Agenda item

(a)  Annual Accounts for 2021/22 for WMCA (covering report)

(b)  WMCA Annual Accounts

(c)  Audit Findings of West Midlands Combined Authority

(d)  Letter of Representation

The report considered a report of the Executive Director of Finance and Business Hub that had been prepared for the committee to approve the annual accounts of the West Midlands Combined Authority (WMCA) for the financial year ended 31 March 2022.

The committee also received  Grant Thornton’s draft Audit Findings Report dated 2 December 2022 including the Letter of Representation.

The Chair advised that as the meeting was inquorate, the WMCA Board would be asked to approve the accounts as part of the minutes for this meeting.

It was noted that a copy of the draft accounts had been shared with the committee on 27 June 2022. The Chair also noted that there had been 2 updates to these draft accounts in relation to pensions and the valuation of the land assets, as set out on page 3 of the report from Grant Thornton. Finally, the Chair highlighted some relatively minor recommended changes, primarily reflecting the narrative reports required updating to reflect circumstances up to January 2023.

The Head of Financial Management, Louise Cowen presented the report on behalf of the Executive Director of Finance and Business Hub and expressed her thanks to the WMCA’s Finance Team for their work in producing the accounts and also thanked Grant Thornton’s Finance Team for their work on  the accounts noting the resourcing difficulties they had experienced.

Grant Patterson (Grant Thornton), reported that following a review of the financial amendment statement, he was looking for the accounts to be signed off on 10 February whilst with regard to the Value for Money report, he advised that  the audit would be certified closed in April and the committee would receive the report at its April meeting. The Chair requested that a final copy of the Audit Findings report be provided at the time the accounts are signed.

Grant Patterson highlighted key issues referred to in the Audit Findings report.

In relation to financial statements  and the significant risk relating to over 78,000 journals processed, the Chair asked that the Head of Financial Management follow-up on how the transactions are broken down.

In relation to the testing of journals which included an expense claim for the Chief Executive that was authorised by the Chief Executive, it was reported that whilst this was an isolated incident and Grant Thornton had confirmed that they were comfortable that the expense was valid, management should review their governance processes around senior management expenses so they are authorised by a different member of the management team. The committee noted that an appropriate approvals process needs to be put in place.

Councillor Bardsley noted that the matter being highlighted by Grant Thornton on page 15 of their report in relation to the complexity of audit trails, appeared to be a matter they had also raised in the prior year. Louise Cowen responded that management had made some progress on addressing this matter in relation to the consolidation process but further work was required in relation to grant income.

Councillor Sutherland commented that it would be useful if the report categorised risks according to a red, amber, green rating which would make it easier to focus on issues requiring more attention.

The Chair reported that he would like a response from the WMCA for all items highlighted in the Audit Findings report.

The Chair added that, whilst he acknowledged this was a sector wide issue, he was disappointed that 2021/22 accounts were being considered for approval in January 2023, 10 months after the year end. He asked that management and Grant Thornton report to the next meeting on the plans they have to ensure the 2022/23 accounts can be signed off on a more timely basis.

It be recommended to the WMCA Board that:

1.    The annual accounts be approved;

2.    The Audit Findings Report presented by Grant Thornton be noted;

3.    Grant Thornton propose to issue an unqualified audit opinion for the accounts;

4.    The signing of the letter of representation by the Executive Director of Finance and Business Hub as set out in Appendix F of the Audit Findings Report be approved;

5.    The Chair of Audit, Risk and Assurance Committee be authorised to sign off any further changes required to the Statement of Accounts for 2021/22 prior to publication be approved and

6.    Subject to no further issues being raised by Grant Thornton, that the Mayor and the Executive Director of the Finance and Business Hub be authorised to sign the accounts on behalf of the WMCA.