Local Government Audit Service
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LOCAL GOVERNMENT AUDIT SERVICE Statutory Audit Report to the Members of Longford County Council for the Year Ended 31 December 2019 Department of Housing, Planning and Local Government housing.gov.ie CONTENTS AUDITOR’S REPORT TO THE MEMBERS OF LONGFORD COUNTY COUNCIL .. 1 1 Introduction ..................................................................................................... 1 2 Post Balance Sheet (non adjusting) Event ...................................................... 2 2.1 COVID-19 .................................................................................................................. 2 2.2 Disclosures in Annual Financial Statements ............................................................. 2 2.3 Actions taken to address the financial uncertainty of COVID-19 .............................. 2 2.4 Financial impact ......................................................................................................... 2 3 Financial standing (at 31 Dec 2019) ............................................................... 4 3.1 Statement of Comprehensive Income ....................................................................... 4 3.2 Financial position ....................................................................................................... 4 3.3 Capital Account analysis ........................................................................................... 4 4 Major revenue collections ............................................................................... 5 4.1 Summary of the major revenue collections ............................................................... 5 4.2 Rates ......................................................................................................................... 5 4.3 Rents ......................................................................................................................... 5 4.4 Housing loans ............................................................................................................ 5 4.5 Conclusion ................................................................................................................. 6 5 Transfer of Water and Sewerage Functions to Irish Water .............................. 7 5.1 Service Level Agreement .......................................................................................... 7 5.2 Water related rates .................................................................................................... 7 5.3 Water related assets .................................................................................................. 7 6 Capital Account .............................................................................................. 8 6.1 Capital balances – unfunded ..................................................................................... 8 7 Fixed Assets ................................................................................................... 9 7.1 Assets management .................................................................................................. 9 8 MyPay shared services ................................................................................... 9 8.1 Payroll shared services ............................................................................................. 9 8.2 Pensions shared services ....................................................................................... 10 9 Local Authority Companies ........................................................................... 10 9.1 Longford Pool Construction Ltd ............................................................................... 10 9.2 Local Enterprise Development CLG ........................................................................ 10 10 Development Contributions ........................................................................... 11 10.1 Overview .................................................................................................................. 11 10.2 Bad debt provision ................................................................................................... 11 10.3 Arrears ..................................................................................................................... 11 11 Governance .................................................................................................... 12 11.1 Overview .................................................................................................................. 12 11.2 Internal audit ............................................................................................................ 12 11.3 Risk management .................................................................................................... 12 11.4 Data protection ........................................................................................................ 12 11.5 Ethics ....................................................................................................................... 13 11.6 Procurement ............................................................................................................ 13 11.7 Fraud policy ............................................................................................................. 13 12 Acknowledgements ....................................................................................... 14 AUDITOR’S REPORT TO THE MEMBERS OF LONGFORD COUNTY COUNCIL 1 Introduction I have audited the Annual Financial Statement (AFS) of Longford County Council for the year ended 31 December 2019, which comprise the Statement of Accounting Policies, Statement of Comprehensive Income, Statement of Financial Position, Funds Flow Statement and notes to and forming part of the accounts. The financial reporting framework that has been applied in its preparation is the Code of Practice and Accounting Regulations for Local Authorities, as prescribed by the Minister for Housing, Planning and Local Government. My main statutory responsibility, following the completion of the audit work, is to express my independent audit opinion on the AFS of the Council, as to whether it presents fairly the financial position at 31 December 2019 and its income and expenditure. My audit opinion, which is unqualified but includes an emphasis of matter paragraph (see paragraph 2) is stated on page 6 of the annual financial statements. The Council is by law, responsible for the maintenance of all accounting records including the preparation of the AFS. It is my responsibility, based on my audit, to form an independent opinion on the statement and to report my opinion. I conducted my audit in accordance with the Code of Audit Practice. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the AFS. It also includes an assessment of the significant estimates and judgements made by the Council’s management in the preparation of the AFS, and of whether the accounting policies are appropriate to the Council's circumstances, consistently applied and adequately disclosed. I planned and performed my audit so as to obtain all the information and explanations, which I considered necessary, to provide sufficient evidence to give reasonable assurance that the Financial Statement is free from material misstatement, whether caused by fraud or error. This report is prepared in accordance with Section 120(1) (c) of the Local Government Act, 2001 and should be read in conjunction with the audited AFS. 1 2 Post Balance Sheet (non adjusting) Event 2.1 COVID-19 The COVID-19 outbreak and the emergency measures taken to mitigate it have had a significant impact on the finances of local authorities after year ended 31 December 2019. This has resulted in a reduction in, and uncertainty of, various income sources, together with increased levels of spend. Reductions in income have also had a bearing on the cash flow of local authorities and the ability to deliver services. 2.2 Disclosures in Annual Financial Statements In accordance with Circular Fin 05/2020, the Council has included a note in their Annual Financial Statements (see note 23) in relation to COVID-19. This note refers to the impact of COVID-19, a non-adjusting post balance sheet event, and describes the uncertainty faced by the Council as a result. Whilst my opinion is not qualified as a result of the uncertainty, I have included an Emphasis of Matter paragraph. 2.3 Actions taken to address the financial uncertainty of COVID-19 The Council has taken steps to address the financial uncertainty both at local and national level including Local level The Council has prepared a report on the “Continuing financial impact of COVID-19 pandemic” which estimated a budget short fall of €9.1m (estimated income decline in rates of €5.5m and services of €2.9m and an increase in spend of €0.7m, largely COVID-19 driven). The Council has approved an increase in overdraft level for €20m on 20 May 2020. National level The Council has participated in the submission of acute financial management reports to Department of Housing, Planning and Local Government (DHPLG), namely: o Indicative figures calculating the impact of COVID-19 on 2020 Commercial Rates o Analysis of Rated Properties Impacted by COVID-19 o Analysis of Local Government Goods & Services Income Impacted by COVID- 19 2.4 Financial impact As noted above, the Council estimate that COVID-19 will have a significant impact on its finances in 2020. 2 Chief Executive’s Response There