Published: January 2021
Audit of Financial Statements
- The 2020-21 financial statements were certified without qualification as noted in my audit report. Key statistics from the accounts are outlined.
Work on economy, efficiency and effectiveness
- The Council has in place proper arrangements to secure economy, efficiency and effectiveness in the use of its resources.
- The governance statement reflects compliance with relevant guidance and standards.
Other areas of audit interest
- Absenteeism figures for 2020-21.
- The latest National Fraud Initiative.
- The Local Government Auditor’s Report for the year to 31 March 2020 was published on 15 December 2020.
- Brexit considerations.
- COVID-19 considerations.
- Belfast Region City Deal.
- As Local Government Auditor, I have a statutory responsibility to provide an opinion on the Council’s financial statements. The results of my audit of the 2020-21 Statement of Accounts and my work on proper arrangements for 2020-21 are summarised in this report.
- The legislative role for the Local Government Auditor is contained in the Local Government (Northern Ireland) Order 2005 and the Local Government (Northern Ireland) Act 2014. In addition, the Code of Audit Practice, published on 1 April 2021, prescribes the ways in which statutory audit functions are to be carried out. The Code of Audit Practice is supported further by a Statement of Responsibilities of Local Government Auditors and Local Government Bodies. Both of these documents are published on the NIAO website.
- Management have specific responsibilities regarding the production of financial statements and are expected to have effective governance arrangements in place to deliver the Council’s corporate objectives. The publication of the financial statements is an essential means to account for the stewardship and use of public money each year.
- As external auditor, it is my responsibility to form an opinion on whether:
- the financial statements give a true and fair view of the financial position of the Council and its group, and its income and expenditure for the year then ended;
- the financial statements have been prepared in accordance with the relevant accounting and reporting framework as set out in legislation, applicable accounting standards or other directions thereunder;
- the parts of the remuneration report to be audited have been properly prepared in accordance with the Department for Communities’ directions; and
- the information given in the Narrative Report is consistent with the financial statements.
5. There is a range of various other matters which can be reported by exception and they are outlined in the Code of Audit Practice. One of these items relates to the information published with the audited financial statements, such as the governance statement. I report if the governance statement is not consistent with the information gathered during the audit including that gained from carrying out work on the Council’s arrangements for securing economy, efficiency and effectiveness of resources, and our work on performance improvement.
6. This report is solely based upon those matters that have come to my attention as a result of normal audit procedures. Consequently, our comments should not be regarded as a comprehensive record of all deficiencies that may exist or all improvements that could be made.
Statement of Accounts
- The accounts should be prepared in accordance with International Financial Accounting Standards as interpreted for Local Government in the `Code of Practice on Local Authority Accounting in the United Kingdom’.
- The financial statements were signed by the Chief Financial Officer and submitted for audit on 28 June 2021. Following the audit, the Statement of Accounts were approved by the Council and certified by me within the statutory deadline of 30 September 2021. The Statement of Accounts are published on the Council’s website.
- On conclusion of the audit, the 2005 Order requires me to issue a certificate stating the audit is complete and to give an opinion on the statement of the accounts. The audit certificate and opinion are contained within the Statement of Accounts.
Audit Certificate and Opinion
4. For the year ended 31 March 2021, I gave the following unqualified opinion on the financial statements.
In my opinion:
- the financial statements give a true and fair view, in accordance with relevant legal and statutory requirements and the Code of Practice on Local Authority Accounting in the United Kingdom 2020-21, of the financial position of the Council and its group as at 31 March 2021, and its income and expenditure for the year then ended; and
- the financial statements have been properly prepared in accordance with the Local Government (Accounts and Audit) Regulations (Northern Ireland) 2015 and the Department for Communities’ directions issued thereunder.
5. At the end of the audit I issue a Report to those charged with Governance, addressed to the Chief Executive of the Council, on the results of the audit, noting the most significant issues, making recommendations and seeking comments. That report is presented separately to the Audit & Risk Panel.
Increase in usable reserves
The Council’s usable reserves have increased from £67,363,203 at 31 March 2020 to £92,246,780 at 31 March 2021, an increase of £24,883,577.Unspent COVID-19 funding received in year of £9,173,406 is included within this figure.It is important that there are clear plans to utilise these reserves in the future.
Council’s Group Structure
6. The Council’s group accounts include:
- Belfast Waterfront and Ulster Hall Ltd, a 100 per cent owned subsidiary with a net turnover of £551k (2019-20, £7.9m) and net assets of £4,853 (2019-20, net assets of £6,696). The company is responsible for meeting strategic targets set by the Council regarding the successful running of Belfast Waterfront Hall, International Convention Centre and the Ulster Hall.
