that could have a material effect on the

financial statements; or • communications from regulatory agencies concerning non-compliance with, or

deficiencies on, financial reporting practices which could have a material effect on the financial statements.

We also confirm that we have disclosed: • our knowledge of fraud, or suspected fraud, involving either management, employees

who have significant roles in internal control or others where fraud could have a material effect on the financial statements; and

• our knowledge of any allegations of fraud, or suspected fraud, affecting the Council's financial statements communicated by employees, former employees, analysts, regulators or others.

Post balance sheet events Since the date of approval of the financial statements by Members of the Council, no additional significant post balance sheet events have occurred which would require additional adjustment or disclosure in the financial statements for the year ended 31 March 2009.



Compensating arrangements There are no formal or informal compensating balancing arrangements with any of our cash and investment accounts. Signed on behalf of Sutton Council Paul Martin Bob York Cllr Tim Crowley Chief Executive Strategic Director, Chair, Audit Committee Resources Group

Appendix 5 – Use of resources key findings and conclusions


Appendix 5 – Use of resources key findings and conclusions The following tables summarise the key finding and conclusions for each of the three use of resources themes.

Table 8 Managing finances

Theme score

Key findings and conclusions Sutton has a history of strong financial management and performance. There is a strong alignment between asset management and the Council's and community priorities. Priorities reflect needs and there is a good balance between national, regional and local priorities, with priorities shared and owned by partners. Sutton Council delivers VFM services and understands the relative performance and costs of all its services through the established use of its award winning VFM quotients tool and service efficiency plans. The Council is featured in the Audit Commissions recently published document 'Summing Up' for its robust approach which is embedded across the Council. The Annual Report 2007 presented the Councils performance information for 2007/08 and key achievements in a narrative style. These include not only traditional financial details but efficiencies delivered and environmental information. It is available in hard copy and is on the Councils website. The report can be provided in large print and in Braille, and a translation service is available.

KLOE 1.1 (financial planning)

Score

VFM criterion met

3

Yes



Key findings and conclusions

• Sutton's priorities reflect needs of stakeholders and there is a good balance between national, regional and local priorities, with priorities shared and owned by partners.

• Resources are targeted to identified priorities, financial standing is good and the Council manages its budget well. • General fund balances have been consistently maintained above the minimum target of 5 per cent of General Fund expenditure. • The Medium Term Financial Plan (MTFP) is aligned with the Sutton Plan and the VFM strategy. • South West London Waste Partnership (comprising: Croydon, Kingston-upon-Thames, Merton, and Sutton) has been awarded 112.9m in PFI credits by

DEFRA. • Sutton has seven signature projects such as the Modernisation of Learning Disability Services which embody the councils overarching priorities. Joint

ventures have been undertaken with the PCT including a shared management structure for Learning Disabilities prior to their transfer to the Council in April 2009.

• The Council has provided specific area based funding for its six local committees called Public Realm. • In light of the economic downturn, the Council is using prudential borrowing to fund its capital programme for the next two years on the basis there will be

no capital receipts from its surplus assets. • It has considered funding assets of services that are not part of the signature projects in the Sutton plan. Following a major options review to establish

whether the Council could use the redevelopment value of the properties to attract private sector funding, the emerging conclusions is the use of an asset backed vehicle.

• The Council's investment decisions take account of VFM and efficiency over the longer term. Eg significant investment made in providing SEN bases at borough schools to avoid more expensive and less environmentally sustainable out of borough placements.

• Strategies such as IT and e-government have directed significant additional amounts of capital and revenue investments in order to achieve some key PIs set by the government to improve quality and extent of service provision and to improve efficiency and automation of Council back office processes.

• There is a strong alignment between asset management and the Council's and community priorities. The Council undertakes investment planning and post rationalisation reviews and is working further on improving whole life costing in relation to its assets.

• Following the collapse of Icelandic banks in which Sutton had £5.5m investments, an independent review of treasury management activities was commissioned and led to revised approach to credit criteria, individual credit ratings, sovereign ratings for each individual institution.

