1. Experience of Dry Run for Early Closedown at South Tyneside Council
Paul Sheffield Finance Service Manager (BT South Tyneside)
10th February 2017

2. Agenda Background to South Tyneside Council Everybody on board
Early planning
Review of the timetable
What we already had
Things we changed
The result
Where did 4 weeks go?
Summary of key points

3. South Tyneside Council
Small metropolitan borough
Overwhelmingly Labour Council
HRA/Collection Fund Statements
Group Accounts
Tyne & Wear Pension Fund Accounts
BT South Tyneside Partnership
Technical lead with many years accounts experience
Financial Statements covering 188 pages
Publication of accounts usually went down the wire i.e. 30th June

4. Everybody on board Members / Audit Committee Senior Leadership Team
S151 Officer / Head of Finance
Members / Audit Committee
Senior Leadership Team
Finance Staff
External Dependents
External Auditors

5. Early planning
Treat as a project and appoint technical lead as project manager
Start as early as possible
Identify all external dependents and communicate accordingly
Involves huge overhaul of tasks – virtually everything published used to have a June deadline
Identify the dependencies and linkages between tasks and get them in order
Identify potential roadblocks and work on solutions
Concentrate efforts on tasks that are time consuming – can they be done quicker/can they be estimated/are they needed at all?
Challenge big using materiality levels
Involve external auditors in any proposed changes that impact on disclosure or data accuracy –remember you will need to provide evidence of non materialtiy
Highways Network Assets could now be implemented in same set of accounts

6. Review of the timetable (1)
The basics – accountable/responsible officers, due dates, RAG status
The more detailed level the better
Compare dates last year – where did you deliver ahead of established deadlines
Identify any tasks dated post year end and see if they can be undertaken before 31st March
Review responsibilities – cast wide or centralise?
Prepare to change responsible officers if tasks begin to clash
Start with last action for a task and work backwards
Build in time for training

7. Review of the timetable (2)
Break down tasks into smaller ones so as to split responsibility or plan to remove any potential problems or roadblocks
Use of a start date – encourage pre preparation
Add tasks to the timetable as new issues arise
How much quality assurance is required? – apply risk rating
Hold regular review meetings
Concentrate on overdue items especially if they impact further down the line
Order primary statements for disclosure – balance sheet, HRA, Comprehensive I&E, MIRS, Cashflow, Group Accounts

8. What we already had
Excellent working relationship with external auditors
Very good working papers for all disclosures with explanations
Accounts fairly well decluttered
No accruals in schools spend
No data collection on employee benefits
Good relationships with Group entities
Employee self service - did away with payroll accruals
Pension accounts produced independently and subject to different audit regime
Robust partnership arrangement with fairly strong team skills and full support of Head of Finance
2 clearly defined adjusting periods – 1 for management accounts and 1 for technical entries
Checklist for adjusting journals
Good process to deal with changes in the Code of Practice

9. Things we changed (1) Instigated regular balance sheet reviews
Systems reconcile
Accruals reversed
Provisions monitored
PFI/Bank/Investments/Borrowing reconciled to source records
Suspense accounts balanced and cleared
Declutter – removed any non material notes or excessive disclosures / removed any disclosures not statutorily required
Pre planning – all previous years data updated before final accounts started
Risk based approach to quality assurance
Removal of duplication – audit deliverable v disclosure note
Full use of general ledger facility – all transactions input before commencing statements
Increased use of linkages in spreadsheet working papers
Investment in asset management system – capital accounting entries automated (componentisation of dwellings)
Accepted accuracy suffers at the expense of speed – accrued on estimate rather than wait for actual
Increased materiality on accruals to £15,000

10. Things we changed (2)
Distributed tasks across all available team members
Removed system based accruals and started manual accruals on 1st April
Restricted our Housing Company to one run of recharges for March
Identified in advance what our key accruals would be and ensured these were there as a minimum
Shortened capital closedown so as to accelerate capital recharges process
Key personnel diary cleared for final closedown towards end of May
Enhanced our working arrangements with external auditors
Increased knowledge of technical areas where weak e.g. learnt that PFI liabilities do not change when inflation factors input
Embedded external evidence into working papers where possible
Issued reminders based on open actions on the timetable for the week ahead
Full integration of HRA statement and adjustment note to update the Comprehensive Income & Expenditure Statement and notes
Visits to schools with Independent Bank Accounts to encourage earlier production of year end information

11. The Result
Council accounts completed by 31st May 2016 Pension accounts completed mid June but only on advice of external auditors to await final figures No real major sticking points No material errors and very limited disclosure errors in the accounts following audit Success!

12. Where did 4 weeks go? 2 weeks in starting manual accruals on 1st April
1 week in bringing forward capital programme closedown
2 days in automating capital accounting charges via new system
3 days in linking working papers particularly for cashflow and group accounts
2 days from reduced QA and limiting disclosures

13. Summary of key points Good communications Early planning
Think big – this is an opportunity to force change
Involve external auditors at every stage
Challenge auditors views where there may be significant gains - compromise
Remember you cannot change everything
Robust timetable monitoring regime
We are not all the same!

14. Questions?