- BelTel LLP is a joint venture between the Council and McAleer & Rushe. Its main purpose is the development of the former Belfast Telegraph building, renamed “The Sixth”, into a state-of-the-art work space which could attract both national and international occupiers. Its aim is to support the redevelopment of this part of the City and compliment investment from the relocation of Ulster University’s campus. The council currently holds a 46 per cent interest in the venture with a net investment of £3.4m at 31 March 2021.
|Net Expenditure chargeable to the General Fund (reflects adjustments between Accounting Basis and Funding Basis)||26,231,433||2,895,685||23,335,748|
|Capital Expenditure in year||21,567,305||43,855,969||(22,288,664)|
|Capital / Reserves / Staff Costs||2020-21||2019-20||Variance|
|Long Term Assets||788,238,627||792,947,995||(4,709,368)|
|Staff numbers (FTE)||2,030||2,068||(38)|
|Staff Costs (including Agency costs)||89,144,595||89,672,827||(528,232)|
Staff Absence Total
|10.86 days||13.58 days||(2.72) days|
|- short term||2.58 days||4.63 days||(2.05) days|
|- long term||8.28 days||8.95 days||(0.67) days|
- The Local Government (Northern Ireland) Order 2005 requires me to be satisfied that the Council has in place proper arrangements for securing economy, efficiency and effectiveness in the use of its resources.
- Councils are required to maintain an effective system of internal control that supports the achievement of their policies, aims and objectives, while safeguarding and securing value for money from the public funds and other resources at their disposal.
- My review of the Council’s arrangements for securing value for money covered a wide range of areas including:
- Strategic priorities, financial strategies and policies;
- Financial reporting systems and sound financial internal controls;
- Procurement strategies and policies to deliver sustainable outcomes and value for money;
- Promoting a good governance environment including managing risks and systems of internal control;
- Asset management strategies and policies to safeguard assets, deliver objectives and generate value for money; and
- A framework to manage the workforce to effectively support the achievement of strategic priorities.
4. On the basis of my review this year, I am satisfied the Council has in place proper arrangements to secure economy, efficiency and effectiveness in the use of its resources.
Annual Governance Statement
1. The Local Government (Accounts and Audit) Regulations (Northern Ireland) 2015 requires the Council to conduct a review, at least once in a financial year, of the effectiveness of its governance framework (including its system of internal control) and to then approve an Annual Governance Statement.
2. I am required to report if the Annual Governance Statement:
- does not reflect compliance with the Code of Practice on Local Authority Accounting in the United Kingdom 2020-21;
- does not comply with proper practices specified by the Department for Communities; or
- is misleading or inconsistent with other information I am aware of from my audit.
3. My review did not highlight any inconsistencies.
4.The 2015 Regulations also require councils to undertake an adequate and effective internal audit of its accounting records and of its systems of risk management, internal controls and governance processes using current internal auditing standards. The Council has an in-house Internal Audit function that conducted a review on the effectiveness of the systems of internal controls in place during 2020-21. The findings of this work were presented to the Council’s Audit & Risk Panel for review and considered by me as part of the audit process.
Audit and Risk Panel
5. It is essential that Members exercise effective scrutiny of the internal controls processes and procedures in place within the Council. One way that Members carry out this function is through the Audit and Risk Panel.
6. The Audit and Risk Panel is also invited to review my audit reports and my staff attend meetings to present audit findings.
- For the twelve months to the end of March 2021, the average number of day’s sick absence in the Council was 10.86 days per full time employee as compared to 13.58 days in 2019-20. The Council continued to apply its Attendance Policy throughout 2020-21 albeit within the limitations of COVID-19 restrictions. The Council told me that it is probable that the decrease of 2.72 days is attributable to the effects of the pandemic in that employees who may otherwise have been off sick were recorded as being absent for other reasons such as shielding, self-isolation and paid special leave. A significant number of staff were also on Furlough throughout the year.
- The Council also advised that a large proportion of staff worked from home throughout 2020-21. This, together with social distancing and self-isolation, has likely led to less exposure to germs and minimised some of the usual sickness absences such as colds and flu. In addition, homeworking may have enabled some employees to continue to work when they might not have been well enough to travel to the workplace but felt fit to work from home.
- The Local Government Auditor produced a good practice guide on Managing Attendance in Central and Local Government on 23 November 2020. The report provides an overview of sickness absence across central and local government in Northern Ireland and sets out key principles for managing attendance that are consistent across the public sector.
Local Government Auditor’s Report – 2020
4. The annual Local Government Auditor’s Report was published on 15 December 2020 and is available on the NIAO website. The report summarises my perspective on financial audits and performance improvement work in the year to 31 March 2020.
5. The Report highlights areas of strength and areas for improvement within local councils. It also considers important issues that may affect councils in the medium term. The Council and its members should consider this report in the context of its own activities for any improvements that could be made.
Performance improvement audit and assessment
6. Under the Local Government (Northern Ireland) Act 2014 the Council has a statutory duty to make arrangements to secure continuous improvement in the exercise of its functions and to set improvement objectives for each financial year.