• The Executive now has a monthly update on treasury and the Audit Committee quarterly updates. The Audit Committee also received further updates from the independent reviewer at the June 2009 meeting.



KLOE 1.2 (understanding costs and achieving efficiencies)

Score

VFM criterion met

3

Yes

Key findings and conclusions • Sutton Council delivers VFM services and understands the relative performance and costs of all its services through the established use of its award

winning VFM quotients tool and service efficiency plans. • The Council is featured in the Audit Commissions recently published document 'Summing Up' for its robust approach which is embedded across the

Council. • Latest available comparative information across a range of benchmarks show that overall expenditure is just below median with core services around or

below median and comparative performance including customer satisfaction levels overall is very strong. • Over three quarters of all savings have been through efficiency measures and it delivered £18.1m of Gershon savings to 2008/09 and £5.2m efficiency

savings are predicted for yr1 CSR07. • Efficiency gains have helped the Council set its lowest council tax increase since 1993. • Investments in libraries are driven by addressing inequalities, fostering community cohesion and raising skills. • Investments are targeted and are delivering social, economic and environmental outcomes in partnership with a range of agencies some of these include:

− the best GCSE school attainment results in the country;

− the highest customer satisfaction rating in London (81 per cent);

− clean, safe streets and parks at reduced costs reflected in satisfaction ratings with environmental services of 68 per cent;

− an increase from 30 per cent to 70 per cent in the proportion of national adult social care performance indicators rated as good or very good in the last five years; and

− an increase in sustainable travel modes due to the Council’s Smarter Travel Sutton project.



KLOE 1.3 (financial reporting)

Score

VFM criterion met

3

Yes

Key findings and conclusions • The Annual Report 2007 presented the Councils performance information for 2007/08 and key achievements in a narrative style. • The Council magazine, Sutton Scene, is distributed six times a year to local residents and is supplemented by local committee inserts tailored to local

communities. • The Council effectively reports financial, performance and environmental impact information to the Public. • The 2007 Annual Report reports financial information such as budgets, council tax levels and delivered efficiency savings. • In response to stakeholder feedback, budget consultation with residents and stakeholders was brought forward by 12 weeks in 2009/10. • Each year the council produces an Environmental Statement, which reports Sutton’s environmental performance to the public. • This report is verified by the Environmental Management Accreditation Scheme (EMAS) external auditors for accuracy and can be viewed via the EMAS

page on the Council’s website. • Sutton is one of only 16 councils with EMAS accreditation. • All services across the Council have targets to reduce their environmental impact. • The general ledger financial system, Agresso, is used to produce the financial monitoring reports at the end of each accounting period. The system was

been given significant assurance by Internal Audit. • The Council has a good history of accounts preparation. • Projected outturn variances are reviewed monthly throughout the financial year and corrective action taken as appropriate. • Variance information is used to inform decisions about reallocation of resources. For example underspends on Adult Social Services during 2008/09 were

used to finance the creation of a reserve of £500k to support the Transforming Social Care Programme over the next two years. • Profiled financial monitoring reports are available on the system from the day after the end of each accounting period. • Reports are used to improve budget management processes and the introduction of a series of “Lunchtime Learning” talks for staff on issues such as

Treasury Management, VFM and Transforming Social Care. • The 2007/08 accounts met the statutory dates and have received an unqualified opinion. • Improvements are being made to the website following a SOCITM better connected survey.



Table 9 Governing the business

Theme score

Key findings and conclusions The 2008 CA scored the Council a 4, including 4 for both achievement and ambition. Performance indicator data shows that 41 per cent of the Councils PIs are in the top quartile. Arrangements for the management of data quality were assessed at level 4 and there is a comprehensive performance management system which drives improvement priorities. Key strategies are in place to drive commissioning and procurement including with the voluntary sector. There is a clear focus on equalities and sustainable development. The Council has a strong focus on meeting the needs and preferences of its residents and has the highest customer satisfaction rating in London (81 per cent). The Council is characterised by a culture of openness, trust and respect amongst councillors and managers which underpins outstanding partnership working to deliver priorities, increase capacity, improve performance and deliver efficiency. Scrutiny is making an active contribution towards policy development. Governance arrangements are strong and there is a sound system of internal control with effective risk management. The Council can evidence numerous examples of outcomes from its work.

