Paul Dossett (External Auditor, Grant Thornton) introduced the report and highlighted the following points:

a)    Budgets for following years had had to be set, even though the disagreement around the impact of the pension transaction had not been agreed on;

b)    He had interpreted legal advice received to mean that should the Council set the 2024/25 budget, without resolving the issue of this transaction, there was a risk that the Council would be setting an illegal budget;

c)    Grant Thornton had engaged very constructively with Council Officers in recent weeks and Council Officers had engaged in discussions with DLUHC to try to resolve the issue;

d)    There had been a net gain from the transaction.

Jon Roberts (External Auditor, Grant Thornton) added:

e)    They had been working on the 2020/21 audit, around the issue of the previous transaction, so that once the transaction was resolved it would ‘roll’ forward into 2020/21;

f)     The 2020/21 audit had progresses since the last meeting and it would be ready for sign off in October 2023;

g)    They would be checking the Council’s vulnerability to works relating from the discovery of RAAC;

h)    Following equal pay liabilities at Birmingham Council, which attracted national news coverage, Grant Thornton would be looking at risk and liabilities relating to this issue across their portfolio;

i)     Should expected reforms, as set out in the paper, have taken place, there would be the option to apply a ‘backstop’ 2021/22, meaning auditors could ‘jump’ that year and go straight to 2022/23 which had the benefits of auditors working on more up to date information, and secondly if the audit code amendments for property valuation and pension valuations be introduced, it would be a much short audit.

David Northey (Interim S151 Officer) added:

j)     He stressed that at this stage the interpretation of the legal advice had been an interpretation of legal advice;

k)    He had a further meeting with DELUHC that week;

l)     The transaction was the right thing to have done for the taxpayers of Plymouth as there had been a net gain.

In response to questions it was further explained:

m)  If the backstop was used there would be no shortfall of assurance or audit work and it would mean that instead of auditing the closing balances of 2021/22, additional audit work would be carried out on the opening balances for 2022/23, with the benefit of entering into a more current year, but couldn’t confirm the approach without confirmation from Government;

n)    If the approach was agreed by Government, the backstop would be used and the plan would be to get back to the expected timeline for approving accounts;

o)    Sorting of the pension transaction from 2019/20 had taken a substantial amount of time and a considerable amount of accounting and legal advice had been given, but it did seem to be coming to a conclusion to allow the Council to set a legal budget for 2024/25;

p)    Paul Dossett felt that DELUHC, in order to resolve the issue of the 2019/20 transaction, the Council would need to dispose of assets in order to cover off the position in a capitalised directive, or alternatively DELUHC may determine that the original investment cold stand as a capital item;

q)    The actuary carried out a triennial review of the pension fund;

r)    The transaction had enabled the Council to eliminate its pension deficit at the time, and so there would not be liabilities in relation to deficits and that particular transaction in the future, and Paul did not see the transaction having a negative effect in the future, the disagreement had just been that it was not the correct accounting at the time;

s)     David Northey would provide further updates in the future to the Committee;

t)      A governance review had taken place, following recommendations from Grant Thornton relating to the transaction, and progress against the recommendations had been reported on;

u)    The transaction was, and had been since the beginning, financed, the disagreement was about how it had been financed and whether that should have been in one year, or over a period of years;

v)    The council had made revenue savings of £1.47 million as a result of the transaction being discussed;

w)   DELUHC did schedule meetings relatively quickly on request, which was positive considering the financial difficulties of Council’s across the country, and if the situation changed, David Northey would inform the Committee.