7. Under the current legislation each year councils are required to produce an Annual Improvement Plan for the year ahead and a self-assessment report for the year just past. The Local Government Auditor is required to audit the prior year self-assessment report and the incoming Annual Improvement plan and assess whether the Council is likely to have complied with the legislation.
8. The onset of the COVID-19 pandemic led the Department to propose a reduction in the performance improvement work undertaken by councils, and consequently the improvement audit and assessment work to be carried out in 2020. Councils were still required to produce a self-assessment of their performance in 2019-20 but did not have to produce an Annual Improvement plan for 2020-21. Therefore the Local Government Auditor will audit the 2019-20 self-assessment report. Given the impact of the COVID-19 pandemic on normal council services the Local Government Auditor is likely to conclude that she is unable to assess whether the Council was likely to comply with Part 12 of the Local Government Act (Northern Ireland) 2014 (the Act) during 2020-21. The legislation to allow this work to be completed has now been amended.
9. My Annual Improvement Report summarising the audit of the 2019-20 self-assessment report will be published in March 2022.
10. Whole of Government Accounts (WGA) are consolidated financial statements for the whole of the UK public sector. The National Audit Office audits these accounts and sets the overall audit approach. As such the Council is within the band of organisations in 2020-21 where additional audit procedures were not required.
11. The Whole of Government Accounts annual return will be submitted for HM Treasury’s consolidation process.
12. The Council participates in the National Fraud Initiative, a UK wide data matching exercise undertaken every two years that is designed to highlight savings for the public sector as a whole.
13. Data matching for the period 1 April 2020 to 31 March 2022 is currently underway and the results are due to be published in June 2022.
14. The audit fee for the financial audit is in line with the estimate and the performance improvement audit fee has been decreased to reflect a reduced audit requirement in light of the pandemic.
1. The United Kingdom left the EU on 31 January 2020, and completed the transition period on 31 December 2020. Issues affecting Council’s to date have included funding of Council programmes, cross border trade, tourism, imports and exports, employment, local supplies and local business. These issues and other related matters are considered at the monthly SOLACE meetings to ensure that all councils are taking a consistent approach. Council officers are continuing to work with colleagues across the 11 councils to ensure that areas of risk are identified and appropriate measures are in place to manage these risks where possible.
2. The COVID-19 pandemic has had a significant impact on society and on the economy. Councils have had to adapt quickly to ensure continued provision of their key critical services such as waste collection and disposal, community support, and registrations of deaths and burial services. Additionally, Councils will have suffered losses in income from the closure of their income-generating facilities and services such as leisure centres.
3. In May 2020, the Minister for Communities in Northern Ireland announced that the Executive was allocating £20.3 million [Footnote 1] to councils to assist them with their financial pressures up to the end of June 2020 as a result of COVID-19. This funding was to allow councils to continue to provide essential services. An additional £40 million [Footnote 2]was announced in September 2020 to support the operation of all 11 councils. In October 2020, the Executive allocated a further £15 million [Footnote 3] to councils to ensure that they continued to positively contribute to the response to, and recovery from COVID-19.
4. In a Written Statement to the Assembly [Footnote 4] on 20 May 2021 the Finance Minister announced further COVID-19 funding to address a range of pressures. This included £10 million to Councils to ensure the continued delivery of local public services, as well as £3 million to support council-managed community development and advice services via the Community Support Programme.
5. There is no doubt there will continue to be wide reaching impacts from the pandemic for many years to come. There will be continuing challenges for councils to deliver a balanced budget, even with central government support and therefore it is extremely important that the Council has detailed medium term financial plans which are regularly monitored and updated.
6. A report by the Comptroller and Auditor General was published on 2 September 2020 on the NI Executive’s response to the COVID-19 pandemic including support for Councils. A second report on the NI Executive’s Response to the COVID-19 Pandemic was published on 8 June 2021.
Belfast Region City Deal
7. In its 2018 autumn budget, the UK Government committed £350 million of funding to the Belfast Region City Deal (BRCD). In May 2020, the NI Executive committed to match the £350 million of UK Government funding, with the six participating councils and the two Universities committing a further £150 million in total. In March 2019, the Secretary of State, BRCD partners and the Northern Ireland Civil Service signed a Heads of Terms document, enabling business cases to be prepared for the projects proposed.
8. The BRCD partners have been working with the UK and NI departments to develop Outline Business Cases for their individual projects and the process for consideration and approval is now underway. The next steps are for the BRCD partners and the governments to agree a final deal document and establish supporting governance and finance frameworks to enable the delivery of the deal. It is expected that the final deal will be signed by BRCD partners and both governments by the end of the year allowing funding to flow to the most advanced projects which have approval.
9. I would like to thank the Council for its continued co-operation during the audit. My staff and I look forward to working with Council during the year in preparation for next year’s audit.