KLOE 2.1 (commissioning and procurement)

Score

VFM criterion met

3

Yes




• Key strategies are in place to drive commissioning and procurement including with the voluntary sector. • The Council is also building capacity internally and externally with SMES and the voluntary sector to engage in strategic commissioning and procurement. • The voluntary sector has been commissioned to provide more efficiently and in line with priorities:

− services for older people and people with learning disabilities – day care Alzheimer’s; and

− services to Sutton’s Disability Partnership for Children and Young People – short breaks path finder. • The Council has an established track record of redesigning services and providing services in partnership or through joint procurement to address

personalised needs, deliver, broader social, economic, and environmental outcomes and improve value for money. Examples include:

− Personalisation: Reprovision of services at Orchard Hill to supported living and Smarter Travel;

− Regeneration of Kimpton industrial area which has got business improvement district status;

− Sustainable Development: Phoenix Centre , regeneration of area including health, young people and cultural services;

− Shared services delivery – Safer Sutton and PCT management team collocated in council offices; and

− Joint procurement with other Boroughs: Waste PFI ( increased recycling at HRC), Duty Social Workers , HR services, Energy, SEN transport. • There are good examples of the Council influencing the market to add value. These includes stimulating competition for Adult Social Home Care Provision

to secure a competitive long term price and negotiating with Steria the Council’s IT contractor to provide bespoke benefits that increased whole live costs eg service resilience.

• Based on an analysis of need and in line with priorities investment, commissioning and procurement is effectively focused on delivering sustainable outcomes. Examples of this include:

− the town centre regeneration project which takes account of involving SMES as well as residents;

− the Hackbridge sustainable suburb;

− The Life Centre – antisocial behaviour and skills for young people; and

− joint work with agencies and partners in response to the recession – Job Centre +, Apprentice Scheme. • Work is currently being done on improving the website which in turn will help maximise the impact on communication/engagement with the Council and its

partners. • ICT is supporting the delivery of customer focused delivery. There are high call resolution rates (80 per cent) plus and customer satisfaction. Quality is

regularly assessed to private sector standards.



KLOE 2.2 (data quality and use of information)

Score

VFM criterion met

3

Yes

Key findings and conclusions • The 2008 CA scored the Council a 4, including 4 for both achievement and ambition and arrangements for the management of data quality were assessed

at level 4. • The Council has a comprehensive performance management system that provides information in a timely way and drives improvement priorities. Signatory

Partners to the Joint Information Protocol with LB Sutton include a number of PCTs and Trusts in South West London. • The Council uses information from official sources such as OND (census information) and local NHS (Joint Area Needs Assessment) to profile populations,

identify inequalities and set priorities. • The Council has a good track record of achieving improvement against local and national indicators and targets as recognised in the 2008 DoT - improving

strongly. • The Council is a member of benchmarking clubs such as the CIPFA / IPFA Benchmarking Club. Outcomes include Sutton being the second highest

performing council in the club based on the core indicators, cost per invoice and debtor days. • Performance information reports are produced systematically via the Tracker System and reported regularly to management, ie the Group Management

Teams and Performance Review Boards; Scrutiny Committees and Local Strategic Partnership themed partnership boards and the Sutton Partnership Board.

• Evidence of partnership working includes with South West London Mental Health Trust where integrated framework for monitoring and reviewing the flow and quality of data is shared.

• Internal audit reviews of data quality are risk-based and include partnership data where appropriate. Eg data provided by partners to support the calculation of National Indicator outturns and indicators linked to LPSA 2 targets.

