Annual Governance Report North Dorset District Council September 2010 Audit 2009/10

Annual Governance Report - North Dorset DC 2009/102 Outline structure of this report What we do and why? Key messages What did we find at North Dorset District Council? –Financial Statements –Value for Money Recommendations What does the Council need to do? Supplements 1-5

Annual Governance Report - North Dorset DC 2009/103 What we do and why? Our audit work is directed at giving the: Financial statements opinion; and Value for money conclusion

Annual Governance Report - North Dorset DC 2009/104 Key messages Financial statements Unqualified audit opinion?Yes Free from material error? Yes Adequate internal control environment? Yes Value for money Adequate arrangements? Yes

Annual Governance Report - North Dorset DC 2009/105 What does the Council need to do? Consider the matters raised in the report before approving the financial statements. Take note of the adjustments to the financial statements which are set out in this report (Supplement 2). Approve the letter of representation on behalf of the Authority before I issue my opinion and conclusion (Supplement 3). Agree your responses to the proposed action plan (Supplement 5).

Annual Governance Report - North Dorset DC 2009/106 What did we find at North Dorset District Council? Financial statements - summary We expect to issue an unqualified opinion on the financial statements on 21 September 2010 (see Supplement 1) We identified a number of errors which have been adjusted (see Supplement 2) We identified no important weaknesses in internal control that we need to bring to your attention There are some issues I want to raise with you on financial reporting

Annual Governance Report - North Dorset DC 2009/107 What did we find at North Dorset District Council? Financial Statements – What key risks did we plan to review? Risks in the opinion plan: Material changes arising from revised accounting requirements for local taxation Arrangements to identify and account for service concessions Disclosure of pay and benefits of senior employees AND Other issues arising during the audit: Post Balance Sheet Events Summary – all other issues

Annual Governance Report - North Dorset DC 2009/108 Material changes arising from revised accounting requirements for local taxation Risk: Required changes were not made, leading to material error. Findings: Changes in accounting requirements had been applied correctly A prior period adjustment was required to the previous year’s figures in respect of this change and this was accounted for correctly Presentation amended to clearly highlight affected comparators with the word ‘restated’. (supplement 2)

Annual Governance Report - North Dorset DC 2009/109 Arrangements to identify and account for service concessions Risk: New requirement introduced for 2009/10 meant changes in accounting arrangements for assets used but not owned by the Council. These assets have to be shown on the Council’s own balance sheet where certain conditions are met. This is a complex area, with high potential for error. Findings: Sufficient arrangements in place to identify these arrangements No arrangements, therefore no assets, which fell into this category.

Annual Governance Report - North Dorset DC 2009/1010 Disclosure of pay and benefits of senior employees Risk: There are new rules about what should be disclosed regarding senior officer pay and benefits. Guidance was still being provided during the accounts preparation. Findings: We found that the Council’s disclosures complied with the new rules.

Annual Governance Report - North Dorset DC 2009/1011 Post-Balance Sheet events (PBSE). Three adjustments made from the audit: 1.New note added resulting from the government’s June budget that CPI rather than RPI would be used for index public sector pension. 2.Disclosure of loan to Gillingham Community Trust incorrectly disclosed as a capital commitment. Moved to PBSE 3.Revenues & Benefits transfer to East Dorset DC. (All shown in supplement 2)

Annual Governance Report - North Dorset DC 2009/1012 Summary – all other issues 2010/11 payment included in the 2009/10 I&E. Amended to be shown as a payment in advance. Audit fees incorrectly disclosed, including ‘inspection’ work as ‘audit’ REFCUS netted off with grant funding made capital financing movements in the Capital Adjustment Account unclear to how they related to other entries in the accounts. Explanatory foreword contain predictive figures that we would be unable to audit. Annual Governance statement included reference to 2008/09 use of resources assessment, which is not current. Management agreed to amend all issues. All shown in Supplement 2.

Annual Governance Report - North Dorset DC 2009/1013 What did we find at North Dorset District Council? Financial Statements - Accounting practice and financial reporting: Senior employees remuneration – it would be better practice if the payments relating to the Finance and Resources Manager were disclosed in North Dorset’s financial statements. These should be a stand-alone document, not requiring the reader to have to go to another Local Authority accounts to find relevant information. Collection fund statement – a reconciliation of income between the notes and the main statement would provide better information. At present the references to the note are potentially confusing, as there is no clear link between the balances disclosed

Annual Governance Report - North Dorset DC 2009/1014 What did we find at North Dorset District Council? Value for Money Conclusion You have proper arrangements in place for each VFM criterion The criterion are set out in Supplement 5 I intend to give an unqualified VFM conclusion for the year ended 31 March 2010

Annual Governance Report - North Dorset DC 2009/1015 Recommendations Disclose full details of any joint management posts within North Dorset DC accounts, without reference to other local authority accounts. Improve the notes to the Collection Fund so that they clearly reflect and explain the balances from which they are referred.

Annual Governance Report - North Dorset DC 2009/1016 Audit Fee 2009/10 & Independence I can confirm that the audit has been delivered within my initial estimates. I was not required to review your whole of government accounts return this year so your fee has reduced by £1,521. I can confirm that that I have carried out the audit in accordance with the Audit Commission’s policies on integrity, objectivity and independence Actual (£)Plan (£) Accounts37,38438,905 VfM50,957 Audit Total88,34189,862

Annual Governance Report - North Dorset DC 2009/1017 What does the Council need to do? Consider the matters raised in the report before approving the financial statements. Take note of the adjustments to the financial statements which are set out in this report (Supplement 2). Approve the letter of representation on behalf of the Authority before I issue my opinion and conclusion (Supplement 3). Agree your responses to the proposed action plan (Supplement 5).