To receive a report from the External Audit Director, KPMG.

James Boyle, External Audit Director was in attendance on behalf of KPMG, External Auditors, to present the External Auditor’s Annual Report for the year-ended 31 March 2024, (pages 125 to 156 of the Agenda refer). 

The purpose of the report was to provide a summary of the key findings and issues arising from work undertaken for the Council’s 2023-24 audit.  This included the audit of the financial statements and commentary on Value for Money (VFM) arrangements.

Members were advised that the report was required to be published on the Council’s website alongside the final signed accounts for the year ended 31^st March 2024.

Members were invited to put their comments and questions forward.

• A Member queried whether the Council’s financial management and governance was in good order, with the exception of Invest East Lindsey Limited.  In response, the External Audit Director, KPMG acknowledged this was correct.

• A Member expressed great dissatisfaction with the findings that ELDC had shown a significant weakness in the governance arrangements in relation to Invest East Lindsey Limited for the year ended 31 March 2024 and that the financial performance and position of the subsidiary had not been reported in a sufficient, appropriate or timely manner within the Governance structure throughout the year-ended 31 March 2024, page 143 of the Agenda refers.

• A Member further commented that the findings were a learning curve and that ELDC should not set up companies without the proper governance in place.

• Members supported that it should be strongly emphasised in the Minutes that the Committee was greatly concerned and disappointed with the findings in relation to Invest East Lindsey Limited.

• A Member commented that the Committee was due to receive an update from Invest East Lindsey’s Supervisory Board in March 2025.

• A Member highlighted the Committee's actions from November 2023 to March 2024 to express concern and question the information that had been reported in relation to Invest East Lindsey Limited.

• A Member further referenced the Chief Executive’s approval of the formal request to defer Invest East Lindsey Limited’s repayment of the housing development loan.

• A Member queried the justification that the Committee had remained unaware of the decision made on deferring repayment of the housing development loans prior to the Committee’s Meeting on 22nd November 2023 and highlighted that there was a gap in the Council’s governance.

• A Member commented that it would be beneficial for the Portfolio Holder for Finance to attend Meetings to provide insight.

In response, the Section 151 Officer assured Members that the report coming forward to the March 2025 Meeting of Audit and Governance Committee would provide further clarification on the processes that had been followed for decisions that had occurred.

• The Chairman expressed dissatisfaction that the information had not been previously provided to the Committee.  In response, the Section 151 Officer explained to Members that regular Treasury reports had included a variety of information alongside shareholder reports and reports that were presented to the Executive Board.  The Section 151 Officer assured Members that it was necessary to ensure that there was sufficient detail in all reports to allay Members’ concerns.

• A Member supported the need for clarity on the issue and highlighted the efforts of the Committee to continue to ask questions on behalf of taxpayers.

• A Member commented that issues frequently raised by the External Auditors highlighted a significant problem and that the Committee needed to see that actions had been followed up.

There were no further questions or comments.

Following which it was,

RESOLVED

That the Auditor’s Annual Report be noted.