• The Council's understanding of information needs extends to area based partnership working, including the LAA. E.g. low crime rate in 2008/09 there were only 7 information security incidents and in 2009/10, there has so far been one incident at the time of this review.

• The Council’s arrangements include information security, data sharing and data quality, all of which cover compliance with core regulatory requirements, such as the Data Protection Act (1998), Freedom of Information Act (2000) and ISO 27001.

• All staff providing Council services attend regular work place briefings/training sessions, including staff employed by private, voluntary and partnership agencies which has led to a reduction in security information incidents and the severity of such incidents.



KLOE 2.3 (good governance)

Score

VFM criterion met

3

Yes

Key findings and conclusions • The Council demonstrates effective working relationships with chief officers and partners. • With its partners, the Council has set clear, highly challenging ambitions that address the longer term needs of the Borough. • Partners, stakeholders and local people are closely involved in developing these and take full ownership of the ambitions which aim to ensure the long-term

sustainability of the Borough and make the quality of life one of the best in London. • The Council has a strong focus on meeting the needs and preferences of its residents and has the highest customer satisfaction rating in London

(81 per cent). • The CA 2008 judges that the Councils capacity to deliver its plans is sound. • The Council has strengthened the governance arrangements of its capital programme. Partners are involved in the delivery of the capital programme to

challenge existing service models to achieve a transformation in service for users. • Partners including Sutton Housing Partnership and Safer Sutton Partnership have schemes within the Capital Programme and attend the Capital

Management Programme Board to provide progress reviews and updates. • The Citizenship and Lifeskills centre is a signature project within the Capital Programme and is being managed by Safer Sutton Partnership. The scheme

includes a new community centre, youth centre, library and safety centre. • Scrutiny arrangements have been revised and a new set of arrangements have been implemented this year. There is an established Standards Board

committee in place and it meets every quarter. It has conducted three investigations to date which were later dismissed. • Members are equipped to effectively carry out their role and responsibilities eg through the Annual Corporate Development Plan and a bi-annual Member

Development Plan. • All elected Members receive IDeA Political Skills Framework to help them identify their areas of development need and they are also offered the

opportunity of one-to-one development discussions with one of the Organisational Development team. • The training and development needs are also extended to school governing bodies and key staff. • Review of expenses and allowances paid to officers and members confirm they were properly paid and in accordance with Sutton's policies and are subject

to scrutiny. The Council is planning to disclose on its website the allowances paid to each member in the last financial year.



KLOE 2.4 (risk management and internal control)

Score

VFM criterion met

3

Yes

Key findings and conclusions • The Council has a sound system of internal control. • Internal Audit undertake an annual programme of proactive and preventive anti fraud and corruption reviews. • My review of Internal Audit function found the service provided complies with CIPFA standards. • The Council sets out an assurance framework that integrates strategic objectives, risks, controls and transparent assurance reporting, together with an

annual review of key financial systems by Internal Audit. • Sutton has an established independent Audit Committee that is constituted in line with CIPFA guidelines. • The Audit Committee and Statement of Accounts Committee members are tasked with the oversight of corporate governance and receive assurance on

each element of the risk based system of internal control described in the Annual Governance Statement. • The Audit Committee meets quarterly and actively monitors areas where audit reports have indicated internal control shortcomings or emerging problem

areas, such as property maintenance partnering arrangements, single persons discount, treasury management and information management security. • The Audit Committee integrates with other committees eg referred issues to scrutiny committee (eg value for money on a road improvement measure) and

has worked with the Standards Committee on the annual review of corporate governance. • Partnership working between the Council and the Metropolitan Police include seconding a benefit fraud investigator to the Financial Investigation Unit at

Sutton. • Council was awarded a beacon status and provides integrated operational working and has delivered a low crime rate relative to London and England as a

whole. • An annual perception survey has been introduced to assess the workforces’ awareness of the council’s arrangements to prevent and detect malpractice. • Member received general risk management training as part of the induction programme following the last local government elections. In 2008 specialist

training included using S106 agreements to manage development risks and opportunities. • The Council has in place a corporate approach to securing VFM. It has a draft VFM strategy for the period 2008 -11 that sets out how this will be achieved

over the period. • Risk management training is driven by a collective needs assessment which ensures that all staff receive training appropriate to their needs/roles within the

context of the risk management strategy. Training and guidance is e-enabled. • The Council works in partnership with the Department for Work and Pensions (HBMS) and the Audit Commission NFI and takes a risk-based approach to

managing error and fraud.




