1. Bridgend County Borough Council Financial statements audit 2005/6 – Presentation to Audit Committee 26 October 2006 Public Sector AUDIT Gilbert Lloyd Ian Pennington

2. 1 © 2006 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Contents Analysis of Accounts Audit Issues and adjustments Statement on Internal Control Use of Resources opinion What next?

3. 2 © 2006 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Analysis of accounts Balance sheet Assets and liabilities Revenue reserves Council tax and NNDR collection Consolidated revenue account

4. 3 © 2006 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Assets and Liabilities Assets Liabilities

5. 4 © 2006 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Council Tax Collection Ageing of Council tax debts Source: Iworld

6. 5 © 2006 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. NNDR Collection Ageing of NNDR debts Source: Iworld

7. 6 © 2006 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Revenue Reserves Source: Draft financial statements

8. 7 © 2006 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Consolidated Revenue Account Detailed narrative in the accounts Directorate deficit £1.5m as previously forecast Offset by better than budgeted council tax collection Management looking at ways of improving transparency

9. 8 © 2006 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Contents Analysis of Accounts Audit Issues and adjustments Statement on Internal Control Use of Resources opinion What next?

10. 9 © 2006 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Audit issues and Adjustments Audit adjustments – Revenue Account Audit adjustments – Balance Sheet Representation letter Post balance sheet events

11. 10 © 2006 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Audit adjustments – Revenue Account Reconciliation of Surplus reported to Council and final accounts £’000 Accounts year end surplus as previously reported47 Write off of old balances no longer due(91) Correction of bad debt provision calculation280 189 Surplus for the year236 Source: Audit working papers and draft accounts

12. 11 © 2006 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Audit Adjustments – Balance Sheet Summary of Audit differences Amounts £’000Balance sheet Draft Total assets less liabilities as previously reported90,760 Consolidated revenue Account (as per previous slide)189 Reclassification of Insurance provision1,209 Reconciliation between Housing benefit grant claim and year end debtor136 Maesteg Washeries cost of works in year incorrectly capitalised(347) Assets valued in the year not adjusted to reflect the movement in the asset value(91) Ynysawdre Swimming pool, building impairment not recognised(1,850) Total assets less liabilities as at 31 March 200690,006

13. 12 © 2006 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Audit issues and Adjustments Representation letter Post balance sheet events No unadjusted audit differences to report

14. 13 © 2006 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Contents Analysis of Accounts Audit Issues and adjustments Statement on Internal Control Use of Resources opinion What next?

15. 14 © 2006 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Statement on Internal Control New statement prepared for 2005/06 Process has been well performed Bought into at the highest level (Cabinet, CMB and Audit Committee) SIC reported in the first draft of the accounts amended to reflect Internal Audit’s “unsatisfactory” opinion Detailed action plans taken out of final draft The statement is very personalised to Bridgend, and interesting and informative Authority should continue to review the process for 2006/7

16. 15 © 2006 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Statement on Internal Control - continued Audit Committee’s role is to:  Review SIC  Consider it in context of your work over the last 12 months  Reports read  Presentations given and  Questions answered  Make recommendations to the signatories Audit Committee has considered the draft of the SIC as previously reported and recommended it to signatories subject to an amendment to Internal Audit year end opinion

17. 16 © 2006 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Contents Analysis of Accounts Audit Issues and adjustments Statement on Internal Control Use of Resources opinion What next?

18. 17 © 2006 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Use of Resources Background Use of resources opinion – types Use of resources opinion 2005/6

19. 18 © 2006 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Use of Resources opinion New code of audit practice More formalised opinion Eventually opinion will be incorporated into the financial statements 2005/06 reported via the Relationship Manager’s audit letter – which will include detailed comments and issues National moderation process

20. 19 © 2006 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Use of Resources opinion Links to Authority’s responsibilities Not a “yes/no” opinion Details will be in the RMAL

21. 20 © 2006 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Use of Resources Opinion 2005/6 Key matters Performance management of services and staff (being dealt with by performance management flagship project and HR flagship project System of internal control (as evidence by Chief Internal Auditor’s annual report) Arrangements to maximise use of corporate asset base Issues arising in year (primarily children’s services, and corporate culture review) There are a number of other issues which will be reported in the RMAL

22. 21 © 2006 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Contents Analysis of Accounts Audit Issues and adjustments Statement on Internal Control Use of Resources opinion What next?

23. 22 © 2006 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. What next? Relationship Manager’s Annual Letter Regulatory plan for 2006/07 Accounts signing process