Bank Reconciliation Report
To consider the above report
Members considered actions in relation to unreconciled bank reconciliation entries.
Councillor Hilton explained that this was an historic issue of bank reconciliation which had been described in the last two external audit ISA260 reports as “unadjusted mis-statements.”
The issue was first reported in 2017 and had prompted action. Processes were set up to enable income received by the bank to be identified, allocated and reconciled to the correct service account more easily. This proactive management of income ensured that the amount of unreconciled income would not grow. The 2017/18 bank reconciliation control audit was carried out in March 2018. The audit, which was on the revised reconciliation process, resulted in a final report awarding the second highest of four audit opinions ‘Substantially complete and generally effective’.
There were two large unreconciled balances of £1,136.953 relating to bank reconciliation entries and £1,152,758 on the Housing Benefit subsidy account respectively. One a debit and the other a credit.
The Finance team and Internal Audit had undertaken significant work to resolve the differences but given the lack of historical records could not go any further. In conclusion the unreconciled entries and housing benefit credits could not be individually matched off and a technical financial adjustment was required to rectify this in the statement of accounts. If approve, the adjustment would be reflected in the 2020-21 accounts but noted by external audit for the 2019-20 external audit report.
Members would note in table 3 that the impact on the council’s accounts was negligible and a positive of £15,800.
Councillor Bond asked whether the Lead Member was confident that the decision was acceptable for audit purposes if one was asked for by the Secretary of State. He asked if any claimants had been left out of pocket. As the report di not detail the root causes, was the council happy that the situation could not happen again.
Councillor W. Da Costa explained that he had spoken to officers and had been told that there were no ongoing unreconciled items. New processes were in place so it should not happen again. This was reassuring. However, he expressed concern that the issue was raised in August 2017 but the credits related to 2017/18 and 2018/19 so whilst it was fortuitous that the amounts were similar, he wondered if the housing benefit subsidy account was about to be raided inappropriately. He asked how Councillor Hilton how he could be assured this was not the case.
Councillor Hilton explained that the work had been ongoing for a long period of time and it was decided it needed to be closed down. The external auditors were involved in that process. He was absolutely comfortable that the reconciliation was appropriate and a small positive balance would be received as a result.
It was proposed by Councillor Hilton, seconded by Councillor Story, and:
RESOLVED: That Council notes the report and:
i) Approves the write off of £1,136,953 for the unreconciled bank reconciliation entries.
ii) Approves use of £1,136,953 of the £1,152,758 credit balance in the Housing Benefit Subsidy Revenue Account to offset these entries.