• Intelligence/data is shared and used to plan investigations. There is evidence of positive outcomes, an increase of 200 per cent in the amount of error and fraud identified.

• Details are reported in the Council’s annual reviews of anti fraud and NFI activity. The exercise was effective in identifying error and fraud totalling £244,693 – an increase of approximately 200 per cent on the preceding NFI. The increase is attributable to housing benefits and Council tax single person discounts, which is a new NFI element.

• Outputs from countering housing benefit fraud show in 2006/07 the Council identified five cases with a value of £98,000; 2007/08, this increased to nine cases with a value of £176,000 followed by 17 cases with a value of £311,000 in 2008/09.

Table 10 Managing resources

Theme score

Key findings and conclusions The Council’s approach to managing its natural resources is exemplary and has been recognised nationally as good practice in some areas. Its strong corporate and community leadership role and the use of quality assurance systems such as EMAS means that it has been able to embed a strong culture of environmental awareness and deliver measurable results. Outcomes include reduced energy and water consumption, increased sustainable travel and better managed biodiversity. Good progress is being made by the Council and its partners in adapting to climate change and in particular identifying local vulnerabilities to inform service planning. The Council is using its assets well to support the delivery of its strategic and community priorities resulting in improved services and quality of life. Asset management goes beyond service and Council boundaries and is very much delivered in partnership which is creating added value. Whilst outcomes are strong, key processes and plans, such as stock condition surveys and property and highway asset management plans need to be updated. Plans to realise future capacity from assets through the accommodation strategy and the refurbishment of Leisure Centres are being worked on. Investment in and disposal of assets is carefully considered and is targeted at effectively supporting the delivery of strategic priorities. There is good work with partners and good engagement with stakeholders. Planned delivery is focused on sustainable development solutions.

KLOE 3.1 (use of natural resources)

Score

VFM criterion met

4

Yes




• The Council has been EMAS accredited since 1996 • The Council has set corporate targets since 2002 for reducing the use of energy, water and other key natural resource consumption. • Outcomes achieved to date include a 33.83 per cent reduction in water consumption from 2000/01, from 2002/03 year on year cumulative energy savings

in gas (- 19 per cent), electricity (-0.55 per cent) and oil (- 52 per cent) have resulted in an equivalent 22 per cent reduction of C02 emissions • In terms of travel the council has reduced its annual business mileage by 14 per cent since 2004/05. • Between 1995 and 2007 the percentage of staff using sustainable modes of travel to work as a result of the Council’s own travel plan has increased from

34 per cent to 49 per cent • Nearly 70 per cent of the Council’s electricity is purchased from green renewable sources saving around 5800 tonnes of C02 emissions a year • 170 Vehicles in the Council fleet are using a bio fuel mix which is reducing C02 emission between 4 per cent -24 per cent. • The Council has a biodiversity action plan and tree strategy in place which is delivering good results against NI197 with 57 per cent of the 42 designated

Sites of Importance for Nature Conservation (SINCs) under positive management. • achieved level 1 for NI188 it is using its developed Local Climate Impacts Profile for its own services and partners to integrate identified vulnerabilities into

future service delivery plans • After the floods in 2007 it set up a dedicated flood group and identified it’s own and community vulnerable assets using information from insurance

companies including, highway assets and trees to prevent future damage. • Adopted the Pitt recommendations and the Council is working with the voluntary sector to ensure its flood response plans meets the needs of vulnerable

groups.

KLOE 3.2 (strategic asset management)

Score

VFM criterion met

3

Yes




• EMAS accreditation is embedded across the Council • There is a track record of continuous improvement in reducing energy and water consumption, • Energy is procured jointly through LASER using flexible procurement. • New buildings are being built to the highest levels of environmental sustainability BREAM Good – Stanley Park School, Sutton Life Centre. • There is regular liaison with partners to look for opportunities for asset sharing and provide multi- agency services to the community. • Outcomes include:

− PCT staff co-located with in the civic offices;

− Police and council staff co-located in the Safer Sutton Partnership offices in Sutton Police Station and at the Phoenix centre; and

− Council staff at the DWP offices in Merton, working in the joint Sutton Pensions Outreach Team (SPOT). • Investment decisions are not prioritised in a systematic way. • The Council does not use a weighted scoring matrix to integrate at a strategic level the range of asset based issues including social, economic and

environmental factors to support prioritisation and decision making. • The Council property strategy has been in place for four years, • Council is developing an up to date Asset Management Plan. • Last year, the council began a 20 per cent condition survey every year to bring its stock condition information up to date. • The Council has reduced the maintenance backlog on its property portfolio. • The Council targets investment in or disposal of its assets to effectively support the delivery of its strategic priorities in partnership and good engagement

with stakeholders. • Planned delivery is focused on sustainable development solutions. Projects that have shown benefits include Kimpton Industrial Estate Regeneration;

Phoenix Centre; Orchard Hill Reprovision and Sutton Library. • Forty out of 85 council sites completed to disability comfort standards in consultation with access groups.

Appendix 6 – Action Plan



Page no.

Recommendation Priority 1 = Low 2 = Med 3 = High

Responsibility Agreed Comments Date

8 R1 Address recommendations made in the accounts memorandum to officers regarding amendments made to the draft financial statements.

2 Head of Accountancy Services.

Yes. Weekly meetings have been held with the auditors to discuss their findings and recommendations and, with the exception of the two unadjusted items detailed in the AGR, all recommendations have either been included in the final 2008/09 accounts or will be included in the 2009/10 accounts.

September 2009

11 R2 The Council’s journal processing should introduce a control where there is a separation of duties in processing and authorisation.


Yes. Whilst in theory the separation of duties for journal authorisation would be the ideal situation, levels of staff resources do not always allow for the level of separation on a practical basis. Controls are in place by limiting the number of people who can perform journal processing. However, journal processing will be reviewed with the intention of identifying a value above which separate authorisation will be required.

March 2010



Page no.

Recommendation Priority 1 = Low 2 = Med 3 = High

Responsibility Agreed Comments Date

11 R3 Refresh the ICT disaster recovery plan to include Council priorities for recovery of business critical systems.

1 Executive Head of Customer Services.

Yes. The migration of applications into the Steria hosted data centre has been completed and is fully supported by a back up data centre, a failover connection between the council and the data centres and provision of database and application backup servers and routines. The Managed Service agreement provides for one hour recovery of the top four business critical systems. Further work is required to collate the remaining system disaster recovery requirements identified in Appendix 7 of the Council-wide Integrated Emergency Strategy and their prioritisation. It is intended that this work will be completed by March 2010 and the ICT Disaster Recovery plan updated to reflect this.

March 2010

11 R4 Strengthen arrangements for the review of the draft statements and working papers to minimise errors.


Yes. Attention was paid in 2008/09 to improve the quality and consistency of working papers produced. However there were areas of weakness in the working papers identified during the audit. These areas are being reviewed. As part of the review we plan to produce more standardised working papers to ensure greater consistency across the Council and revised procedures for 2009/10 closing of accounts will be issued to Heads of Finance.

On-going

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As a force for improvement, we work in partnership to assess local public services and make practical recommendations for promoting a better quality of life for local people.

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© Audit Commission 2009

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Audit Commission, 1st Floor, Millbank Tower, Millbank, London SW1P 4HQ

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